Vietnam most attractive mkt for retail

Overtakes Vietnam according to GRDI

Strong growth in Grosss Domestic Product (GDP), changes in regulatory structure favouring foreign investors and increasing consumer demand among others have helped Vietnam to emerge as a attractive retail destination, said the study.

"The critical factors that have powered Vietnam to the top of the Index this year are rapidly growing per capita income of the Vietnamese consumer and drastically opening up of regulations for new entry," said Saurine M Doshi, Partner, AT Kearney India.

India, Russia and China, the top three countries in last year's GRDI, fell to second, third and fourth, respectively, in the 2008 GRDI. While these countries remain important retail investment destinations, high real estate costs in large cities and growing competition have decreased their attractiveness relative to prior years and forced retailers to look for opportunities in tier II and III cities, it added.

"India continues to be a dominant force in AT Kearney's annual GRDI report. While India has slipped to number two this year, it continues to be a "hot" destination for global retailers. However, the growing challenges with doing retail business in India have caused the slippage in the rankings. Challenges such as sky-rocketing real estate costs, lack of good commercial real estate and the complexity around regulations, especially for foreign retailers" said Hemant Kalbag, Principal, Consumer Industries & Retail Practice, AT Kearney India.

While Vietnam's $20 billion retail market pales in comparison to India or China, the absence of competition and 8 percent GDP growth make it an attractive expansion opportunity for global retailers. Vietnamese consumers are among the youngest in Asia, with 79 million below the age of 65, and increased their consumer spending by more than 75 percent between 2000 and 2007. The country is growing increasingly urbanised and concentrated with more than one million people a year migrating into the two large cities of Ho Chi Minh and Ha Noi.