"Viet Nam has ended India’s three-year reign as the most attractive emerging market destination for retail investment, according to the seventh annual Global Retail Development Index (GRDI)," AT Kearney announced in a statement.

The firm attributed Viet Nam’s leap from fourth in the 2007 GRDI to first place in 2008 to strong gross domestic product (GDP) growth, changes to the country’s regulatory structure favouring foreign investors, and increasing consumer demand for modern retail concepts.

While Viet Nam’s retail market is valued at US$20 billion, it is minuscule compared with India’s market at around $510 billion. However, the absence of competition plus 8 per cent GDP annual growth make it an attractive expansion opportunity for global retailers, according to the company.

"Vietnamese consumers are among the youngest in Asia ,with 79 million below the age of 65. They increased their consumer spending by more than 75 per cent between 2000 and 2007.

The country is growing increasingly urbanised and concentrated with more than 1 million people a year migrating into HCM City and Ha Noi," the firm reported.

The firm was also optimistic about expectations that the Government would remove controls on fully foreign-owned retailers in the country, under a new program to develop wholesale and retail real estate to 2010.

"The Vietnamese consumer is seeing rapidly growing per capita income and regulations are drastically opening up the market for new entry," said Mike Moriarty, a partner with AT Kearney and co-leader of the GRDI.

"Now is the perfect time to get involved. It won’t be easy and you’ll be a pioneer, but now is the moment. Currently the top five organised retailers in the country, including Sai Gon Co-op, G7 and Casino, have less than 3 per cent of the market," he said.

India, Russia and China, the top three countries in last year's GRDI, fell to second, third and fourth, respectively.

The region has already seen the recent emergence of modern retailers in Thailand, the Philippines and Malaysia.

Since 2001, the GRDI study of retail investment attractiveness on 30 emerging markets helped retailers prioritise their global development strategies and points out the urgency for retailers to enter the country.

The study is based on a set of 25 variables, including economic and political risk, retail market attractiveness, retail saturation levels, and differences between GDP growth and retail growth.

The GRDI also focuses on opportunities for mass merchant and food retailers, which are typically the bellwether for modern retailing concepts in a country.

"The emerging markets will provide the engines for continued growth and profits for global retailers as sales in their home countries turn sluggish," said Hana Ben-Shabat, co-leader of the study.

A full report on the 2008 GRDI is available at www.atkearney.com.

AT Kearney was established in 1926 to provide management advice for CEOs. The company now serves global clients in all major industries with offices located in 34 countries.