Retail giants set for growth

18 February 2011

LONDON: Wal-Mart, Carrefour and Tesco should all enjoy impressive sales growth over the period to 2015, a trend increasingly driven by overseas markets, a report has argued.

Research group IGD forecast that 43% of the revenues posted by Wal-Mart, Carrefour, Tesco and Metro could be drawn from their international operations in five years time.

"Global retailers that want to achieve the highest growth rates are those that are building a presence in emerging markets," Joanne Denney-Finch, IGD's chief executive, told Reuters.

Wal-Mart, the world's biggest retailer, was pegged to witness annual gains of 4.7%, as total returns reach €402bn ($545bn; £338m) in 2015.

Mike Duke, the discounter's chief executive, recently suggested customers in America still remain wary following the downturn.

"The vast majority have a cautious attitude," he said.

He added that Mexico, South Africa and India are among the organisation's core priorities going forward, alongside China.

"You're seeing real significant growth in domestic consumption in China," said Duke.

Elsewhere, IGD predicted Carrefour's sales may improve 5.9% a year, to €122bn, boosting the company's turnaround programme.

The French hypermarket giant trades in many European nations, including Belgium, Greece, Italy, Spain and Poland, but is looking to the East for expansion.

"In terms of quantitative growth, I don't think the West can do anything," said Lars Olofsson, ceo of Carrefour.

"How do we help Europe in the short and medium term? Because without growth, I'm going to be pretty pessimistic."

Tesco, based in the UK, will see demand rise 7.5% every 12 months, taking revenues to €106bn, IGD projected.

One key contributor supporting this process is the multinational's strong performance in Asian economies like China Japan, Korea and Malaysia.

"The two billion consumers in China and India want to have the standard of living that consumers have in the US and Western Europe," Terry Leahy, Tesco's chief executive, said last month.

Fostering sustainable models supporting such a shift requires formulating new approaches than have been implemented in the past, he said.

"As economies develop, we need to do our best to make their growth as green as possible," Leahy said.

"The challenge is to tap into consumer power. Encourage consumers to go green, not just by saving energy but buying products with a low carbon footprint.

"If we can do that, then we will create a mass movement in green consumption."

Metro, the German conglomerate, is also set to deliver an uptick of 5.3% per year, hitting €87bn, IGD stated.

Speaking at the recent World Economic Forum in Davos, Eckhard Cordes, the firm's chief executive, asserted nations from Brazil, India and China to Turkey, Indonesia and South Africa are enhancing their position.

"The US and Western Europe will continue to grow, but at a significantly lower speeds than the BRIC countries, or similar countries," he said.

"The relative portion of cash investments is higher for Asian countries and Eastern European countries. Otherwise, we would not be able to generate a sufficiently high growth rate."

However, the company wants to combine a worldwide presence with meeting the distinct needs of shoppers.

"We are a globally active retailer," Cordes added. "[But] our business is truly local."

Data sourced from Reuters, IGD, Barron's, Deutsche Welle; additional content by Warc staff