China returned to the top of this year's Global Retail Development Index (GRDI) for the first time since 2002, compared with last year's third place, according to global management consulting firm A.T. Kearney.

The GRDI ranks 30 emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness, retail saturation levels, and the difference between GDP growth and retail growth.

Chinese consumers are becoming increasingly comfortable with Western-style retail forms and the country's size continues to provide retailers with opportunities, according to A.T. Kearney.

India, last year's top GRDI destination, fell to the third. Retail growth will continue in India, but an influx of foreign players, limited and expensive desirable real estate and foreign investment restrictions have pushed the country's retail market closer to maturity.

China's retail sales rose 17.9 percent in the first quarter of 2010, while the country's GDP grew 11.9 percent during the same time period, according to data from the National Bureau of Statistics.

This means the central government's four trillion yuan ($586 billion) stimulus package has taken effect, said Wang Tiemen, an assistant professor at the Guanghua School of Management, Peking University.

The top 10 countries in the 2010 GRDI are the most diverse mix of large and small markets in the Index's nine-year history: China, Kuwait, India, Saudi Arabia, Brazil, Chile, United Arab Emirates, Uruguay, Peru and Russia.

" Retail executives have learned again that core markets like the United States and Europe are not the powerful engines of growth they would like," said Hana Ben-Shabat, A.T. Kearney partner and co-leader of the study. "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 small and large offers the best path to global success for retailers."

China, India, Brazil and Russia remain the highest-priority markets for retail expansion, according to 60 retail executives from around the world surveyed by A.T.Kearney, with nearly 80 percent of respondents citing one of these markets as part of their firms' plans for short-term international growth.

Expansion is also on the agenda for many emerging market retailers. Ninety-two percent of respondents from emerging markets are looking to expand beyond their home markets, with close to 30 percent of those saying a developed country is among their top three expansion targets.

"Expansion is no longer about retailers from developed markets moving into developing markets," said Ben-Shabat. "Now retailers from developing markets are using their unique insights into local business and culture to expand regionally in a trend that will shift the global retail competitive landscape."

In addition, retailers are looking for fast success from their expansion efforts, with most saying they expect expansion to be profitable within three years of new-market entry. In a similar survey in 2005, retailers were looking for a profit after between five and seven years of market entry.

A.T. Kearney Global Retail Development Index 2010