Grocery retailing in selected countries from Asia, Africa, and The Americas
Turkey
General retail economy
In the wealthier west of the country, in urban areas, supermarkets account for 50%
(2005) of grocery sales.
Retail multiples
Carrefour
1999 , Carrefour had 32 supermarkets in Turkey
Tesco
2003 , Tesco entered Turkey, buying a majority stake in the Kipa chain with 5 stores.
2005/6
, Tesco sales were £182 million; profits were £6 million.
India
General retail economy
India, with its large, young, and growing population, presents an attractive target for expanding supermarket chains, especially from other less-developed countries. India is attractive to foreign retailers demographically and perhaps economically, but not legally Foreign companies looking to invest in India also face major regulatory hurdles (see Retail legislation below).
India has (2004) around 5 million retail outlets; one per 200 people. This is a similar ratio to the UK in the 1950s, before the arrival of the supermarkets. This means the
Indian retail sector is very fragmented, lacking any dominant supermarket chains.
India also lacks (2004) any major wholesale or distribution chains, despite being home to one sixth of the world’s population. The Indian government was also keen on opening up its food retailing sector [to large Western supermarkets] but the government has been forced to backtrack so what after protests from small shopkeepers (The Times, 20/3/2007, p.52). One protest was attended by 20,000 small shopkeepers.
In 1999 India’s first supermarket, called Crossroads , opened in Mumbai.
The Economist (31 May 2008, p.80/82) makes the case for India to allow foreign retailers into its territory.
1) Low income households would benefit. Where they have access to supermarkets they shop cannily, buying discount items and loss-leaders but staying loyal to small shopkeepers for the bulk of their purchases.
2) The small-shopkeeper sector in India seems robust at present, and on current trends will still have 85% of the retail market in 2013.
3) The opening of a supermarket nearby does reduce local small shops trade by about a quarter, but this recovers and, says The Economist, is back to pre-supermarket levels within 5 years.
4) Opening a supermarket nearby forces small shopkeepers to become more efficient, and some small shops even hire more staff for home delivery services. ‘Only 1.7% of
[India’s] small shops close each year’, says The Economist (ibid). Small shopkeepers could join in co-operatives to gain buying power (but this could pass downwards price pressure back up the food chain onto India’s already-poor farmers).
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The opposing argument is that if India opened its grocery retail market fully to foreign supermarkets, low income families might initially gain on price but could lose the opportunity to use local small shops, if the closure rate of these accelerated from its present (2008) 1.7% a year. With small shops gone, the supermarkets could offer less loss-leaders and discounts. Some families could be left in an Indian version of a ‘food desert’. And whilst shoppers might gain, there could be large employment losses in the retail sector. Economics says there should be net welfare gains from supermarket liberalisation in India, but the social equity question of how these gains are distributed, who are the losers, and how if at all they are compensated is less clear.
In social redistribution terms India’s middle class would certainly gain from grocery retail liberalisation, seeing lower prices, whilst likely being in jobs that would not be threatened by such liberalisation…However the poor might lose. Despite also seeing lower prices (they buy less goods than the middle class), wages and job opportunities might shrink. The question then is, how big India’s middle class, and ‘poor’ class is.
It is estimated that (2007) India still has 600 million people living on under £1 (1.95
US$) a day, many in the rural economy that would be pressurised by large supermarkets. The middle class may number 300 million (2007), if it is defined as those with an income over US$ 2,000 a year. A narrower definition, used by the
National Council of Applied Economics Research, puts the income bar at US$ 4,400, giving a ‘middle class’ of just 58 million (The Economist, 15 April 2006). Politics, not economics, may ultimately decide the day, and India has a strong Left-wing lobby.
Retail legislation
India presents a difficult regulatory environment for foreign supermarkets. Foreigners cannot invest in retailing, unless it is in a single-brand store, when they can own up to
51% (The Economist, 31 May 2008, p.80/82). This allows in stores like Reebok but debars Carrefour. Retailers like Carrefour and Wal-Mart, who are keen on entering the Indian market, must form joint-ventures with domestic Indian companies (Sunday
Telegraph, 11 March 2007). Even once in, retailers must overcome a thicket of regulations, and pay taxes to move goods out of some states, into others, or even within some states.
