NEW YORK, Oct. 6, 2004 (PRIMEZONE) -- PricewaterhouseCoopers launched today the third edition of its Retail & Consumer study, "From Beijing to Budapest: New Retail & Consumer Growth Patterns in Transitional Economies," at the Global Retail & Consumer Business School in Dusseldorf. The study assesses growth opportunities in fourteen countries in Asia, Central and Eastern Europe (CEE) and Russia; it has determined six countries with "GO" recommendations in terms of investment: China, India, Turkey, Thailand, Malaysia and Hungary.
"Our study finds that transitional economies across the globe offer varying degrees of challenge and opportunity for the retail and consumer investor, and while the modernization of the retail and consumer sector is for the most part driven by multinationals, all areas are seeing the emergence of regional players," said Alec Jones, Global Industries Leader, PricewaterhouseCoopers.
The study determines that the most immediate opportunities in the retail and consumer sector lie in China and that India offers more long-term potential for investment in the sector. Turkey, Thailand, Malaysia and Hungary are considered investment havens that offer general opportunities for development in the short or longer term.
Niche opportunities exist in South Korea, Poland, Romania, Czech Republic, Singapore and Slovenia despite the fact that they are already saturated as far as the size of the market is concerned. The study also shows that Russia and Indonesia should be viewed with caution and seen as long-term investment options.
Overall, there are three major trends that emerged after assessing the challenges and opportunities within the fourteen countries covered by the report:
- Price sensitivity is having a significant impact on brand management and the development of private label; - Expansion from the increasingly saturated major cities into small, regional cities; - The development of shoppingtainment -- shopping centers with malls and the creation of adjacent leisure activities.
"It is expected that as certain retail and consumer investors take a break after a first phase of investing in these economies that local players will begin capitalizing on their increasing knowledge of modern retailing and their understanding of local cultures to make their presence felt more strongly. This, together with the consolidation of local and foreign retailers' investments, will toughen the competitive environment considerably in the future," said Jones.
Additional findings on the opportunities and challenges facing these high growth markets follow:
Immediate Opportunities in China
- China is the biggest consumer market in the world and membership
in the WTO (World Trade Organization) will improve business
conditions for companies investing there.
- National and regional brands are still extremely strong, and
multinationals have to be aware of the extent to which they need
to adapt their products and marketing to the Chinese consumer.
- The Chinese government will play a key role in developing an
environment conducive to long-term and sound economic
development.
India's Emerging Economy Offers Longer-Term Opportunities
- Consumer goods companies have already established themselves with
success in India; there is huge potential for future development
as the country modernizes.
- Currently, foreign retail and wholesale investment is restricted
to cash & carry outlets and, to a lesser extent, e-commerce.
- India's outstanding capabilities in IT will ensure an extremely
rapid and dynamic development in the modern retailing space.
- The new government is designing policies to help improve the
lifestyles of its 300 million people. Partnerships between
foreign retail and consumer goods companies with local firms will
undoubtedly contribute to the improvement of lifestyles and
higher levels of employment and consumption, when this becomes
possible in the future.
Investment Havens
- Turkey, with its young and growing population, is an obvious
target for companies in the retail and consumer sector. A huge
effort is being made to modernize the Turkish economy and
accession to the EU would make a significant impact on the
country's economic development.
- While regulatory restraints are still an impediment in Thailand,
there is plenty of potential for development in this country.
Increasing consumer demand and the existence of a burgeoning
middle-class make Malaysia an extremely interesting destination
for investment. Additionally, a young population, low
unemployment and a growing modern retail sector all contribute to
this country's extremely attractive investment climate.
- While Hungary has a fast maturing retail and consumer market,
there are still opportunities left for investment there for
hypermarkets, convenience stores and specialized outlets
especially outside the capital.
Niche Opportunities
- South Korea, Poland, Romania, Czech Republic, Singapore and
Slovenia are already saturated as far as the size of the market
is concerned. Although a certain number of general retail
development opportunities in these countries still exist, retail
and consumer companies would be better advised to focus on niche
investments.
- Singapore and Slovenia's prosperous populations make them targets
for niche opportunities.
- Romania, with its current limitations on property and land
acquisitions and the limited availability of skilled staff and
management, also make it a better destination for small, targeted
retail opportunities.
Opportunities for the Long Term
- Russia is a potentially huge mass consumer market for the
investor and has one of the highest current world growth rates.
However, the country is set for an extremely fragile economic,
political and social framework.
- For Indonesia, the decisions made by its government will have a
profound influence on the country's development in the long term.
The changing political and regulatory environment is an
impediment to efficient and rapid development for foreign
companies.
For more information on the third edition of the PricewaterhouseCoopers Global Retail & Consumer study, "From Beijing to Budapest: New Retail & Consumer Growth Patterns in Transitional Economies," please go to: www.pwc.com/growth.
For a copy of the executive summary please contact: kalexander@porternovelli.com.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
(c) 2004 PricewaterhouseCoopers. All rights reserved.
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Methodology
The third edition of PricewaterhouseCoopers' Retail & Consumer Thought Leadership Study, "From Beijing to Budapest: New Retail & Consumer Growth Patterns in Transitional Economies," covers a market of nearly half of the world's population, living in the economies with the highest growth potential: China, India, Indonesia, South Korea, Malaysia, Singapore, Thailand, Czech Republic, Hungary, Poland, Romania, Russia, Slovenia and Turkey.
The survey was conducted in the fourteen selected countries between April and July 2004, using a generic template. The template was structured around three main investigation topics:
- Economic overview and regulatory environment; - Demographics and consumer behavior; - Retail & consumer goods sector: performance, challenges, opportunities and emerging trends
The retail and consumer sector as analyzed in the study comprises the following information:
- Distribution activities (wholesalers, distributors, retailers); - Suppliers of consumer packaged goods (CPG); - Multinational, regional and local players from both activities; - Food and non-food, i.e. - For retailers: convenience stores, department stores, supermarkets, hypermarkets, supercenters, specialty retailers, and online retailers - For CPG companies: food, beverage, tobacco, consumer products, household and personal products and luxury good.