IGD assesses global markets and rates their retail potential. Helen Gregory reports
International grocery retailers are being urged to look to China as the single biggest global opportunity. Although some western chains already operate there, they have barely scratched the surface in terms of market potential, according to the IGD. Despite China's challenging infrastructure, supply base and planning laws, IGD puts the country at the head of its retail wish list, and that's out of a total of 75 markets.
Says business manager, international research, Louise Spillard: "Because of the size of the market, several international and domestic retailers should be able to develop their operations in China before the market shows any signs of maturity and reaches significant levels of market concentration."
In its Global Retailing 2003 report, the IGD forecasts that the top 10 European retailers will increase their combined global market share from 22.7% to 36.8% between 2000 and 2010, and that the global food retail market will grow 21.8% between 2001 and 2006 to $3,543bn.
More than 50% of this increase will be through emerging markets and Asia Pacific is expected to drive the largest growth.
IGD's market index assesses each market's attractiveness to global retailers and highlights those most likely to be considered for market entry. China, Italy and Russia are seen as priority one' markets with countries such as Japan, India and the US as priority two'. Going down to priority five', there are countries such as Peru, Cambodia and Albania. China and Russia are rated top because of the size of market, potential market growth and long-term strategic importance. Meanwhile Italy, says the IGD, remains a major opportunity in western Europe because of the lack of global retailers operating in the country, together with a relatively benign competitive environment.
The IGD forecasts a number of mergers and acquisitions in the next 10 years in Europe because of tougher planning laws, bigger populations, the single currency, and low food inflation.
Within the North American Free Trade Agreement, it estimates Mexico will see the largest growth because of high inflation, prosperity and lack of a foodservice threat. The IGD also highlights India as an interesting candidate because, so far, it has attracted only German wholesaler Metro and has an increasing middle class.
Although South America has potential, it says economic problems in Argentina and Brazil are likely to compromise leading retailers' expansion, short term. Central Europe is a thriving retail area but the IGD warns of hypermarket over-saturation in some areas if all the major retailers realise their plans. It estimates there are now 418 in the region compared with 266 two years ago.
But it's a different story in the US where the supercenter (hypermarket) phenomenon of the 1990s is set to take a much bigger share of the market; by 2010 this format will have grown its share from 6% in 2000 to 19%. Spillard says: "This will eat into the supermarket share to the extent the weaker supermarket retailers are likely to be forced out of the market."
Tesco's success in Central Europe helped push its total sales to £37.4bn in 2001,and she says Tesco's likely long-term strategy is to grow in the UK and emerging markets until it is big enough to make the acquisitions it needs in Europe. She adds: "Whether Tesco can establish itself in Japan ahead of other retailers such as Carrefour, Costco and Wal-Mart is a key question. There is definitely a window of opportunity there. It is in other key markets outside the UK that the long-term position of Tesco in the global retail world will be decided. It will need to determine its long-term strategy for the markets of France, Germany, Japan and the US."
The UK chain is fifth in the global retail index (taking into account factors such as home market dominance and percentage of foreign sales) with no change at the top Carrefour, followed by Ahold, Wal-Mart and Metro. The rankings have hardly changed in the last year, emphasising a lack of major merger and acquisition activity. However Spillard adds: "Carrefour could be ready to consider a major move in the next year."
Wal-Mart will be the one to watch the US giant needs to grow in Europe and Asia to be truly global, which means France, Italy or Spain are likely to be next on its hit list.
{{ANALYSIS }}
International grocery retailers are being urged to look to China as the single biggest global opportunity. Although some western chains already operate there, they have barely scratched the surface in terms of market potential, according to the IGD. Despite China's challenging infrastructure, supply base and planning laws, IGD puts the country at the head of its retail wish list, and that's out of a total of 75 markets.
Says business manager, international research, Louise Spillard: "Because of the size of the market, several international and domestic retailers should be able to develop their operations in China before the market shows any signs of maturity and reaches significant levels of market concentration."
In its Global Retailing 2003 report, the IGD forecasts that the top 10 European retailers will increase their combined global market share from 22.7% to 36.8% between 2000 and 2010, and that the global food retail market will grow 21.8% between 2001 and 2006 to $3,543bn.
More than 50% of this increase will be through emerging markets and Asia Pacific is expected to drive the largest growth.
IGD's market index assesses each market's attractiveness to global retailers and highlights those most likely to be considered for market entry. China, Italy and Russia are seen as priority one' markets with countries such as Japan, India and the US as priority two'. Going down to priority five', there are countries such as Peru, Cambodia and Albania. China and Russia are rated top because of the size of market, potential market growth and long-term strategic importance. Meanwhile Italy, says the IGD, remains a major opportunity in western Europe because of the lack of global retailers operating in the country, together with a relatively benign competitive environment.
The IGD forecasts a number of mergers and acquisitions in the next 10 years in Europe because of tougher planning laws, bigger populations, the single currency, and low food inflation.
Within the North American Free Trade Agreement, it estimates Mexico will see the largest growth because of high inflation, prosperity and lack of a foodservice threat. The IGD also highlights India as an interesting candidate because, so far, it has attracted only German wholesaler Metro and has an increasing middle class.
Although South America has potential, it says economic problems in Argentina and Brazil are likely to compromise leading retailers' expansion, short term. Central Europe is a thriving retail area but the IGD warns of hypermarket over-saturation in some areas if all the major retailers realise their plans. It estimates there are now 418 in the region compared with 266 two years ago.
But it's a different story in the US where the supercenter (hypermarket) phenomenon of the 1990s is set to take a much bigger share of the market; by 2010 this format will have grown its share from 6% in 2000 to 19%. Spillard says: "This will eat into the supermarket share to the extent the weaker supermarket retailers are likely to be forced out of the market."
Tesco's success in Central Europe helped push its total sales to £37.4bn in 2001,and she says Tesco's likely long-term strategy is to grow in the UK and emerging markets until it is big enough to make the acquisitions it needs in Europe. She adds: "Whether Tesco can establish itself in Japan ahead of other retailers such as Carrefour, Costco and Wal-Mart is a key question. There is definitely a window of opportunity there. It is in other key markets outside the UK that the long-term position of Tesco in the global retail world will be decided. It will need to determine its long-term strategy for the markets of France, Germany, Japan and the US."
The UK chain is fifth in the global retail index (taking into account factors such as home market dominance and percentage of foreign sales) with no change at the top Carrefour, followed by Ahold, Wal-Mart and Metro. The rankings have hardly changed in the last year, emphasising a lack of major merger and acquisition activity. However Spillard adds: "Carrefour could be ready to consider a major move in the next year."
Wal-Mart will be the one to watch the US giant needs to grow in Europe and Asia to be truly global, which means France, Italy or Spain are likely to be next on its hit list.
{{ANALYSIS }}
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