While China has emerged as the top emerging retail destination for big Western chains, they are widening their empires to the less well-known markets of Kuwait, Peru and Chile, which have been more insulated and resilient to the ravages of the global recession, according to a survey by AT Kearney, the global management consultancy. Hana Ben-Shabat, a partner at AT Kearney, said: "Reliance on developing countries for future growth is no longer a 'nice to have' but a necessity. Establishing operations in a portfolio of countries both large and small offers the best path to global success for retailers."
Many of the UK high street's biggest names, including Marks & Spencer, Debehams, Topshop and Tesco, are extending their already substantial international presence to compensate for modest growth in the mature UK market. Derek Lovelock, the executive chairman of Aurora Fashions, which operates the fashion chains Karen Millen, Coast, Oasis and Warehouse, said: "Most of us are pretty saturated in our home markets and we recognised that a while ago."
Aurora's overall international business has grown by 63 per cent in the past three years; and overseas now accounts for a greater proportion of Karen Millen's sales than the UK.
AT Kearney's Global Retail Development Index, which ranked 30 emerging countries in terms of the urgency of western retailers to launch there, put China as the top destination in 2010, up from third last year.
Ms Ben-Shabat said: "One of the main reasons is that the Government's stimulus package really seemed to work. In China, we still see the growth of the middle class and the movements from the rural areas to urban areas. While some of the big cities [such as Beijing and Shanghai] are saturated, there is still huge potential in some of the second-tier cities."
Aurora's Mr Lovelock says: "China is similar to Russia. There is a lot of retail space opening up and there is a strong appetite for international [chains] and particularly strong English fashion brands."
In fact, nearly 80 per cent of the retail executives surveyed by AT Kearney cited one of China, India, Brazil and Russia as markets on their company's plans for short-term international growth.
However, the most striking finding of AT Kearney's survey is the diversity of the top-ranking countries. For instance, the Middle East accounts for three of the top 10, with Kuwait ranked second, Saudi Arabia fourth and the United Arab Emirates seventh.
UK retailers with a presence in Kuwait include Bhs and Jaeger, as well as Debenhams which also has stores in Iran, Jordan, UAE and Qatar.
Amanda Burrows, a partner at Geek Brand Consulting, the retail brand consultancy, said: "Spending power is the main reason for opening in the Middle East. People in the Middle East love European brands and the mark-ups can be a lot higher than in your home country. A high street brand can be seen as a premium label if they get their marketing right."
When Tunisia, Morocco, Egypt, Algeria and Turkey are included, the Middle East and North Africa account for eight of the top 21, says AT Kearney. For instance, Debenhams launched in Egypt and Malta earlier this year.
Another region that has been more resilient to the global downturn is Latin America, which has four countries in the top 10: Brazil ranked fifth, Chile in sixth, Uruguay in eighth and Peru in ninth.
Ms Ben-Shabat said higher personal incomes and improving business conditions are attracting foreign investors and store groups are embracing the trend towards organised retail formats in Latin America.
But sliding down the table are India, to third from top spot last year, and Russia, falling eight places to tenth.
Ms Ben-Shabat says the economy in Russia was hit "badly" by the recession and other risk factors, such as politic issues, have also taken the shine off the country, although it remains an attractive market. On India, she says retail growth will continue, but an influx of foreign players, "limited and expensive desirable retail estate" and foreign investment restrictions have pushed the country's retail market closer to maturity.
UK retailers will no doubt continue to expand overseas, particularly as the UK consumer looks to be in for a rocky ride, with a series of austerity measures expected in tomorrow's emergency Budget.
Martin Crossley, a partner at King Sturge, the international property consultancy, said: "European and US retailers are now more secure at home and looking for growth opportunities. With no new developments in their home markets and almost no like-for-like sales growth, they need new markets."
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