NEW YORK — Central Europe, Asia and Latin America, get ready for your supercenters, because these are the hot spots in which international mass merchants are going head-to-head.
This story first appeared in the January 13, 2004 issue of WWD. Subscribe Today.
That was the word Sunday morning at the National Retail Federation’s 93rd annual convention and expo, which kicked off with presentations on the changes occurring in global retailing.
In a packed session attended by convention attendees from countries such as Brazil, China and the U.K., Gilles Goldenberg, Deloitte Touche Tohmatsu partner in charge of consumer business for Europe, offered an overview of the landgrab occurring among the world’s largest retail powers.
“Strong strategies at home drive international expansion,” said Goldenberg, noting that international expansion had become a necessity for those European retailers who have reached their market share limits in their home countries. Goldenberg cited Carrefour’s decisions to expand internationally after facing antitrust issues in its home market of France as an example.
When choosing new markets to tap mass retailers have, not surprisingly, set their sights on those areas with the greatest growth potential — those with high populations, burgeoning economies and fewer regulatory hurdles to clear. “Very few retailers compete face-to-face in their home markets,” said Goldenberg.
Goldenberg called Central Europe, Asia and Latin America the current “battlegrounds” in which international mass merchants are going head-to-head. Goldenberg noted that competition between Wal-Mart and Carrefour is particularly heating up in the market in Latin America.
While most of the world’s largest retailers are already beginning to focus on expanding their presence in China, Goldenberg believes India and Russia will soon garner more attention.
Despite the scramble, U.S. retailers generally have yet to enter the international expansion fray. “What is remarkable is the low interest in the U.S. in international expansion,” said Goldenberg. Of the top 10 global mass retailers, said Goldenberg, only Wal-Mart, Costco and J.C. Penney had any international presence.
In a follow-up session, France Houdard, senior manager of Deloitte’s Chinese services group, explained some of the risks involved with setting up businesses in foreign countries.
In China, for example, Houdard said many new foreign retailers failed to take into account the diverse makeup of the population. “China is a kingdom of kingdoms,” said Houdard, pointing out that the country had more than 200 distinct languages. Houdard also noted that legal and regulatory statutes in China are quite vague, allowing for varying interpretations by government officials.