Retail multiples
Indian domestic supermarket chains include Reliance and Bharti .
Thailand
General retail economy
In 2002 six global retail chains – Ahold (Netherlands), Carrefour (France), Casino
(France), Food Lion (Belgium), Makro (Netherlands), and Tesco (UK), were seeking to gain a foothold in Thailand.
Retail legislation
2007 , the Thai government was considering passing legislation that would make it harder for foreign retailers to expand there. Proposals were for regional Thai governors to be able to make recommendations to a central agency (The Retail and
Wholesale Supervision Committee) which in turn could accept or reject proposed new supermarkets; penalties for contravening this agency’s rulings would be 3 years in
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prison or fines of 3 million Baht (£46,000). Conditions in the Bangkok Hilton fall just a little short of those at Tesco’s head office in Cuffley, Hertfordshire.
Tesco has faced resistance to its expansion in Thailand since a military coup in the country in late 2006.
Independent retailers
2007 , The Thai government claimed 100,000 small shops have been forced to close since 1997 due to the expansion of foreign supermarkets. Thailand was heavily reliant on traditional open-air street markets for groceries, and summer temperatures reached 30C. Shoppers liked the idea of air conditioned supermarkets, but small shopkeepers were not so keen.
Retail multiples
Carrefour
1999 , Carrefour had 10 supermarkets in Thailand
Tesco
1997 , Tesco entered Thailand. It bought the 13-strong Lotus supermarket chain. By
2001 Tesco had 24 hypermarkets in Thailand.
2005/6,
Tesco sales were £1,087 million; profits were £66 million.
2006 , Tesco was market leader with 73 hypermarkets and 144 other stores in
Thailand.
China
General retail economy
In 2006, is in the middle of an explosive consumer boom – for its fortunate east-coast citizens anyway. Wal-Mart and Carrefour have entered the Chinese grocery market.
China had 2,500 supermarkets in 1994. This number grew to 21,000 in 1998 and
40,500 in 2001. The share of retailing taken by supermarkets has grown from 0.18% in 1994 to 3.43% in 1998 and 8.2% in 2001.
Foreign supermarkets now (2006) account for 23% of the sales of the top 100 food retailers in China, although these top 100 account for a far smaller total share than the myriad of small shops and market stalls most Chinese still buy their foodstuffs from.
Stores like Wal-Mart are venturing further inland, not least to escape soaring rents and intensifying competition. Here, they may find interesting local purchasing preferences which they must cater to, to survive – a preference for extremely rough toilet paper in Zhejiang, or a liking for whole pig’s faces steamed, sliced, and dipped in sauce at the table in Shandong.
Retail multiples
Carrefour
1992, Carrefour entered China
1999, Carrefour had 23 supermarkets in China end-2004 , Carrefour had 49 supermarkets in China.
12/2007 , Carrefour had 387 stores in China
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Tesco
Tesco entered China in 2004 by buying a share in the multiple Hymall .
By the end of 2004 Tesco had 29 supermarkets in north and east China, including 11 in Shanghai.
2006 , Tesco has 39 stores in a joint venture with Ting Hsing.
In 2007 Tesco opened a store under the Tesco fascia in south-eastern Beijing. By
2007 Tesco also owned 90% of the Hymall chain, of 46 stores, all of which were
92007) soon to be re-fascia-ed as Tesco stores.
2008
, Tesco opened its first ‘ Express’
format store in China, in Shanghai.
Wal-Mart
1999 , Wal-Mart had 6 supermarkets in China end-2004 , Wal-Mart had 30 Chinese supermarkets.
Taiwan
Retail multiples
Carrefour
1989 , Carrefour entered Taiwan
1999 , Carrefour had 23 supermarkets in Taiwan
Tesco
2000 , Tesco entered Taiwan, buying 1 store there.
2005 , Tesco pulled out of Taiwan, having opened 4 stores there.
South Korea
Retail multiples
Carrefour
1999 , Carrefour had 15 stores in South Korea
Tesco
1999 , Tesco entered South Korea.
2005/6, Tesco sales were £2,133 million; profits were £129 million.
2006 , Tesco has 55 stores, including 36 hypermarkets, in a joint venture with
Samsung.
