China is still the world’s second top destination for emerging market retail expansion.

Even as the Chinese economy slows and conditions become more difficult for foreign retailers, the huge and growing market is impossible to ignore, says global management consulting firm AT Kearney. Retail sales in the world’s most populous country increased 13 per cent in 2013 (to $3.7 trillion), and consumer confidence rose.

“Urbanisation, increasing disposable incomes and the family-planning relaxation will fuel future retail growth in China,” said the firm.

China followed Chile which, according to the 2014 AT Kearney Global Retail Development Index, is the world’s most attractive market for retailers.

AT Kearney says the major movers in China are online retailers. China’s e-commerce market is growing significantly and now accounts for eight per cent of all retail. In 2013 it grew 42 per cent year-over-year to $305 billion. Fast growth is expected as Internet use expands, offerings improve, lower-tier cities start spending more online, online payment safety improves, and logistics services expand.

The Index also revealed Asia has a number of fast-growing economies that offer fertile ground for retailers, as growing populations, rising incomes, and increasing affinity for modern formats helps retail sales increase rapidly. Modern retail is spreading beyond the largest urban centers to smaller, untapped cities and regions.

It says the region saw several improvements in the rankings, including Malaysia (#9), which re-entered the top 10 for the first time since 2009, and Indonesia (#15) which moved up four places from last year’s ranking.

Other Asian countries in this year’s Index include Sri Lanka (#18), India (#20), Philippines (#23) and Vietnam (#28).