Top of the shops

The figure represents 31% of the global market as a whole, despite the challenges of rising food and energy prices. However, the annual report stated that economic conditions continued to test the “fortitude” of the industry around the world.

This year’s line-up (listed at bottom of page) is led by the usual suspects of Wal-Mart, Carrefour, Metro and Tesco, yet the report stressed that the leading grocers spent a great deal of 2007 evaluating new markets such as Russia and India.

“All of the major players are looking to lessen their dependence of their saturated home markets,” said Natalie Berg, grocery research manager, Planet Retail and author of the Global Top 30.

Tesco will look to generate more than half of its revenue from overseas markets, mainly the US, China and Southeast Asia, while 80% of the Wal-Mart International’s new space growth this year will take place in Canada, Mexico and China.

Carrefour’s growth will stem predominantly from the emerging markets of Brazil, Colombia, China, Indonesia, Russia and India, which are expected to account for a third of the group’s turnover by 2010.

“Emerging markets have become increasingly attractive for the major grocers. All eyes are on India, Russia and China — three huge economies which can be expected to remain in a constant rate of fast-track economic growth for many years to come,” said Berg.

No major changes in the Top 30 rankings for Western and Central Europe, as Carrefour, Metro Group and Tesco held onto their crowns in the top three, despite the relentless expansion drives among discounters including Schwarz Group. Despite intervention from competition authorities, there were a few small-scale acquisitions during the year.

In the US, the analysis unveiled that the Top 30 generated banner sales of US $1.06 trillion, representing 52% of the modern grocery market as a whole. In terms of pure grocery sales, the Top 30 now account for 40% of the North American market. Wal-Mart remained the undisputed leader, having produced sales in excess of US $300 billion, greater than its next four largest competitors combined.

Despite its longstanding status as America’s most powerful retailer, Wal-Mart is now faced with a new competitor: Tesco. The British heavyweight opened its first Fresh & Easy stores last year in which has been billed as one of the strongest arrivals of a foreign retailer in the states.

In the future, the current economic environment is tipped to benefit price-oriented formats and small-box retailers trading in residential areas. In the US and European reports, evidence suggested convenience and discount stores will witness strong growth, while drugstores are expected to develop at a fast pace.

The multi-format strategy will be of huge importance to North American and European grocers as the demand for proximity retailing surges.

“Rising fuel prices have spurred the development of these proximity formats; however, large-box stores, specifically those that offer perceived value in a one-stop shop, are also winning as consumers look to consolidate their trips,” Berg commented.

“Given the uncertainties resulting from the economic slowdown in both region, it will be the ability of each retailer to be flexible that will see them through the tough times ahead.”

Lynne Nolan is the editor of Retail News Middle East.