The index, which forms part of IGD's Global Retailing 2004 report, is designed to look further than turnover to rate retailers' international presence as measured by global capability and strength. Despite Wal-Mart being by far the world's leading retailer, with sales of $244,524 million (year to Jan 2003), IGD rates Carrefour as the clear number one global player, with Wal-Mart five points behind.
Carrefour remains the leading global retailer, with operations in 33 countries and a strong domestic market position. Given its dominance in Europe, Carrefour now considers the entire region as its 'enlarged home market', although it continues to develop scale in Asia, South America and the Middle East. It has also developed into a multi-format retailer with strong competence in the supermarket and discount sectors and aims to develop all three of its formats (hypermarkets, supermarkets, discount stores) in each country, providing it with substantial opportunity for future growth as it currently operates only one format in 19 of its 33 markets.
This year Wal-Mart has succeeded in capturing the number two position from Ahold, which has had a challenging year and is in the process of withdrawing from Asia and South America. In the past year, Wal-Mart's international sales have grown to $40.8 billion. Its global private label is developing strongly with George clothing now available in Wal-Mart stores across six markets. It has also carried out global procurement internally for its first full year, increased its stake in Seiyu to 37.7% and introduced Wal-Mart systems and completed its first store conversion in Japan.
Metro remains in fourth place, while Tesco stays firm at fifth with its focused international strategy helping it pick up additional points. Its emphasis on developing local managers is generating strong results, with 17.9% of sales now delivered from its international operations and leading positions held in six of its operating markets - the UK, Republic of Ireland, Hungary, Poland, Slovakia and Thailand.
Other notable upward movers in the index include Auchan which moves up to sixth place and Rewe, which has made the most significant GRI score gains (+8 points). Auchan has achieved a 13% increase in its international turnover. In the past 18 months, it has clearly upscaled its activity in key European markets, entering Russia and increasing its stake in its Italian partner, the Eurofind holding company. It has also clarified its international strategy and has withdrawn from some markets in which it had limited scale, Mexico and the US, in order to focus on building leading positions in core markets.
Rewe has substantially improved its Index Score this year, with the acquisition of Bon Appetit in Switzerland and the success of the earlier Standa acquisition in Italy. The German grocery retailer has also rationalised its portfolio to focus on markets where it can attain a leading position, with the sale of assets in Hungary last year. It has yet to expand beyond Europe, however it benefits from a clear strategy balancing operations between high and low risk European markets. IGD expects it to develop its operation in Russia, where soft discount formats are currently proving extremely successful.
IGD Chief Executive, Joanne Denney-Finch OBE, says; "We do not expect globalisation to cease, however, there are many uncertainties in developing a global retail business. Retailers seeking to develop scale in the emerging markets, can no longer rely on expectations of strong market growth to deliver strong performance - instead, they must ensure that they have world-class operational capabilities, combined with a high-degree of cultural awareness and the ability to understand new market dynamics.
"In the future we will see companies rationalise their global activities and exit countries where they do not foresee an opportunity to develop a leading position or where the outlook and business profitability are disappointing. Ultimately, these exits and the subsequent consolidation implied, will result in a handful of global retailers emerging. These leading players will emerge with a credible international presence, a strong set of world beating retail skills and will be in a solid position to achieve good returns from international markets. They will also be complemented by a host of strong national players in each market, which will ensure that the global retailers cannot become complacent."
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