According to the seventh AT Kearney annual Global Retail Development Index (GRDI), India has lost its top position as the global market for retail investments to Vietnam, and has slid down to the fourth place.
Announcing this, Saurine M Doshi, partner at AT Kearney India, said: “India has been at the peak of the Index for the past few years, mainly due to the steep and consistent rise in the income levels of Indian consumers, but going forward, its inability to open up the FDI regulations for foreign retailers will affect the industry’s competitiveness more than ever before.”
Citing reasons for Vietnam’s leap from the fourth position last year, the report said that the strong GDP growth, changes to the country’s regulatory structure favouring foreign investors and increasing consumer demand for modern retail has been responsible for the growth. Moreover, the Vietnamese government is expected to remove controls on 100 percent foreign ownership of retailers in the country and has established a new program to develop wholesale and retail real estate by 2010.
India, Russia and China, the top three countries in last year’s GRDI, have dropped to second, third, and fourth place respectively in the 2008 index. The report said that while these countries remain important retail investment destinations, high real estate costs in large cities and growing competition have decreased their attractiveness and forced retailers to look for opportunities in Tier II and III cities.