The emerging markets represent a significant growth opportunity for retailers, but is not without risks and challenges, according to a panel of major international retailers and retail experts speaking at the World Retail Congress in Barcelona.

CB Richard Ellis head of EMEA research and development Dr Nick Axford said: “It is the growth of these countries that make them so appealing. The BRIC countries are showing two or three times the growth of the developed countries.”

He added that while the GDP of these countries is relatively low, the populations are huge (approaching 1 billion in both India and China) and there is a rapidly growing middle class.
Mango deputy general manager Daniel Lopez agreed that demographically these markets represent very interesting opportunities. Tiffany & Co president and vice chairman James Quinn agreed: “Today’s emerging markets are tomorrow’s mature markets.”

Aldo Group International vice president Norman Jaskolka said: “For us we see emerging markets as markets where we can grow in a relatively short space of time and get market share that would take a long time in more mature markets.”

The opportunities may be huge, but entering emerging markets is not without risks.
Lopez warned: “Our opinion on emerging markets is that there is a wide variety so you have carefully analyse each opportunity.”

Quinn said: “We learn each time how to adapt and how to adapt quickly to local market conditions. You have to make move judiciously to make sure you don’t trip over.”

The panel agreed that franchising was the best way to grow rapidly in these markets, but finding the right partner is essential. Lopez said: “Local partners have been the drivers of our growth. Franchising for us is something that is very natural to us. It’s been in our DNA from the beginning.”

Jaskolka added: “If we did it on our own we would do it one market at a time. Local partners have the real estate contacts and the overall capacity to operate locally that we wouldn’t be able to do on our own.”

The panel agreed that being able to adapt your offer to the local market is fundamental and that is one area where retailers expanding internationally have tripped up before.

However, maintaining standards and brand management when operating via third parties remains a constant challenge.

Mango said: “We do 95 per cent of the systems and operations and present it very well, but at the end the last five per cent – the execution – that’s what makes the difference.”

When finding real estate in emerging markets there some unique challenges. RE said: “The majority of shopping centres are badly designed and poorly managed and they have a limited understanding of retailers’ requirements.”