February 8, 2008
Indiaretailing.com: Chinese and Russian Retailers in the World’s Largest Retailers List
Through a special arrangement, what follows is an excerpt of an article from
Indiaretailing.com, presented here for discussion.
Chinese and Russian retailers have, for the first time, ranked on the list of the world’s 250 largest retailers, according to 2008 Global Powers of Retail, a report from Deloitte Touche Tohmatsu, in conjunction with STORES magazine.
The report said six retailers from the two countries have entered the Top 250 rankings, including Chinese retailer Bailian Group, which entered the list at number 101. The highest ranked Russian retailer was X5 Retail Group NV (X5) at number 191. Bailian was formed in 2003 when the Shanghai municipal government merged several retailing groups in an effort to reduce costs and compete more effectively against foreign companies. X5 was formed in May 2006 through the merger of Pyaterochka and Perekrestok, two leading Russian chains.
The other new entries from China are Suning Appliance Co. Ltd. (216), GOME Electrical Appliances Holding Limited (#218) and Dalian Dashang Group (224). The other Russian chain is privately owned Euroset Group (229), that country’s largest mobile handset retailer.
Dr Ira Kalish, Deloitte Research, said, “This is an exciting time for global retailing. There is evidence of consolidation and modernization in emerging markets, and the strategies behind the emergence of these new stores reflect a growing maturity among emerging market businesses.”
Wal-Mart continued to top the list, and increased its lead over second placed Carrefour. The big mover was Tesco PLC (Tesco), which overtook German retail giant Metro AG to take fourth place, the first movement among the Top five since 2003. In doing so, Tesco also became the second largest retailer in Europe and is gaining ground on Carrefour.
Dr. Kalish added, “The Top 10 retailers’ share of Top 250 combined sales continues to inch up. With combined sales of $978.5 billion in fiscal 2006, the world’s 10 largest retailers accounted for 30.1 per cent of Top 250 sales compared with 29.4 percent in 2005.”
Discussion Questions: How do you think the rise of Chinese and Russian retailers will influence the style of retailing in other world markets and international trade? With retailer consolidation taking place in foreign markets, do you think it will be long before these large concerns shift their eyes towards the U.S. market? Can you elaborate on experiences you’ve had with Russian and/or Chinese retailers?
BrainTrust
Recent Discussions
Discussion Questions
Poll
The rise in Chinese and Russian retailers will likely try to influence other world retail markets in much the same way that Japanese, German and Korean auto makers have influenced worldwide auto sales.
While the economies of China and Russia are expanding rapidly–which bodes well for domestic growth–the key consumption market in the world is still the the U.S. Thus I can envision future attempts by Chinese and Russian retailers to try to invade our retail environment. Will they succeed? It’s too early to say. But Wal-mart, Kroger, Costco and other top U.S. retailers will just have to stay at the top of their game to maintain dominance in the States.
So stay tuned.
These are societies on the rise. Middle classes growing, elite classes growing, therefore, significant growing markets. There is no real reason to assume retailers can transplant themselves from North America and Europe and create a compelling story in those countries. We may see our brands sold there, but the retailers themselves? They’ll be local.
Of course the biggest challenge here will be counterfeiting. We’re using these countries for our merchandise sourcing, but they have all our specs, all our designs…it wouldn’t take much to cut out the middle man.
But I expect these countries to be hot, hot, hot retail markets.
The rise of Chinese and Indian retailers, among others around the world, is good news for consumers and brands. I think we’ll see a growth in Russian and Chinese brands globally and the exporting of brands to and from the US will continue to grow.
I think it is premature to expect the actual retailers to be present in US retail for several years at least. In the reverse, if a US or European retailer isn’t already established in these countries it will be difficult to gain a foothold as retailers there have learned to effectively compete.
Looking to the future, retailers will always have ambitions to expand overseas. Retailers in all countries need to stay sharp and remain relevant, to keep foreign retailers from gaining a foothold. Tesco is making the latest attempt in the US and while I believe their concept will succeed, I don’t see many others likely able to duplicate the effort.
I have years of experience working in the Russian supermarket industry and have observed stores in China. In 1994, I designed the first Russian supermarket for the average Russian and a company plan to support it. The first store was opened in 1995. By 2005, we were a 1 billion dollar retailer that is now part of X5. When I did this design work, I took ideas and concepts from western Europe, USA and Russia. No single area dominated the design, rather a blending to achieve an anticipated market need.
Russia, China and India are all prime markets for supermarkets due to their emerging middle class. Everywhere in the world are new good ideas for US supermarkets, but no single foreign model or concept will make the current formats obsolete. Just look at Tesco’s new format. I predict that without some serious changes, we are looking at another Food Lion invasion of Texas or Carrefour’s ill-fated US entry.
Without a doubt, there are concepts in Russian supermarkets that American consumers would love, but not their whole store.
I think it’s going to be a while before Russian retail comes to the U.S. The country is still trying to get its own house in order at a time of political and economic instability. It is for this reason–along with the fact that the Russian Mafia is a powerful force and will extort every dollar they can from companies–that some chains are choosing not to go into Russia at this time or scaling back expansion.
