International retailers eye Mena markets for growth

The Mena region has proved resilient in the wake of the economic downturn and appears poised to recover, the report said. Retail sales are on the rise, driven by higher disposable incomes, urban population growth, a strengthening middle class, and infrastructure investments.

The region's resilience and strength is reflected in the rankings, as it accounts for eight of the top 21 locations on the list. Surprisingly, Kuwait was ranked as the second most promising market for retailers in the world, behind China, and ahead of India. Although Kuwait is small compared to other countries on the index, its urbanized, wealthy consumer population has solid purchasing power, the report noted. As oil prices rise and the global economy recovers, Kuwait's GDP per capital could increase 49% by 2014.

Saudi Arabia continued to perform well on the index, moving up one spot to fourth on this year's list. With an economy that has remained relatively sheltered from the recession and a population of 28 million, the kingdom continues to be provide strong growth opportunities for retailers, the report said.

UAE luxury goods demand decreases

Meanwhile, the UAE dropped from fourth place to seventh on this year's list, as the downturn led to a decline in tourism and decreased demand for luxury goods. However, the country remains a vital growth market for retailers, particularly in health and beauty and consumer electronics, the study said.

"The UAE has been a hot spot for several years and is now entering the next level of maturity," said Dan Starta, Partner and Managing Director, AT Kearney Middle East. "Retailers are looking to build on their stronghold in the UAE to diversify their portfolio across the region and will continue to actively invest in the attractive markets of Saudi Arabia and Kuwait."

Other Mena countries that made the list were Tunisia (11), Egypt (13), Morocco (15), Turkey (18) and Algeria (21).

"The attractiveness of the Mena retail markets provides ample opportunities for regional as well as global retailers," said Martin Fabel, Partner, AT Kearney Middle East. "Our research stresses that establishing operations in a portfolio of countries both small and large offers the best path to global success for retailers."

Overall, China took over the number one spot on the list from India, which was ranked third in this year's report. The full top ten consisted of China, Kuwait, India, Saudi Arabia, Brazil, Chile, the UAE, Uruguay, Peru and Russia. The index ranks 30 emerging countries based on criteria such as country and business risk, market attractiveness, and market saturation.