Not long ago retailers were eyeing the BRIC nations – Brazil, Russia, India and China – for opportunities they provided, as together these four countries account for roughly 19 per cent of the world economy today. But now it’s time to move ahead with China slowing down, though it still remains a lucrative market for international retailers, there seems to be an erratic urgency amongst retailers to search for new emerging markets. Even manufacturers and exporters are looking for new markets as the traditional ones are stagnating and few adventurous companies have already made the movement to explore emerging economies for export opportunities. Apparel Online picks up a few unconventional emerging retail markets that are being vied by retailers due to their growing economies, rising incomes, and young and expanding population. While these markets are still at their nascent stage of development, the latent potentials are worth exploring.
Indonesia
Indonesia is an upcoming emerging market with 30 per cent of its population aged under 15 and only 6 per cent aged over 65, making it a high growth retail market in the middle- to longterm. According to Euromonitor International, Indonesia has showed the strongest GDP growth between 2008 and 2013. The retail sales in the region are expected to grow between 4-5 per cent annually till 2015. Though predominantly rural, with about 45 per cent of its population classified as rural, but Greater Jakarta is believed to be the world’s second most populated urban area with over 26 million people. “The influx of foreign retailers into Indonesia is boosting demand for retail space and shopping mall development,” confirms Jones Lang LaSalle in their press release. Due to this various international retailers are either expanding or planning to make their presence felt in the country, including Uniqlo, Lotte, Galeries Lafayette, H&M, IKEA, Carrefour, Cartier, Fossil, Roger Dubius and many more. McKinsey & Co., a US research company also reveals that the number of middle-class consumers in Indonesia is forecast to triple to 135 million by 2030 from 45 million this year, and income per capita to double to US $ 6,000 by then from the current US $ 3,500.
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Mexico
According to Euromonitor International, Mexico with almost 79 per cent of its population living in urban areas records highest per household disposable income at US $ 32,282, and which is well connected through internet. Retail is one of the biggest sectors in the Mexican economy, accounting for 7 per cent of GDP and employing 10 per cent of the labour force. It also holds enormous potential to help drive Mexico’s economic growth. The BMI Research report confirms that Mexico between 2015 and 2019 will see rising total household incomes, falling unemployment and the relative stability of the economy that will continue to provide opportunity for foreign investment within the retail sector. “The growing affluence of the population is a key driver behind our forecast that sub-sectors comprised largely of non-essentials will experience strong rates of growth, as demand increases, throughout the forecast period,” reveals BMI Research’s press release. Mexico’s economy also benefits from an expanding US economy, as the north of the border brings more tourists and Mexican citizens working in the States increase the remittances they send back home. Such is the market that sees the presence of various international brands like Prada, D&G, Marc by Marc Jacobs, Coach, Armani, Walmart, Mango, Tony Burch, GAP, H&M, Debenhams, to name a few.
Colombia
With the fourth largest economy in Latin America, measured by GDP, Colombia’s retail sector presents many opportunities for international and domestic retailers, as well as investors. Years of economically sound policy have lowered barriers to entry for international brands, and sustained economic growth has brought lower unemployment rates and higher levels of affluence for a significant portion of the population. According to BMI Research the economy is set to expand, with year-on-year (YOY) real GDP growth forecast at 3.1 per cent and 3.5 per cent in 2015 and 2016, respectively. Furthermore, the number of households in the middle-class bracket will increase by over 7 per cent. In 2014, Colombia exhibited strong growth through non-store retailing, accelerated by the expansion of internet, claims Euromonitor International. With a greater influx of luxury brands such as Salvatore Ferragamo, Coach, Longchamp, Hugo Boss, Armani Exchange, Louis Vuitton, Cartier, Bvlgari, etc., Colombia also boasts of mass favourites such as ZARA, Mango, Forever 21, etc.
Poland
Due to Government reforms, Poland is seeing more influence in Europe, which is helping it to become a promising emerging market economy. Though millionaires are rare in Poland, but luxury products are no longer rare sight in Warsaw’s shops with luxury brands such as Burberry, Kenzo, Zegna, Hugo Boss, etc. Although the luxury brands are limited in count, but due to Poland showing signs of a stable economy, many retailers are vying to enter the market. Apart from a few luxury brands, mass-market brands such as H&M, ZARA, Mango, Adidas, GAP are satiating the thirst of Polish consumers. According to Cushman Wakefield, Poland’s retail market outlook remains positive. The increasing employment rate as well as falling food and oil prices are expected to boost domestic demand and private consumption.
Panama
Panama’s economy has been growing at an average of about 10 per cent annually over the past few years, but what puts it on the retail list is its growing status such as Singapore’s as a super hub for many international brands. With about 9,900 ultra-high networth individuals currently living in Latin America, Panama now has more people with assets over US $ 30 million than in the Middle East and Russia combined. According to a report by Frank Knight, a property consultancy firm, Panama’s super-rich are growing at the second highest rate among all Latin Americans. The World Bank estimates that the region’s middle classes will rise from 30 per cent of the population today to nearly 50 per cent in just 15 years. Preferred high-end brands like Hermès, Zegna, Canali, Bally, Chanel, Puig, Ralph Lauren, Michael Kors, Tommy Hilfiger, Calvin Klein, Coach and Gucci exist in Panama, while it also sees the presence of high-street players such as Zara, Forever 21, GAP, Lacoste, Adidas, Nike, etc.
Iran
On the verge of a diplomatic breakthrough with the West, Iran has been shrouded by decades of fatwas and sanctions, which has restricted its appetite for the fashion market. But the amount of illegal shipping of handbags, apparel, etc. from Dubai is no secret for anyone. Industry analysts believe that with the right set of political and economic reforms, Iran can be a gold mine for consumer brands from the West. Through the years, Iran’s elite have grown rich off oil exports to countries such as China, whereas its urban middle-class are young, educated and exposed to the humungous numbers of western fashion brands. According to New World Wealth, a consultancy firm, Iran ranked second in the Middle East in terms of the growth of high-net-worth-individuals (those with net assets over US $ 1 million). Between 2000 and 2014, the number of Iranian millionaires increased 194 per cent to 32,100, which is nearly as many as they are now in Kuwait. While many international brands are still waiting for the sanctions to ease out, a few such as Escada, Benetton and Mango have already entered the market to gain first-hand advantage.