Wal-Mart
1999 , Wal-Mart entered South Korea, buying 4 stores from Makro. By end-1999,
Wal-Mart had 5 stores in South Korea.
Japan
General retail economy
In 2003 and 2004, both Tesco and Wal Mart entered the Japanese grocery retail market, see Part II of this site, ‘supermarket time lines and store numbers’ – Tesco,
7/2003 and 4/2004, and Wal Mart, 2004. Nevertheless, the Japanese way of life may not be so favourable to supermarkets as it is in Europe or North America. Japanese houses are much smaller, so the model of a large weekly or fortnightly supermarket shop may not work as many people would have nowhere to store all this food. Japan also has a rapidly ageing population, certainly more aged than in the USA; in 2020 34 million of its 127 million people will be aged 65 or over (Guardian, 1/6/04, p.15), and
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many Japanese women shop more traditionally, walking or cycling to a local mall of small shops several times a week.
Japanese housewives are often very thrifty, especially in the early years of marriage when total family earnings have not yet risen to their peak level, savings have not yet been built up, and there are children to raise. This thriftiness may work against supermarket penetration, because shoppers like to shop around for bargains, also for freshness, and like to visit many small shops to achieve this. However (Guardian,
1/6/04, p.15) in a popular magazine for young Japanese married women, Sutekina
Okusan, it said that daily shopping may tempt people to spend more than they could afford on items they didn’t need, and the chance to go shopping just once a fortnight at a large supermarket might help cut out this temptation. Time will tell which viewpoint is right.
Retail legislation
Japan has a very restrictive regime on large shops. Their Large Scale Retail Stores
Law (LSRSL), enacted in 1973, required retailers to notify public officials of their intention to build any new store with a floor space of greater than 500 square metres.
This has greatly hampered the expansion of the supermarkets (Kuwahara, 1997, p.112). Japanese retailing remains dominated by small stores, and 53% of Japanese retailers have two or less employees. The LSRSL was relaxed in response to the
Heisei recession of 1990, when Japanese stocks and land prices fell sharply, but this recession has continued through into the 21 st century and up till 2003 Japan has seen no boom in supermarkets.
Retail multiples
1960s, 70s Seiyu and Daiei were the leading multiple retailers in Japan. Daiei dominated the Kansai region (Osaka and Kobe). Seiyu was mainly in the Kanto region (Tokyo).
Tesco
2003 , Tesco entered Japan.
2005/6, Tesco sales were £300 million; profits were £12 million.
2006 , Tesco operates over 100 small-format stores in Japan.
Wal-Mart
3/2002 , Wal-Mart entered Japan, buying a 6.1% share of the Seiyu retailer. This stake was progressively raised until by 12/2005 Wal-Mart owned a majority of Seiyu.
Malaysia
Retail multiples
Carrefour
1999 , Carrefour had 6 supermarkets in Malaysia
2000
, France’s
Carrefour chain was the only major European retail multiple in
Malaysia.
Tesco
In 2000 Tesco announced plans to open 20 stores in Malaysia, the first one to open its doors in 2002.
2005/6, Tesco sales were £151 million, losses were £1 million
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2006 , Tesco has 10 hypermarkets and three supermarkets in Malaysia.
Singapore
Retail multiples
Carrefour
1999 , Carrefour had 1 supermarket in Singapore
Indonesia
Retail multiples
Carrefour
1999 , Carrefour had 7 supermarkets in Indonesia
Australia
General retail economy
The retail grocery market is dominated by Woolworths and the Coles Group.
Retail multiples
Aldi
6/2004 , Aldi had 70 stores in Australia
Egypt
Retail multiples
Sainsbury
Sainsbury set up a supermarket in Cairo in 1999, and by 2000 had expanded to seven supermarkets across Egypt, as well as an 80% holding in an Egyptian supermarket chain, Edge . However when the Palestinian ‘Intifada’(uprising) began across the border in Israel, Sainsbury was perceived as too pro-western by Egyptian customers and was forced to pull out of the country. Egyptian religious leaders had spoken out against Sainsbury for threatening the livelihood of small Egyptian shopkeepers.
Nigeria
General retail economy
2002 , Nigeria had 102 supermarkets.
