CHICAGO, IL -- (Marketwire) -- 06/13/11 -- As U.S. consumer confidence and the overall US economy continues an uneven recovery amid forecasts of a possible double-dip recession, U.S. apparel retailers must look to high-growth emerging markets to expand their businesses and increase revenues. This was a major conclusion of the Retail Apparel Index, an analysis by global management consulting company A.T. Kearney, that rates emerging markets for market expansion attractiveness.
Mike Moriarty, A.T. Kearney partner and co-leader of the study commented, "Emerging markets were impacted much less severely by the 2008 - 2010 recession, and these markets are now proving their sustainable growth. Apparel retailers must look to these markets as an important part of their strategy for growth."
China ranks as the most attractive emerging market for apparel retailers. Its first place ranking is obviously driven by the country's large population but also the growing disposable income of the middle class and the Chinese consumers' developing fashion sense. With its compound annual growth rate of more than 20 percent in recent years, apparel retail in China has grown at a rapid pace, and this trend is expected to continue for the next five years.
China is followed in the ranking by two Middle East Countries, U.A.E. and Kuwait, then by Russia and Saudi Arabia.
"Retail formats in China are diversifying beyond traditional department stores. Chinese consumers are beginning to shop at venues such as hyper markets, specialty stores, outlets, discount stores and on line," observed Hana Ben-Shabat, a partner with A.T. Kearney and co-leader of the study.
Foreign companies, including luxury brands, are aggressively entering the market. American clothing retailer Gap, Inc., opened stores in Beijing and Shanghai in late 2010. PVH Apparel Group also entered China with its IZOD brand and plans to open 3,000 stores over the next five years. Italian retailer RDM announced an investment of US$910 million to set up five Italian-style luxury outlet centers in China.
The United Arab Emirates holds the second position in the 2011 Apparel Index, driven by a population with a high disposable income and immense fashion consciousness. The expatriate populace and tourism in particular are driving forces of consumption in this market. Additionally, the UAE is a regional commerce center in the Middle East, and is a preferred market for entering the Middle East as well as testing new products and retail formats.
Kuwait is ranked #3 in the Apparel Index. Key factors driving retail growth in Kuwait are a favorable long-term economic outlook, more women entering the workforce which creates a more sophisticated consumer base with high levels of disposable income and fashion awareness, and a significant expansion in retail real estate. The gross leasable retail space in Kuwait has expanded from 345,000 square meters in 2006 to 1.15 million square meters in 2010 -- that's triple the space in four years.
The remaining top ten markets in the 2011 A.T. Kearney Retail Apparel Index are Russia, Saudi Arabia, India, Brazil, Turkey, Vietnam and Chile (see chart below). For a full copy of the report, please go to www.grdi.atkearney.com.
A.T. Kearney Retail Apparel Index, 2011
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Market Country
Rank Country Attractiveness Retail Development Risk Score
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1 China 37.0 14.3 10.1 61.4
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2 UAE 38.8 8.2 11.9 58.9
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3 Kuwait 31.4 7.2 9.9 48.6
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4 Russia 30.4 8.1 7.8 46.4
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5 Saudi Arabia 25.6 7.4 10.9 43.9
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6 India 25.8 8.0 8.2 42.0
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7 Brazil 23.6 7.5 9.0 40.1
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8 Turkey 21.3 7.3 8.8 37.4
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9 Vietnam 23.3 6.9 7.1 37.3
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10 Chile 16.4 8.3 12.2 36.9
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About the study
The Retail Apparel Index is calculated by analysing the clothing market attractiveness, levels of retail development and country risk weighted 60 percent, 20 percent, and 20 percent respectively. Clothing market indicators include clothing sales and clothing sales growth, youth and urban population and level of international presence. The retail development indicator includes share of modern retailing and sales area growth. Country risk indicators include political and financial risk, business readiness and business cost of crime, terrorism and corruption. Within each metric, a country's value is indexed from 0 to 100 to allow for relative comparison to be made across metrics.
About A.T. Kearney
A.T. Kearney is a global management consulting firm that uses strategic insight, tailored solutions and a collaborative working style to help clients achieve sustainable results. Since 1926, we have been trusted advisors on CEO-agenda issues to the world's leading corporations across all major industries. A.T. Kearney's offices are located in major business centers in 38 countries.
For more information, please visit www.atkearney.com.
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