A.T. Kearney in a recent report says that retail opportunities are to be found in Emerging Markets. There are three aspects why this would be so; namely, lower rents, the growth expansion towards tier 2 cities and lastly acquisition.
The first is lower rents.
Here we quote the Wall Street Journal,
``According to the consulting group, there’s room for growth in places such as Dubai, where the housing bust has left many a glass tower empty and is helping to ease rental prices. Builders are starting to lower the price of retail space in Eastern Europe as well.
``Cheaper rents in the emerging markets are good news because that’s where the economy is expected to rebound this year. While GDP continues to sink in the U.S. and Europe, it is forecast to rise in many developing countries on the back of expected 5.2% average growth in nations like Brazil, Russia, India and China — the so-called BRIC economies. And with the economy back in positive territory, the developing world’s growing middle class should soon be ready to open its wallet again."
The second aspect could be found in the tier 2 cities or cities which could benefit from the expanding logistical networks arising from the congestion or saturation of tier 1 or major cities.
The retail cycle as illustrated by AT Kearney
Again the same Wall Street Journal article urges western companies to take advantage of this time restrained opportunities, ``Western retailers should be quick to pop their heads in the emerging part of the world, A.T. Kearney warns. The window of opportunity to seize share in an emerging market usually lasts around seven to 10 years, “when real estate is still inexpensive, logistics networks are beginning to improve, consumers are beginning to spend their disposable income on branded products and there aren’t a lot of competitors around.”
The last would be acquisition opportunities. The recent crisis has exposed some emerging market retailers to deep financing problems, yet these companies carry valuations that are attractively low.
So acquisitions could come by with inherent advantages of "key distributions, consumer insights and premium real estate footprints."
Unfortunately, the Philippines ranks 25th, nearly at the bottom of the 30 emerging markets incorporated in the study.
The first is lower rents.
Here we quote the Wall Street Journal,
``According to the consulting group, there’s room for growth in places such as Dubai, where the housing bust has left many a glass tower empty and is helping to ease rental prices. Builders are starting to lower the price of retail space in Eastern Europe as well.
``Cheaper rents in the emerging markets are good news because that’s where the economy is expected to rebound this year. While GDP continues to sink in the U.S. and Europe, it is forecast to rise in many developing countries on the back of expected 5.2% average growth in nations like Brazil, Russia, India and China — the so-called BRIC economies. And with the economy back in positive territory, the developing world’s growing middle class should soon be ready to open its wallet again."
The second aspect could be found in the tier 2 cities or cities which could benefit from the expanding logistical networks arising from the congestion or saturation of tier 1 or major cities.
The retail cycle as illustrated by AT KearneyAgain the same Wall Street Journal article urges western companies to take advantage of this time restrained opportunities, ``Western retailers should be quick to pop their heads in the emerging part of the world, A.T. Kearney warns. The window of opportunity to seize share in an emerging market usually lasts around seven to 10 years, “when real estate is still inexpensive, logistics networks are beginning to improve, consumers are beginning to spend their disposable income on branded products and there aren’t a lot of competitors around.”
The last would be acquisition opportunities. The recent crisis has exposed some emerging market retailers to deep financing problems, yet these companies carry valuations that are attractively low.
So acquisitions could come by with inherent advantages of "key distributions, consumer insights and premium real estate footprints."Unfortunately, the Philippines ranks 25th, nearly at the bottom of the 30 emerging markets incorporated in the study.
