Emerging Markets: Overview and Growth Opportunities in Non-Grocery and Non-Store Channels

Strategy Briefing

About This Report

Jan 2015

Demographic changes in emerging markets are strongly impacting the way consumers shop. Retailers have to adapt accordingly to cater to a new aspirational middle class, with access to higher levels of discretionary spending. This briefing assesses the non-grocery and non-store channels in emerging markets, as well as the challenges faced by local and international retailers present in the region.

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Emerging Markets: Overview and Growth Opportunities in Non-Grocery and Non-Store Channels

BRICs drive dynamic non-grocery growth

The BRIC markets continue to drive emerging regions, accounting for a large and increasing portion of global sales. Growth is being maintained by the booming lower-tier cities, where high levels of discretionary spending combined with a rapid expansion of the middle-class, has contributed to strong growth in the non-grocery and non-store channels across the emerging market countries.

Internet retailing growth limited due to lack of infrastructure

While improving internet penetration and connection speed, has made internet retailing is the fastest growing channel, the lack of infrastructure dampens the otherwise dynamic forecast expansion.

Emerging Market Economies (EME) will represent the ideal audience for m-commerce

While m-commerce is still in its infancy in EME’s, a growing number of consumers in these regions have a mobile internet subscription. For some countries, mobile phones represent the main way to access the internet, suggesting strong growth potential for m-commerce as online sales increase.

International players benefit from growth in emerging markets

The evolution of demographic factors such as rising female employment, urbanisation and a younger population have led to more sophisticated demand. For the apparel and footwear specialists’ channel, this has resulted in more international players being present in EMEs.

EMEs remain a challenge for international retailers

EMEs represent a growth driver for international players, as their domestic markets stagnate, however foreign companies continue to face challenges, such as poor retail infrastructure and high operating costs, when expanding in EMEs.

Introduction

Scope
Key findings

Emerging Markets Drive Global Growth

Emerging markets as main growth driver
Emerging markets will account for half of total retailing by 2018
Retail landscape: Emerging versus developed markets
High level of discretionary spending in Latin America
Younger consumers will boost modern retailing channels
Channel g rowth opportunities in emerging markets

A Closer Look at Selected Non-Grocery Channels: Apparel and Footwear Specialists

Apparel and footwear specialists, a key retail channel in EMEs
EMEs take over apparel and footwear specialists channel by 2019
BRIC countries lead the region alongside Turkey
International players succeed in EMEs thanks to fast fashion
Apparel and footwear specialists is main route to distribution

A Closer Look at Selected Non-Grocery Channels: Health and Beauty Specialists

One third of global sales come from emerging markets in 2014
China becomes the second largest market
Latin American players dominate the channel
Strong sales in China benefits the chemists/pharmacies channel
The Brazilian exception

A Closer Look at Selected Non-Grocery Channels: Electronics and Appliance Specialists

By 2019 emerging markets will account for two thirds of global sales
Demographic changes positively impact the channel
Sales of electronics and appliances gain from urbanisation
Sales of electronics and appliances gain from urbanisation
Local players fare well

Internet Retailing Still at its Beginning

Non-store by far the fastest growing channel over 2009-2014
Continued strong growth in direct selling and homeshopping
Developed markets still dominate internet retailing
Lack of infrastructure inhibits development of e-commerce
Retailers innovate to adapt to local needs
Growing potential for m-commerce
Direct selling still important in emerging markets

Future Outlook

Which channels will provide the best prospects by 2019?
Opportunities and challenges

Definitions and Acronyms

Definitions and acronyms (1)
Definitions and acronyms (2)