However, I believe we are seeing an impact on retailing in Europe and, to a curtain extent, in the U.S. The Russian brand of capitalism has produced a lot of people with a lot of money. They are upgrading their lifestyles in food, apparel and other area. They are traveling more and spending huge amounts of money in the “fashionable” capitals of Europe.
China? Who knows! However, it’s increasingly clear that if you’re not doing business in China already, it’s going to be very difficult to get a foothold. The big chains are there–or coming–and the more the Chinese learn about retailing, the less inclined they will be to give the business away to foreigners.
One of the biggest opportunities in China now, as I’ve been told, is in logistics–end-to-end supply chain solutions. This includes in-store execution and human resources. Chinese retailers are prone to building big stores that stuffing as many employees in there as can fit. They think this is good customer service. However, most of them just stand around doing nothing. A huge population and low pay enables them to do this. But I think human resource management is an issue.
Well-managed Chinese, Russian, and Indian retailers are unlikely to enter the US, Canadian, or West European markets. It’s more likely that they’d grow within their home markets first, then enter the frontier markets, like Vietnam and Africa. Returns on investment in developed markets are generally much lower than emerging and frontier markets.
More Discussions
Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?OpenAI Names the Infrastructure Standard for Agentic Commerce
Will OpenAI or Google (or another entity) set the gold standard for agentic commerce?Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?
The rise in Chinese and Russian retailers will likely try to influence other world retail markets in much the same way that Japanese, German and Korean auto makers have influenced worldwide auto sales.
While the economies of China and Russia are expanding rapidly–which bodes well for domestic growth–the key consumption market in the world is still the the U.S. Thus I can envision future attempts by Chinese and Russian retailers to try to invade our retail environment. Will they succeed? It’s too early to say. But Wal-mart, Kroger, Costco and other top U.S. retailers will just have to stay at the top of their game to maintain dominance in the States.
So stay tuned.
These are societies on the rise. Middle classes growing, elite classes growing, therefore, significant growing markets. There is no real reason to assume retailers can transplant themselves from North America and Europe and create a compelling story in those countries. We may see our brands sold there, but the retailers themselves? They’ll be local.
Of course the biggest challenge here will be counterfeiting. We’re using these countries for our merchandise sourcing, but they have all our specs, all our designs…it wouldn’t take much to cut out the middle man.
But I expect these countries to be hot, hot, hot retail markets.
The rise of Chinese and Indian retailers, among others around the world, is good news for consumers and brands. I think we’ll see a growth in Russian and Chinese brands globally and the exporting of brands to and from the US will continue to grow.
I think it is premature to expect the actual retailers to be present in US retail for several years at least. In the reverse, if a US or European retailer isn’t already established in these countries it will be difficult to gain a foothold as retailers there have learned to effectively compete.
Looking to the future, retailers will always have ambitions to expand overseas. Retailers in all countries need to stay sharp and remain relevant, to keep foreign retailers from gaining a foothold. Tesco is making the latest attempt in the US and while I believe their concept will succeed, I don’t see many others likely able to duplicate the effort.
I have years of experience working in the Russian supermarket industry and have observed stores in China. In 1994, I designed the first Russian supermarket for the average Russian and a company plan to support it. The first store was opened in 1995. By 2005, we were a 1 billion dollar retailer that is now part of X5. When I did this design work, I took ideas and concepts from western Europe, USA and Russia. No single area dominated the design, rather a blending to achieve an anticipated market need.
Russia, China and India are all prime markets for supermarkets due to their emerging middle class. Everywhere in the world are new good ideas for US supermarkets, but no single foreign model or concept will make the current formats obsolete. Just look at Tesco’s new format. I predict that without some serious changes, we are looking at another Food Lion invasion of Texas or Carrefour’s ill-fated US entry.
Without a doubt, there are concepts in Russian supermarkets that American consumers would love, but not their whole store.
I think it’s going to be a while before Russian retail comes to the U.S. The country is still trying to get its own house in order at a time of political and economic instability. It is for this reason–along with the fact that the Russian Mafia is a powerful force and will extort every dollar they can from companies–that some chains are choosing not to go into Russia at this time or scaling back expansion.
However, I believe we are seeing an impact on retailing in Europe and, to a curtain extent, in the U.S. The Russian brand of capitalism has produced a lot of people with a lot of money. They are upgrading their lifestyles in food, apparel and other area. They are traveling more and spending huge amounts of money in the “fashionable” capitals of Europe.
China? Who knows! However, it’s increasingly clear that if you’re not doing business in China already, it’s going to be very difficult to get a foothold. The big chains are there–or coming–and the more the Chinese learn about retailing, the less inclined they will be to give the business away to foreigners.
One of the biggest opportunities in China now, as I’ve been told, is in logistics–end-to-end supply chain solutions. This includes in-store execution and human resources. Chinese retailers are prone to building big stores that stuffing as many employees in there as can fit. They think this is good customer service. However, most of them just stand around doing nothing. A huge population and low pay enables them to do this. But I think human resource management is an issue.
Well-managed Chinese, Russian, and Indian retailers are unlikely to enter the US, Canadian, or West European markets. It’s more likely that they’d grow within their home markets first, then enter the frontier markets, like Vietnam and Africa. Returns on investment in developed markets are generally much lower than emerging and frontier markets.