Uganda
General retail economy
2002 , Uganda had 1 supermarket, and some smaller-format domestic chains.
Tanzania
General retail economy
2002 , Tanzania had 4 supermarkets, as well as some smaller-format domestic chains.
Kenya
General retail economy
2003 , Kenya had 206 supermarkets and 10 hypermarkets. Most of these were in the
Nairobi area.
South Africa
General retail economy
In 2002 , supermarkets accounted for 55% of total grocery retail sales.
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In 2002, 4 multiples took 90% of the total supermarket sales. The Shoprite/Checkers chain and the PnP chain had 40% each; Spar and Woolworth had 5% each.
Retail multiples
Shoprite
Shoprite / Checkers began with 8 stores in 1979. In the 1980s Shoprite consisted of
‘a few tatty stores in Cape Town (Economist, 15/1/2005, p.64). Its first venture outside South Africa was to take over a French-owned chain in Madagascar, and to open a store in Mauritius.
In 2002 Shoprite / Checkers consisted of 294 Shoprite supermarkets, 19 Checkers hypermarkets, and 41 fast food outlets, as well as furniture stores and financial services sales outlets.
In 2005, Shoprite also had stores in Botswana, Egypt, Lesotho, Madagascar, Malawi,
Mozambique, Namibia, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe, (the latter doing badly because of the economic slump under the Mugabe regime)..
In December 2004 Shoprite opened a large store in Mumbai, India.
Shoprite , January 2005 , was the biggest supermarket in Africa.
Shoprite positions itself at the lower end of the market , adopting a ‘pile it high and sell it cheap’ strategy.
Shoprite (2005) had 700 stores in 16 countries, and 63,000 employees.
Canada
Retail multiples
Wal-Mart
1994 , Wal-Mart bought the Canadian chain Woolco, acquiring 122 stores.
1999 , Wal-Mart had 166 stores in Canada
USA
General retail economy
Like Canada and Australia, the USA has had to respond to a food poverty problem amongst poor White people, ethnic minorities, and (especially in rural areas) the indigenous aboriginal population.
The Economist (22/12/2007, pp.104-106) described a phenomenon that many consumers outside the USA may find remarkable– the decline of the suburban shopping mall. Perhaps the first ‘mall’ in America was at Southdale, Minnesota – which predates the ‘Arndales’ that appeared in many UK city centres during the
1960s and 70s. Southdale opened in 1956 and by the 1960s the flight of White middle-class consumers from US city centres created a demand for these malls as replicas of the downtown centres these consumers had left behind – but in a perceived safer, more affluent, setting. Now (2007), the suburbs are perceived as dangerous, ridden with youth crime and poverty. The US malls are being squeezed from both sides – by the huge, low-priced, superstores on the very edge of town, and by a middle-class revival of city-centre living, taking trade back to the downtown area.
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Construction of malls in the US has stuttered almost to a halt and existing malls are closing, in part or entirely. As similar urban living trends to the US emerge in the
UK, British malls must watch with trepidation.
Total size of US grocery market , 2005, US$ 600 billion.
In 2002 , supermarkets had an overall share of 70% of grocery retailing.
2006, top 10 US grocery chains (source, ‘Tescopoly’, A Simms, 2007, p.58)
1) Wal-Mart, 2,089 stores
2) Kroger, 2,501 stores
3) Alberstons, 1,765 stores
4) Safeways, 1,540 stores
5) Ahold, 824 stores,
6) Publix, 876 stores
7) Dalhaize, 1,544 stores
8) H E Butt, 272 stores
9) Supervalu, 619 stores
10) Winn-Dixie, 563 stores
Retail multiples
7/11
2005 , 7/11 had 5,305 stores, turnover was US$ 7,200 million
Aldi
1976 , Aldi opened its first store in the USA, in Iowa
2005 , Aldi has 800 stores in the USA, across 25 states.
2005, Aldi was expanding in southeast Michigan, opening shops in impoverished
Detroit, an area abandoned by many grocery retailers.
2007 , Aldi had 800 stores in the USA.
Carrefour
1988, Carrefour entered the USA. After suffering losses of US$ 80 million, and failing to gain enough retail capacity to compete, Carrefour sold its 2 hypermarkets in
1993, but kept a stake in Costco .
