Posts Tagged ‘Tesco’

The power of Aussie retail giants

March 17, 2010

I blabber on here regularly about the strategic decisions of Australia’s two biggest retailers – Coles (now part of the Wesfarmers empire) & Woolworths. The sheer size and breadth of these two firms’ operations warrant considerable attention.

The folks at ABC TV’s Hungry Beast have done a great job of bringing together the relevant stats and information about strategic agenda (and outcomes) for these two giants in a very neat, short presentation:

As their graphics show (although not explicitly), there is a lot going on in terms of Porter’s Five Forces.  Coles/Wesfarmers and Woolies have affected the economic structure of their industry(s) substantially so as to:

– reduce Rivalry (by acquiring competitors, and by building strength across retail markets so as to reduce the likelihood of competitive attacks)

– increase their Bargaining Power vis-a-vis Suppliers

– reduce Buyer’s choices of store operators (and thus their Bargaining Power)

– build substantial Barriers to Entry (although I would argue the Hungry Beast folks have misused the term greenfield).

The result is two firms that a massively oversized for the relatively small economy in which they operate.  Australia accounts for roughly 1.1% of the global economy (in terms of GDP).  Adding NZ (where these firms have much smaller coverage) only raises that figure to 1.26%.

Nevertheless, these firms come in at #26 and #28 on the Deloitte rankings of Global retailers by revenue. They are larger than all but 3-4 of the US’s supermarket chains, and of the British chains only Tesco is larger. Other than the US’s Kroger, Safeway and Supervalu, and Germany’s Edeka, no other large grocery chains operate in anywhere near as few countries (the rest are in 8-36 countries).

Seems like more evidence why I should be shopping at Aldi, my local farmers’ market and independent liquor outlet…

And thanks to Sakshi for bringing this clip to my attention.

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.