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Hidden cities set to entice global retailers on the hunt for growth

Deloitte and Planet Retail identify ten of the hottest emerging cities

21 September 2012

As global retailers scour the world for growth opportunities, a new report from Deloitte and Planet Retail has picked out ten urban gems from amongst the world’s fastest emerging markets.  ‘Hidden cities: the next generation of retail markets’ argues that as emerging economies grow and citizens continue to migrate from country to city, an ever increasing proportion of GDP growth will derive from these economic centres.  Retailers are now less focused on identifying new countries in which to expand, but rather new cities, to the extent that in large countries such as China, retailers will treat target cities as separate regional economies rather than a truly national, integrated economy.

The ten cities profiled in the report are Bogotá (Colombia), Chongqing (China), Ho Chi Minh City (Vietnam), Jakarta (Indonesia), Kolkata (India), Lagos (Nigeria), Lima (Peru), Manila (Philippines), Nairobi (Kenya) and Yekaterinburg (Russia).  They have all experienced rapid economic growth coupled with substantial investment into creating prosperous commercial centres.

Ira Kalish, director of consumer business for Deloitte Research in the United States, comments: “Global retailers are already knowledgeable about some of the major cities of the emerging world.  The aim of the report is to look at those cities that are significant and worthy of attention, but for one reason or another, have not yet received it.  For example, rather than highlight Shanghai or Beijing, this latest report examines Chongqing; it is China’s most populous city but remains largely unknown to many global business leaders.

“While the ten cities represent a diverse range of locations, they are all situated in countries with good growth prospects.  They have a significant population and, on a per capita basis, are all more affluent than the country in which they are located.  As such, they possess a disproportionate share of the discretionary spending power of their countries.  Moreover, as the countries develop, and as there is continued migration from rural to urban locations, the cities will expand in population quicker than the country, and incomes will likely grow faster as well.”

Paul Martin, Managing Director of Planet Retail, says: “Bogotá, the capital and largest city of Colombia, is an excellent example of city which has benefitted from political stability in recent years to once again become a destination for business visitors.  It is the leading commercial centre of the country and boasts a retail sector amongst the most sophisticated in Latin America.  Local retailers have undergone a remarkable modernisation process – in some cases with the help of international partners – in an effort to boost sales and increase market share in a growing economy.  The modern retail sector already represents an estimated 70% of sales in the city and offers an attractive proposition to global retailers.

“Like Bogotá, Ho Chi Minh City has experienced rapid development of modern retailing. Considered the commercial centre of Vietnam, the growth is being fuelled by rising living standards and aspirations, as well as the attractiveness of modern, hygienic stores.  Whilst maintaining a strong local retailer base, the city has become a hot destination for international convenience store brands.  Additionally, with per capita income in the city at almost three times the national average and on a par with neighbouring Thailand, there are a sizable number of consumers with significant spending power.”  

Whilst at the beginning of the development cycle in comparison to Bogotá and Ho Chi Minh City, Lagos and Nairobi demonstrate the emerging opportunities across the African continent.  

Martin adds: “As the former capital of Nigeria, Lagos remains the country’s largest and most important city.  Though still a fairly low level of income, the per capita GDP in the city is about 60% higher than the national average.  However, the cost of living is one of the highest in Africa, pushing a large proportion of the city’s population below the poverty line.  Economic growth in the country has been strong in recent years owing not only to Nigeria’s status as a major exporter of oil, but to increased investment in the non-oil sector.  

“The small but rising percentage of comparatively well-off people in Lagos means there is a decent growing consumer market.  A number of new shopping centres are currently being developed across the city, allowing modern retailers to move into attractive locations and add momentum to the local retail modernisation process.”

Kalish concludes: “The story of human development is one of cities.  They are where learning and innovation take place, where industry is initially concentrated and the services that support a modern economy are located.  We have arrived at the moment when a majority of human beings live in urban areas.  Retail, like all businesses, follows the money – and in emerging markets, the money will be in cities.”

Ends

Notes to Editors:
About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited  (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

About Planet Retail
Planet Retail is the leading provider of global retailing information, from news and analysis to market research and digital media.  Covering more than 10,000 retail operations across 140 markets around the word, many of the world’s leading companies turn to Planet Retail as definitive source of business intelligence.  By joining the latest web technology with over 15 years of retail industry insight, Planet Retail delivers immediate business value to its customers who span the entire retail supply chain as well as financial services, consulting, advertising, IT, property, investment, entertainment and academia.  Planet Retail has offices in London, Frankfurt, Chicago and Tokyo.  For more information: +44 (0)20 7728 5600; info@4c.planetretail.net; www.planetretail.net

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