Emerging Markets are attractive, but there's no place like home
Opportunities for retail growth remain strong despite concerns about protectionism impacting global supply chains in a number of emerging markets, according to Deloitte Chief Global Economist Ira Kalish, speaking at World Retail Congress in Amsterdam.
“For a global retailer you want good demographics, low-hanging fruit in terms of opportunities and a growing consumer market,” he said. “India, Africa - although they are fragmented - plus some Middle East countries and emerging Asian countries, and some parts of South America.”
However, Kalish warned: “If I was a retailer I would open in my local market because the hardest thing to do is launch in a place you don’t know very well.”
Looking at the impact of trade tariffs he said that if the US continues with its current action then this will “substantially disrupt” supply chains.
“A backlash about globalisation has meant companies involved in global supply chains have put investments on hold. That will be negative for consumers and retailers,” said Kalish. “But the question is who this actually punishes. It is the middle and lower income families will be most impacted by higher prices.”
Looking at retail developments, Kalish predicted that online will continue to grow as a percentage of total retail sales. “Store based retail remains very large but a lot of online research and social media goes on before people buy in stores, therefore commoditising products,” he said. “So retailers have to make more theatre in their stores to make them worth visiting.”
He said that the first impact of artificial intelligence, which is increasingly being used in retail, will be to increase income equality.
However, he predicted that the wider impact might be in changing what career choices people make, as some science and maths- based work is replaced by AI.
He added: “What won’t be disrupted are jobs that require human interaction.”