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EMs Retail Market Could Top $17.8 Trillion

EMs Retail Market Could Top $17.8 Trillion EMs Retail Market Could Top $17.8 Trillion

Emerging markets retail sales could grow by 4.4% per year to reach more than $17.8 trillion in 2030 compared to $9.2 trillion in 2015, according to a report which depicts four possible scenarios for retail in emerging markets.

The new report from global management consulting firm A.T. Kearney, “Emerging Market Retailing in 2030: Future Scenarios and the $5.5 Trillion Swing,” explores future possibilities using a scenario-planning framework, TradeArabia reported.

In the most pessimistic scenario, sales would be little more than $12 trillion. The result is four potential futures where the difference between best- and worst-case scenarios could amount to more than $5 trillion in retail sales in 2030.

The analysis projects these figures by estimating the impact of key events such as Trans-Pacific Partnership implementation or China slowdown on gross domestic product growth in emerging markets. Emerging market retail sales are then projected as a function of GDP.

Hana Ben-Shabat, A.T. Kearney partner and co-author of the study, noted, “Retailers must plan for multiple futures and be nimble enough to pursue diverse strategies as the business environment in emerging markets evolves. Through this combination of foresight and agility, retailers can seize opportunities no matter what the future holds.”

The study identified three global forces of change that will define the business world in 2030:

Rising geopolitical instability: Geopolitical instability—including conflicts in the Middle East and the corresponding refugee crisis, western sanctions on Russia, and tensions in the South China Sea between the US and China—is increasing.

Persistent economic uncertainty: Emerging markets’ economies in Africa, the Middle East, and South America are suffering from lower demand from China, falling commodity prices, a dramatic drop in oil prices, and a slowdown in growth in China. Brazil is paralyzed by political upheaval and is headed for a significant recession.

Accelerating technological adoption: The accelerated adoption of e-commerce in emerging markets has transformed the retail landscape, for better and for worse. Many retailers have taken advantage of e-commerce as a low-capital, low-risk way to enter markets or expand into rural areas.

Shamail Siddiqi, principal at A.T. Kearney Middle East, commented: “How these forces play out will be central to how retailers optimize their international portfolios going forward. There are two high-impact, high-uncertainty factors that have the potential to transform international retail: the degree to which emerging markets will be open to business, and the degree of technology adoption in those markets.”

Financialtribune.com