In a press conference at lunchtime on day one of the World Retail Congress in Paris, MasterCard and The Fletcher School at Tufts University announced the launch of a new initiative that the two have collaborated on - the Digital Evolution Index.

The launch chimed nicely with an earlier interview that Anne Cairns, President, International Markets at MasterCard had given as part of the opening plenary session, entitled ‘The Future Is Now, Are You Ready?’ In the press conference, lead researcher Bhaskar Chakravorti, Senior Associate Dean of International Business and Finance at Fletcher School, pointed out that the future is here, as people have information wherever they are, be it France or Bangladesh. However, he was keen to point to the fact that there are a number of factors that prevent ‘the future’ being evenly distributed around the world. Chakravorti noted that many of these factors on digital evolution do not necessarily attract much focus in the retail world, such as the effect of political institutions, rule of law, the regulatory environment or the menace of cyber crime.

This uneven distribution was a catalyst for the research project that eventually became the Digital Evolution Index. The team selected 50 countries to study, 25 from the developed world and 25 from emerging markets. Ted Iacobuzio, Vice President, Global Insights at MasterCard, explained that the study had identified four interdependent drivers - supply, demand, institutions and innovation - that can be used to define each country’s digital evolution and can serve as strategic evaluation points for future growth. Iacobuzio was keen to stress that the innovation piece doesn’t merely refer to the penetration of technology, although of course that plays a part, but also to areas such as venture capital investment, for example.

Looking at the 50 countries through the prism of these four drivers, Iacobuzio outlined how retailers could very quickly see how their domestic market could have more in common with markets on the other side of the globe than those of their neighbours. Anne Cairns noted that it is important for retailers to think about these corridors, and how pairs of countries match up, when developing business strategy.

Iacobuzio then demonstrated a heatmap, which he described as being the heart of the Index. This doesn’t just show which countries were first to digitally evolve. Rather, the study analysed each country’s evolution from 2008 to 2013 to understand country benchmarks, track progress and identify areas for improvement. The countries were grouped into the following four trajectory zones on the heatmap:

- Break Out. This describes countries that currently have low readiness scores, but are rapidly evolving. Iacobuzio pointed out countries such as Brazil, India, China and Vietnam are grouped here. If their evolution rates sustain, these countries will emerge as strong digital economies.

- Stall Out. Most of the countries in this trajectory are the traditional Western nations, with the notable exception of the US. While they have a history of strong growth, they have reached maturity. To continue the digital evolution, Iacobuzio noted that countries in this category need to seek markets beyond domestic borders and demonstrate innovation if they are to continue to grow.

- Stand Out. Countries in this quadrant are maintaining high levels of digital transactions, aided by sophisticated domestic consumers and state of the art infrastructure. This is where we find countries including the US, Singapore and Hong Kong, all of whom must continue to fast-track innovation to remain in the Stand Out zone.

- Watch Out. If a country is in the Watch Out trajectory, it faces digital evolution challenges. Russia, Nigeria, Indonesia, Egypt, and Kenya are examples of countries on this trajectory. However, Iacobuzio noted that countries in this space have a combined population of 2.5 billion people, and therefore represent significant opportunities for investment.

Looking at the heatmap of the Digital Evolution Index, Cairns said that she particularly excited about Latin American countries, as so many have a high level of personal consumption expenditure (PCE) and mobile usage.

Iacobuzio also noted that as technology continues to evolve, for example through areas such as biometrics, the Digital Evolution Index could change accordingly. It is a roadmap for retailers to see how the digital world is distributed, as well as see where countries have come from and what trajectory they are on. To explore the Digital Evolution Index, visit the website.