All the world's their stage
The pace of globalisation has quickened since Leading Edge last looked at the topic more than a year ago. But by what criteria do we judge if a retailer is truly global'? Jane Beard reports on IGD efforts to provide a more considered and accurate ranking
According to Louise Spillard, IGD's international programme manager "If the definition of being a global retailer means to be present in every country in the world, then there is not yet a global retailer. However, a number of retailers, and not simply those retailers with the largest turnovers are now fulfilling the spirit of the term global retailing."
That is not to deny that size is a key factor as critical mass is necessary to achieve economies of scale and generate sufficient capital for world-wide expansion.
However, being a global retailer is not only about size and cross-border activity but also about retailing skills, vision and management. Most global retailer lists focus on turnover size only, however, IGD seeks to give a more considered ranking of the world's global retailers.
The IGD Global Retail Index includes a combination of "hard" and "soft" factors, which IGD believes determine whether a retailer can be considered as truly global.
The hard factors include:
- Turnover size
- Number of countries of operation
- Presence in key regions not only how many countries but the level of presence in Western Europe, NAFTA and Far East Asia
- Home market dominance
- Percentage of foreign sales as an indicator of the importance and maturity of a retailer's international operations.
The soft factors aim to reflect a retailer's international management skills and include:
- Clarity of global strategy
- Global culture
- Level of global sharing and learning within an organisation.
Taking into account these hard and soft factors gives a very different global retail order (see panel).
Although Wal-Mart is by far the largest retailer in turnover size, it is not yet as "global" as Carrefour or Ahold, which have a wider geographical presence and more international culture.
Carrefour and Ahold have also been active, internationally, longer than Wal-Mart, which began to expand outside the US only in the 1990s.
Metro has dropped slightly in the new ranking because it lacks a significant presence outside Europe. However, this position may change as Metro has refocused its strategy towards rolling out its cash & carry format internationally, including in Asia.
In contrast, Delhaize, Auchan and Casino do not feature in the top 10 for turnover, but the scope of their international operations means that they play a significant part in the global retail scene.
Despite the current limited scope of its overseas activities, Tesco is developing into a leading international retailer. Growth outside the UK is a key element of Tesco's strategy for going forward.
It is worth remembering that globalisation is not a new phenomenon, but one that has been evolving over the centuries. The retail industry has traditionally lagged behind other sectors in the globalisation race but this is now changing. It will be interesting to see how the positions may have changed in next year's Global Retail Index.
Global status Rank by IGD's Rank by turnover Company
Global Retail Index
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Leading global 1 2 Carrefour
retailers 2 7 Ahold
3 1 Wal-Mart
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4 3 Metro
Leading 5 12 Ito Yokado
international 6 23 Delhaize Group
retailers 7 13 Tesco
(nearly global) 8 22 Casino
9 19 Auchan
10 11 Aldi
11 14 Tengelmann
12 16 Costco
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