China’s retail growth may have slowed over the past year, but its spot as the second most promising location in the world for retail development still makes it a vital market for brands, according to A.T. Kearney’s annual Global Retail Development report.
The recently released study finds that China has moved up two spots on the list since last year for retail investment potential, ranking second in the world only behind Chile. The report also finds that China’s retail growth rate is slowing: the country entered a “maturing” market stage in 2014 after starting the “peaking” phase in 2003.
Despite a spate of new department store openings in 2013, including Lane Crawford, 10 Corso Como, and Galeries Lafayette, the report also finds that the department store scene is “struggling” at the moment. It states that store totals dropped by over 4 percent with “minimal” total revenue growth in 2013.
There are bright spots leading to the overall higher rankings, however. Total retail sales grew 13 percent for 2013 to total $2.6 trillion, and consumer confidence rose. While high-end luxury sales fell 2 percent overall, “light luxury” brands targeted toward the middle class saw significant growth. “Even with less-bullish economic growth, China remains impossible for retailers to ignore,” says the report, which argues that urbanization, rising incomes, and population growth will fuel future spending.