Summary Multinational Food Retailers Dip Their Toes In Emerging Markets

862 words - 4 pages

In June 2009 Carrefour, the world’s second largest retailer after Wal-Mart, and that operates in more counters than any other retailer in the world; opened its first store in Moscow. But only three months later, the company announced it’s withdraw from the Russian market. In a prepared statement, the company cited the "absence of sufficient organic growth prospects and acquisition opportunities in the short and medium term" that would have enabled the company to attain a "leadership position" in the market.
According to Natalie Berg, research director at London-based Planet Retail, the Carrefour case shows that the multinationals haven't cracked every single market yet, and that there are ...view middle of the document...

They have taken the time to get to know the market and to adapt to the local consumers. The company's growth in Russia has been achieved mostly via organic expansion, although it has made one small acquisition there.
Most large multinationals that are looking to expand in emerging markets, determine to enter those markets through acquisition of existing operators. That gives them the ability to gain an immediate foothold in these markets. Acquisition may be the least risky form of entry in places with high levels of corruption like Russia. Organic growth can take years in these markets, and it’s also hard to get suppliers on board.
India and China
Multinational operators are also examining other emerging markets like India and China. In India the consumer spending on food is ramping up considerably, but the market is highly fragmented, the five largest grocery chains account for less than 2.5% of grocery sales in the country. The Indian market remains closed to foreign retailers seeking to sell directly to consumers. But cash-and-carry carry operations that sell to businesses can be operated under certain circumstances. Wal-Mart has a 50-50 joint venture with Bharti Enterprises, an Indian conglomerate. The Bharti Wal-Mart partnership supplies Bharti's separately owned network of retail stores, and also has one cash-and-carry wholesaling store that sells to businesses. And Carrefour is reportedly set to debut a wholesale operation there.
China is much further along in its development — and much more open to foreign investment. It is one of the few markets where Wal-Mart,...

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