CHICAGO -- Food-industry executives had better become more specific when discussing the "global market." Retailers outside U.S. borders vary widely in terms of size, sophistication and their approach toward meal solutions in the cultures they serve, according to a panel of retailers assembled here for this month's Food Marketing Institute annual convention. But they all face the same challenge -- to provide customers with the food they want at a price they're willing to pay, and to make the shopping experience enjoyable.
Cees van der Hoeven, president and chief executive officer of Ahold, Zaandam, Netherlands, said North America and Western Europe are fully matured, prompting the company to look at Asia, South America and Eastern Europe for sales growth.
"The growth markets in our industry are the rest of the world," he said.
Sales growth has been good in the United Kingdom, he said, while stores on the highly consolidated continent have lagged.
Poland is shaping up to be a competitive hot spot, he said. And as more European players move into the market, "that's going to be a real bloodbath," he said.
Worldwide, as in the United States, bigger will mean better, at least in terms of corporate health, van der Hoeven said.
"Companies will grow at the expense of smaller stores."
Brazil, the second-largest consumer market in the Americas, has seen a 65% increase in consumption across product categories since inflation came under control four years ago. "We no longer have the hyperinflation of the past," said Paolo Fiejo, president of Exxtra Economica Supermercados, Porto Alegre, Brazil. Inflation is now about 5%, he said. Brazilian consumers are more demanding than ever, avidly comparing prices and benefiting from extra services, Fiejo said. For example, "convenience means home delivery of groceries for upscale urban households."
Despite increasing consolidation, the retail grocery market remains fragmented, Fiejo said, with the five leading Brazilian chains possessing combined market share of "no more than 28%."
Brazil, Fiejo said, has been a technology leader in its continent. "Evidence of this is our rapid adoption of Efficient Consumer Response."
Brazilian consumers can now pay for goods electronically in many food stores, Fiejo noted. Electronic payments accounted for 6% of all sales in 1997, he said.
Van der Hoeven said that "technology in South America and Asia has to take a tremendous leap forward." Europe, followed by the United States, leads the way, he said.
"This issue will separate the weak from the strong. Smaller companies are going to have a real hard time making those investments."
Peter Hung, chairman of Pearl River IGA Ltd., Hong Kong, said Chinese retailers are also catching up on technology. Looking to the West for guidance, they are implementing scanning systems and smart-card programs, he said.
Perhaps the biggest benefit to the industry will come from increasing use of interactive, computer-based training for employees, Hung said.
"That will cut our learning curve substantially," he said.
Hung said the nature of economic growth in China is changing. Growth from exports is slowing, but infrastructure development is expected to pick up the slack. This will benefit areas in the North and the interior, where supermarkets are generally not well developed, he said.
While supermarket sales in China have been flat or down -- and that trend is expected to continue through 1998 -- the construction of larger stores will eventually spur growth, Hung said.
Most stores in China are about 5,000 square feet. New supermarket units range from 10,000 square feet to a maximum of 20,000 square feet.
"In the cities, competition is quite fierce. Outside of cities it will be less, but the spending power is less also," he said.
Home-meal replacement, while an enticing concept, is not a priority for retailers in China and Brazil right now, according to Hung and Fiejo.
"It's got to be a good idea. It could become a big thing, but it's not a reality in the supermarket industry of today," Hung said.
Hung said he expects HMR to become more prevalent amid a current trend to "work more, earn more, spend more."
"Ten years, ago, most people would bike home for dinner," he noted.
Now, the few stores large enough to offer HMR -- Hung estimated that figure to be about 40 in Shanghai -- are doing well with it.
"For the stores that do put it in, it's very popular," he noted. A Wal-Mart is profiting from its $600,000 investment in a sushi machine; and another retailer has customers waiting a half-hour in line for roasted chicken, Hung said.
In Brazil, "It's not on the top of the retailer's mind," Fiejo said. "The action is coming from the supplier's side."
HMR will become a bigger issue in Brazil as more women go to work and "consumers in large urban areas increasingly demand convenience," he said, adding that frozen dishes are one segment that has grown over the last four years.
"I see this as a growing phenomenon in all places," van der Hoeven said of HMR. "It's clearly a function of wealth. In the United Kingdom they are most advanced on this issue, even more so than the United States. On the continent, it's much less developed."
All of Ahold's stores in Thailand have large prepared-food courts, he said; The food court is about the same size as the retail selling area. HMR's global proliferation has not come without potential pitfalls, however. Van der Hoeven, for one, was apprehensive about quality and safety control.
"I am very concerned about hot-food bars," he said. "The quality is extremely questionable. We are in danger of compromising the reputation of our industry."
Nevertheless, all three panelists agreed, HMR is just one element of the entertainment shoppers worldwide have come to expect.
"Most consumers don't like shopping for food, but they have to. The challenge for us is to make it fun," van der Hoeven said. "We are building stores nowadays to make theater, that we can change regularly."
Even in China, where supermarket shopping is a relatively new experience, "you need some fun," Hung said.
"Promotions were unheard of before," he said, as were fresh items. "Now all the big stores are offering fresh. They're losing money, but offering fresh as a loss leader has become necessary."
