Russia is best for retail expansion

Russia ranks above China and Eastern Europe as the best opportunity for international retail expansion, according to a report by AT Kearney.

Falling inflation and the level of consumer spending power in key cities make it attractive, despite an unstable economic and political climate.

The report states: 'Retail density is low; only six international retailers have settled there and the retail sector is booming.'

The AT Kearney Global Retail Development Index (GRDI) ranks countries according to economic and political risk, retail area per 1,000 inhabitants, number of international retailers already present and time pressure. China slipped from first place last year to third this time because of the rate of increase of foreign entrants.

The Slovak Republic was the second most attractive location, with Hungary, India and Turkey in fourth, fifth and sixth place respectively. Columbia and Israel were the least appealing places in the 30-strong list, which did not include any Western European countries.

According to researchers, further analysis of the Russian market confirmed its position. It is estimated to have inflation of 16 per cent this year, compared with 84 per cent in 1998. It also has the largest food market in Europe, worth US$58 billion (£36.37 billion).

The report criticised retailers' lack of focus on timing and flexibility when launching into new markets, despite most paying attention to format types and methods of entry.