Business View Magazine - July 2016 9
projects these figures by estimating the impact of
key events such as TPP implementation or China
slowdown on GDP growth in emerging markets.
Emerging market retail sales are then projected as a
function of GDP.
Hana Ben-Shabat, A.T. Kearney partner and co-au-
thor of the study, noted, “Retailers must plan for
multiple futures and be nimble enough to pursue
diverse strategies as the business environment in
emerging markets evolves. Through this combina-
tion of foresight and agility, retailers can seize op-
portunities no matter what the future holds.”
The study identified three global forces of change
that will define the business world in 2030:
• Rising geopolitical instability. Geopolitical instabil-
ity—including conflicts in the Middle East and the
corresponding refugee crisis, Western World sanc-
tions on Russia, and tensions in the South China
Sea between the U.S. and China—is increasing.
• Persistent economic uncertainty. Emerging mar-
ket economies in Africa, the Middle East, and South
America are suffering from lower demand from Chi-
na, falling commodity prices, a dramatic drop in oil
prices, and a slowdown in growth in China. Brazil is
paralyzed by political upheaval and is headed for a
significant recession.
• Accelerating technological adoption. The acceler-
ated adoption of e-commerce in emerging markets
has transformed the retail landscape, for better and
for worse. Many retailers have taken advantage of
e-commerce as a low-capital, low-risk way to enter
markets or expand into rural areas.
Erik Peterson, A.T. Kearney partner, managing direc-
tor of the Global Business Policy Council, and co-
author of the study, stated, “How these forces play
out will be central to how retailers optimize their in-
ternational portfolios going forward. There are two
high-impact, high-uncertainty factors that have the
potential to transform international retail: the de-
gree to which emerging markets will be open to
business, and the degree of technology adoption in
those markets.”
Using a scenario-based approach around these two
major factors of change, the authors generated four
plausible and compelling scenarios for the future,
with vastly different implications for international re-
tailers.
• Seamless Dreams. In this scenario cross-border
integration and rapid technology adoption create a
highly favorable environment for international retail
expansion.
• Back to the Past. Insular politics, economic reces-
sion, and a lack of technology infrastructure force in-
ternational retailers to return to their home markets.
• Urban Rise, Rural Demise. Governments embrace
open trade, but consumer backlash against technol-
ogy limits retailers to urban centers.
• The Technology Wedge. This scenario describes
a fragmented society in which only countries with
pre-existing physical and digital resources offer ex-
pansion opportunities.
Mike Moriarty, A.T. Kearney partner and co-author
of the report observed, “The global retail landscape
can anticipate billions of new middle-class consum-
ers over the next decades in sub-Saharan Africa and
South Asia, and technology can help us to serve
them profitably—or not. Consumers everywhere
want healthful and nutritious food and personal care
products that enhance their health and well-being,
and they want these to be accessible and affordable.
Global retailers play an important role in making this
happen, but government and social policy will have
a big impact on their ability to lead and succeed.”
Depending on which scenario plays out, the oper-
ating environment and business potential for retail
in emerging markets could differ dramatically and
emerging market retail sales could fluctuate by
more than $5 trillion.
