Vietnam and the Middle East are set be the next targets for investment from international multiples such as Tesco, Carrefour and Wal-Mart, according to AT Kearney's Global Retail Development Index.

The management consultant's index ranks the top 30 emerging countries according to their desirability for would-be investors, based on ratings for economic and political risk, retail market attractiveness and retail saturation levels.

India, Russia and China occupy the top three spots on the index due to their booming economies. They are followed by Vietnam in fourth place - and likely to face a rush of investment, said Hana Ben-Shabat, AT Kearney partner and co-leader of the study. "Vietnam is very attractive to foreign retailers at the moment. Casino and Metro are there already, but with very little prominence, and there are a few domestic retailers. But Vietnam joined the WTO last year and the government is continuing to lift restrictions.

"Vietnam also has a growing population with a lot of young workers compared with China's ageing population. That makes it a great market for investment."

Meanwhile, the United Arab Emirates, in particular Dubai, was experiencing a "retail explosion". Carrefour and Casino had already set up shop there, but the window of opportunity was "wide open" for others, such as Tesco, since the region's young grocery market was coupled with a huge GDP.

But there were challenges ahead in China and India, where Tesco, Carrefour and Wal-Mart were all looking to expand, said Ben-Shabat. Opportunities for grocery retailers were diminishing in first-tier cities such as Beijing and Shanghai, because they were reaching saturation point.

Foreign investors were being forced to look at second-tier cities, which could prove challenging in terms of infrastructure and "consumer readiness".

Inhabitants of second-tier cities were less exposed to Western brands, so the grocers would have to develop different strategies to persuade consumers to spend.

But Ben-Shabat added: "When we are talking about second-tier cities in China, that could still mean a market of 20 million people, so there is still a great opportunity."

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