Couche-tard
2005 , Couche-tard had 2,855 stores; turnover was US$ 1,600 million
Kroger
2005 , Kroger had 795 stores, turnover was US$ 2,000 million
Tesco ,
1/2007 , Tesco entered the USA, under the ‘ Fresh and Easy
’ fascia; the first of these was in California.
Wal-Mart (See also Asda)
1962 Sam Walton and his brother James opened the first Wal-Mart store in Rogers,
Arkansas.
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1991 , Wal-mart entered Mexico
1994 , Wal-Mart entered Canada
1995 Wal-Mart entered Brazil
1996 , Wal-Mart entered China , opening a store in Shenzhen.
12/1997 , Wal-Mart entered Germany, buying an upmarket chain, Wertkauf, and another chain, Inter-spar. See 2006 for reasons for exit from Germany.
1999 , Wal-Mart entered South Korea
1999 Wal-Mart had 3,600 stores in 9 countries, including 95 in Germany , and took over Asda with its 229 UK stores.
2003 Wal-Mart was the world’s biggest corporation
, with 1,700 stores worldwide and 1.2 million employees in the USA alone.
2004 Wal-Mart opened its first superstore in Japan , in Numazu, a seaside town south west of Tokyo (Guardian 1/6/04, p.15). Wal-Mart has 5,000 stores worldwide, across
10 countries.
7/2004 , Wal-Mart opened its 39th store in China . It was in the south-western city of
Guiyang.
11/2004 , Wal-Mart opened its 40 th
store in China , in Wuhan
11/2005 , Wal-Mart has nearly 5,000 stores in 15 countries.
2006 Wal Mart exited from South Korea where it had 16 stores.
2006 Wal Mart had 60 stores in China
2006 Wal Mart exited from Germany.
This cost the company US$863 million.
Wal-Mart had suffered nine consecutive years of losses on its German operation, of
85 hypermarkets. The company was not used to having a major chain, Aldi, undercut its position as cheapest retailer, and it misunderstood the German consumer culture.
For example it had greeters at al its stores to smile at all visitors, which antagonised
German shoppers
2006 , Wal-Mart announced a 26% drop in 2 nd
quarter year-on-year earnings to
US$2,080 million, (UK£ 1,100million), largely due to a US$ 863 million write off consequent on its exit from Germany (see 1997) ( Guardian , 16/8/06, p.21, Daily
Mail 29/7/06, p.69). Its 85 German stores were sold to Metro , who will add them to its existing chain of 288 ‘Real’ stores. Wal-Mart blamed strict German labour laws, and very limited shopping hours (short weekdays, no Sunday shopping at all) making it hard to operate its ‘high volume-low-cost business model’ and weak consumer sentiment in Germany. There was ‘fierce competition’ from three incumbent discounters; Lidl, Aldi, and Kaufland. However Wal-Mart also made its own errors
( The Economist , 5/8/06, p.54). It had a boss of the German operations who spoke no
German, followed by a boss who ran the German operations from England. Wal-
Mart’s German supply infrastructure was fragmented and costly, and it had too few
German stores to achieve worthwhile economies of scale. Wal-Mart also failed to anticipate the German consumer’s preference for choosing their own goods, unmolested by cheery shop assistants at their elbows.
2006 , Wal-Mart has 6,600 stores worldwide. Wal-Mart has 1.8 million employees worldwide, including 1.3 million in the US. The US accounts for some 80% of Wal-
Mart’s sales. The company currently operates in 13 countries; Canada, the USA,
Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Brazil,
Argentina, China (30,000 employees here), Japan, and the UK.
2007 , Wal Mart reported profits of US$12.1 billion in the year to February, and sales of US$345 billion.
2008 Wal Mart has 4,000US stores and 2,900 non US stores. It employs 1,900,000 staff.
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However declining consumer sentiment especially at home in the US, itself due to rising fuel prices, rising interest rates, a stagnation or even possible fall in house prices, and concerns over employment, may have led consumers to rein in their purchasing. Hurricane Katrina, in 2005, also did not help consumer spending. US shoppers to Wal-Mart appeared to be consolidating their spending, spending more per visit but visiting the store less often, cutting back on ‘top-up’ visits. In the UK, Wal-
Mart’s subsidiary, Asda, has ‘come under pressure from a resurgent Sainsbury’
( Guardian, ibid), and has failed to capture market share from the (locally) larger
Tesco. On the positive side, the World Cup boosted sales of food and footballrelated merchandise such as clothing ; Wal-Mart’s sales in Brazil, Central America, and Japan were strong.
