We are seeing the start of a rebalancing of the global economy that will have a huge impact on the global retail market.

Speaking at The World Retail Congress in Barcelona, Deloitte director of global research Dr Ira Kalish said emerging markets such as China would provide the growth opportunities for Western retailers and, in turn, retailers from emerging markets will expand internationally and feature heavily among the top ten retailers.

Kalish explained that consumer spending in the US had flattened because of the sharp downturn in the housing market. Prior to the downturn, more than half the increase in US consumer spending could be attributed to equity withdrawals from property – something that consumers are no longer doing. “This has big implications for the rest of the world,” he added. “We’re going to have a sustained period of financial turmoil.”

During the downturn, Kalish said retailers with the strongest brands are gaining market share, because they can command price increases. Brand management and clear differentiation are becoming increasingly important. He added: “We always go through cycles. It’s nothing to be alarmed about. The good times will return.”

Kalish expects to see the start of a recovery by the end of 2008. He said: “We are going to have a recovery but its going to be a different type of recovery. A slow recovery and transition from a consumer economy to export economy.”

“After the US economy recovers more of its growth will come from exports. And China will see more from imports – that’s where the opportunity is for retailers.”

“The re-balancing of the global economy will benefit Asian retail,” added Kalish.

Now that a much larger middle class is emerging in China we will see more non-food growth and also see more investment in the interior as industry shifts to the inner towns, according to Kalish. He believes there will also be more opportunities for foreign retailers to open in the inner towns and we will see “the emergence of more sophisticated domestic retailers in China itself”.

He warned that in India – one of the other big emerging markets – they are “not developing human capital fast enough to meet demand”. And in Russia, although they place very few limits on foreign retailers, the strong economic growth and consumer spending was pegged largely to the high price of oil.