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A.T. Kearney: China is top emerging retail market

BY Marianne Wilson

CHICAGO — Retailers looking for opportunities in emerging markets should look East, particularly to China, which ranks as the top country in A.T. Kearney’s annual Global Retail Development Index (GRDI). China, which returns to number one in the GRDI rankings for the first time since 2010, is expected to surpass the United States as the world's largest retail market by 2018.

Despite having the lowest GDP growth in more than 20 years, China’s performance was unparalleled relative to other developing markets. Its retail growth was an impressive 11.6% in 2014.  China's retail market is expected to grow to $8 trillion — double the size of the U.S. market — by 2022, according to the report, which ranks 30 countries in emerging markets via two dozen “retail-specific” and “macroeconomic” metrics. (

"As a result of turbulence in the Middle East, Latin America, and Russia, the past year has seen a more cautious approach to international expansion into some developing markets,” said Mike Moriarty, A.T. Kearney partner and co-author of the GRDI.

“However, retailers are taking a longer-term view of emerging markets, with fewer exits, and more targeted investments in areas of growth."

Overall, Asia is a regional winner in the 2015 GRDI, outpacing other regions despite a slowdown in growth, according to the report.  While China came out on top, small countries, including Mongolia (reemerging at 5th) and Malaysia (9th for the second year in a row), also cracked the top 10. India also rises in the rankings, benefiting from economic stability and regulatory reforms aimed at improving ease of doing business, although restrictions on multi-brand retail remain.

In addition, e-commerce continues to grow rapidly, with Asia's market size ($525 billion) now exceeding that of North America ($483 billion). As Internet penetration expands and online offerings improve, Asia's e-commerce retail sales could grow as much as 25 percent annually. The online channel will continue to be a major focus for retailers in the region in the coming years.

Here is a look at how other regions fared in the rankings:

Latin America: Latin America as a whole once again has a prominent position in the GRDI, with three countries in the top 10. However, the region has begun trending downward in the rankings, and regional GDP growth sank to roughly 1.3% in 2014 amid concerns over deep-rooted structural problems since the end of the commodities boom.

Middle East: In the past year, the Middle East has faced substantial economic and political upheaval, and the ranking drops in this year's GRDI reflect the varied environment: market saturation (the United Arab Emirates), increased country risk (Jordan), and GDP slowdown from falling oil prices (Kuwait).

Qatar makes an impressive GRDI debut, in 4th place, highest in the Middle East behind a stable economy, high GDP per capita, and high levels of retail spending. With population growth and an increasing number of expats, Qatar is no longer a market to ignore, the report advises.

Sub-Saharan Africa: Sub-Saharan Africa is a region of massive potential. Three countries (Botswana, Nigeria, and Angola) are ranked in this year's GRDI, and three more (Zambia, Namibia, and Ghana) are on the verge of breaking into the top 30 in the near future. The region presents exciting opportunities that are just starting to open up, the report finds, supported by rising household incomes, fast urbanization, and a growing middle class.

Central Asia and Eastern Europe: This region's top performers in the GRDI are its small gems — Georgia, Armenia, and Kazakhstan — whose unsaturated retail environments are attractive opportunities for international players. Azerbaijan has become a luxury hot spot as more companies seek to tap into the country's oil-driven wealth.

Russia, which has the world's sixth-largest GDP, plunges in the rankings behind worsening economic conditions and political tension, yet it remains too big to ignore, according to the study.

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Click here to read the full 2015 GRDI report.

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Dollar Tree announces plan to deal 330 Family Dollar stores

BY Michael Johnsen

CHESAPEAKE, Va. — Dollar Tree and Sycamore Partners, a private equity firm specializing in consumer and retail investments, on Friday announced that they have entered into a definitive agreement pursuant to which Dollar Tree will sell Sycamore Partners a divestiture package of 330 Family Dollar stores contingent on completion of Dollar Tree's pending acquisition of Family Dollar Stores. 
 
The 330 stores represent approximately $45.5 million of operating income for Family Dollar. Sycamore Partners intends to operate the 330 stores under the Dollar Express banner.
 
“The divestiture presents Sycamore Partners with a unique opportunity to continue their track record of meaningful growth and successful retail investments,” stated Bob Sasser, Dollar Tree CEO.
 
“We look forward to drawing on our extensive experience with similar corporate carve-outs in acquiring and operating this attractive portfolio of 330 stores, which have an annual run-rate of approximately $500 million in sales,” said Peter Morrow, a managing director at Sycamore Partners. "We have a proven track record of retail success and an experienced leadership team. We are eager to better serve the needs of customers in these markets by providing an improved shopping experience."
 
The divestiture announced today enables Dollar Tree to address Federal Trade Commission concerns, the company noted. Both the divestiture and the pending acquisition of Family Dollar remain subject to review by the FTC and satisfaction of other customary conditions. Dollar Tree continues to make progress with the FTC and intends to close the merger with Family Dollar in early July 2015 after securing FTC clearance.
 
Wachtell, Lipton, Rosen & Katz and Williams Mullen are acting as legal counsel to Dollar Tree in connection with the transaction. The Law Offices of Gary M. Holihan, Kirkland & Ellis and Winston & Strawn are acting as legal advisors to Sycamore Partners.
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Dollar General eclipses 12,000 store count

BY Michael Johnsen

GOODLETTSVILLE, Tenn. — Dollar General on Saturday opened its 12,000th store in the small, historic town of Juliette, Ga. 
 
It is exciting to open our 12,000th store and move into new communities where we can serve customers with everyday low prices, convenience and great service,” said Rick Dreiling, Dollar General’s chairman and CEO. “I want to thank our more than 109,000 employees for their dedication to our customers. That focus on service remains the backbone of our success and we expect to continue to expand our business, create new career opportunities and make a difference in the communities we serve.”
 
As part of today’s community celebration, the Dollar General Literacy Foundation presented a donation of $12,000 to Monroe County schools in support of literacy initiatives and the company’s mission of Serving Others. Katherine B. Sutton Elementary School, T.G. Scott Elementary School, Samuel E. Hubbard Elementary School, Monroe County Achievement Center, Monroe County Middle School and Mary Persons High School each received $2,000 donations.
 
Dollar General anticipates opening 730 new stores in 2015 and plans to remodel or relocate an additional 875 stores. 
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