Despite several high profile emerging-market exits by Wal-Mart Stores Inc, Ahold NV, and Carrefour, retailers will continue moving into developing nations such as India and China, a market research firm predicted on Monday.
"I think there are several compelling reasons why retailers need to continue internationalizing their businesses," said Matthew Stych, Euromonitor International's global director for retailing research.
"Economic growth is more rapid in emerging markets, the socio-demographic indicators are more favorable, and retail growth is faster," Stych said. "Retail market concentration is lower and the regulatory climate is more enabling."
Stych also noted that international sales growth typically outpaces domestic sales growth for chains with large presences in their home countries.
Despite recent stumbles such as French grocers Carrefour and Casino shuttering their operations in Eastern Europe, Casino and British grocer Tesco Plc pulling out of China's Taiwan Province, and Dutch grocer Ahold pulling out of Brazil, Stych said many chains were not deterred.
"Wal-Mart's already announced a partnership with Bharti Enterprises (to enter India) and Tesco will be coming to this country very soon on the West Coast," Stych said. "Carrefour and Tesco are being linked to rumors of being interested in entering the Indian market and I can't see that taking too long to come to fruition," Stych said.
Stych also said there was a good case for Wal-Mart to consider the rapidly growing and underserved market of Turkey and for Swedish furniture chain Ikea to consider Mexico.
"The combination of the long-term trend toward internationalization and the forecast for future indicators painting a rosy picture of emerging markets means that retailers will continue to internationalize their businesses," Stych said.
In emerging markets there are trends of increasing urbanization, population growth, relaxing regulation of foreign direct investment, and an emerging middle class, Stych said, which all bode well for retailers.
source: China Daily/Agencies