Wal-Mart market share, USA, 2006, 28.8%
Whole Foods
Began in Austin, Texas, in 1980 , as the ‘Saferway’ vegetarian shop
1988 Saferway became Whole Foods when it acquired a new Orleans natural foods store also called Whole Food. Further acquisitions by Whole Foods followed.
2004 Bought the UK chain Fresh and Wild – see ‘UK supermarkets and timelines’.
2007 , Whole Foods has 195 stores, with annual sales of US$ 5.6 billion (UK£ 2.8 billion).
Central America
General retail economy
In 2002, supermarkets accounted for 36% of retail grocery sales.
Mexico
Retail multiples
Carrefour
1999, Carrefour had 17 stores in Mexico
Wal-Mart
1991 , Wal-Mart opened a Sam’s Club supermarket in Mexico City.
Further expansion in Mexico was delayed by the Mexican economic crisis.
1998 , Wal-Mart acquired a majority stake in Cifra.
1999 , Wal-Mart had 458 stores in Mexico, and a 53% stake in Cifra.
Puerto Rico
Retail multiples
Wal-Mart
1999 , Wal-Mart had 15 stores in Puerto Rico
Guatemala
General retail economy
In 2002, supermarkets accounted for 35% of retail grocery sales, up from 15% in
1994 and 25% in 1997.
Retail multiples
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La Fragua has 46% of the supermarket share in Guatemala, under a variety of fascias including
Supermercados Paiz and HiperPaiz.
Honduras
General retail economy
2002, supermarkets accounted for 43% of retail grocery sales, up from 25% in 1997.
El Salvador
General retail economy
In 2002, 2 chains, Superselectos and La Fragua, each had 55 supermarkets, plus smaller-format outlets. Overall (2002) supermarkets accounted for 37% of retail grocery sales, up from 34% in 1997.
Nicaragua
General retail economy
2002, supermarkets accounted for 19% of retail grocery sales, up from 10% in 1997.
Costa Rica
Retail multiples
Megasuper
The Megasuper chain has 15% market share (2002). Overall, supermarkets accounted for 50% of retail grocery sales in 2002, up from 45% in 1997.
Colombia
General retail economy
2002, supermarkets accounted for 36% of retail grocery sales.
Retail multiples
Carrefour
1999 , Carrefour had 2 supermarkets in Colombia
Brazil
Retail multiples
Carrefour
1975, Carrefour entered Brazil, buying Ultracenter in Sao Paulo state.
1999 , Carrefour had 193 stores in Brazil generating sales of US$ 4.3 billion.
Pao de Agucar
A consortium of five retailers, serving mainly an upmarket customer base.
1999 , Pao de Agucar had 285 stores, and annual sales of US$ 3.7 billion.
Sendas
Begun by a Portuguese migrant in the 1920s in Rio de Janiero.
1995 , Sendas had 40 supermarkets in Brazil.
1999 , Sendas had 73 supermarkets and annual sales of US$ 1.1 billion
Wal-Mart
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1995 , Wal-Mart entered Brazil. It set up a Sam’s Club outlet in 1995 in Sao Caetano, a less-affluent area near Rio de Janeiro.
1999 , Wal-Mart had 14 supermarkets in Brazil
Chile
Retail multiples
Carrefour
1999 , Carrefour had 2 supermarkets in Chile
Argentina
General retail economy
In 2000, supermarkets accounted for 57% of retail grocery sales, up from 36% in
1992.
Retail multiples
Carrefour
1982 , Carrefour entered Argentina
1999 , Carrefour had 300 stores in Argentina.
12/2007, Carrefour had 557 stores in Argentina
Wal-Mart
1999 , Wal-Mart had 13 supermarkets in Argentina
General retail economy
Retail legislation
Independent retailers
Retail multiples
Named multiples
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