Posts Tagged ‘Boots’

Could Wal-Mart have a demonstration effect?

April 8, 2009

The news this week is that Wal-Mart are reportedly back in the hunt for a Russian acquisition. They may be locked in a battle with Carrefour (the French world #2) and Metro (Germany, #4) for a controlling stake in a Russian hypermarket chain Lenta.

Currently not a single US retailer from the world’s largest 250 (according to Deloitte’s rankings) operate in Russia. This is despite more than 20 other large international players being there, including Metro, Rewe, Ikea, Inditex, and Boots (and despite the US making up 34.8 percent of the top 250).

wal-mart-lenta1It would seem that geographic and institutional differences are much larger between the US and its former cold war rival, than between Europe and Russia, and the US and Europe (and indeed the Middle East, Latin America and Asia for that matter).

It is fascinating that Wal-Mart are willing to take on the Russian challenge ahead of opportunities in the remainder of Western Europe. It would seem their format of big-box retailing has more prospects in emerging markets such as Russia, China and Latin America than the more developed world (as an aside, I wonder what that says about the relative economic development status of mid-West US in the 1970s-80s?) .

It will also be intriguing to see the extent to which Wal-Mart might act as a strong example to the laggard US retailers. Will this be a beach head for more entrants in this sector?

One final comment: Lentra does seem a good candidate for such an acquisition. Their format and growth seem comparable to a young Wal-Mart.


Maybe the downturn isn’t a slow down

January 6, 2009

Getting back to work and catching up on emails, I was struck by the ongoing pace of internationalisation in the retail sector, despite the much-discussed global economic downturn. Many of the big players have been busy expanding their empires (while a few others have been struggling).

I am on the mailing list of a mob called Planet Retail, and they send out a daily newsfeed. Over the past month alone, here are the various international expansion moves they have mentioned (both new FDI and also significant within-host country investments):

  • Office Depot (US) and partner Gigante (Mexico) into Colombia
  • Wal-Mart (US) building stronger ties to Russia with an eye to open stores some time
  • Wal-Mart (US) definitely into Chile
  • Quiznos (US) into Venezuela
  • RadioShack (US) buying out Mexican partner
  • KFC and Pizza Hut (US) into Moldova
  • Costco (US) contemplating France, Spain and India
  • Costco (US) definitely into Australia

  • Hamleys (UK) into Russia
  • Alliance Boots (UK) expanding operations in Norway
  • Aldi (German) into New York City
  • Auchan (France) expanding operations in Romania
  • Metro Cash and Carry (Germany) expanding Indian operations into Punjab
  • Schwarz Lidl (Germany) into Bulgaria
  • Tesco (UK) expanding Chinese operations into Shandong
  • Rewe (Germany) expanding Russian operations
  • Woolworths (Australia) potentially into India
  • Lotte (Korea) into Vietnam
  • Best Denki (Japan) into Kuwait
  • Yamada Denki (Japan) into China
  • Quanjude (China) into Taiwan

I have listed them by the home continents of the expanding firms. As you can see there is a pretty even mix of countries in terms of home and host here. Most interestingly from the perspective of a researcher who looks at the geographic reach of multinationals, a good proportion of these moves have been outside of these firms’ home regions (as typically defined). I have highlighted these moves in green. Given retailing is one of the less-internationalised sectors in the global economy, it is fascinating that such expansion continues to occur.