In the 7th annual Global Retail Development Index (GRDI), a study of retail investment attractiveness among emerging markets, Vietnam has emerged as the number one destination for retail investment, kicking India out of its three-year hold on this position. Vietnamese consumers, among the youngest in Asia, with 79 million below the age of 65, increased their consumer spending by more than 75% between 2000 and 2007.

Vietnam's leap to first place in the 2008 GRDI (from fourth place in 2007) was driven by strong GDP growth, changes to the country's regulatory structure favouring foreign investors and increasing consumer demand for modern retail concepts. The report states that while Vietnam's US$20 billion retail market pales in comparison to India or China, the absence of competition and 8% GDP growth, make it an attractive expansion opportunity for global retailers.

India, Russia and China, the top three countries in last year's GRDI, have dropped to second, third, and fourth place respectively in the 2008 index. The report said that while these countries remain important retail investment destinations, high real estate costs in large cities and growing competition have decreased their attractiveness and forced retailers to look for opportunities in Tier II and III cities.

The Vietnamese government is expected to remove controls on 100% foreign ownership of retailers in the country and has established a new program to develop wholesale and retail real estate by 2010. The region has already seen the recent emergence of modern retail in neighbouring countries such as Thailand, Philippines and Malaysia.