GOING GLOBAL, SOONER OR LATER

The season for turning an eye toward other parts of the globe is upon us, at least if trade-association activity is much of a guide. Here's what's going on: Last week the Private Label Manufacturers Association met in Amsterdam, this week the Canadian Council of Grocery Distributors meets in Vancouver and next week CIES, The Food Business Forum, convenes in Paris.So, in the spirit of the season, several

The season for turning an eye toward other parts of the globe is upon us, at least if trade-association activity is much of a guide. Here's what's going on: Last week the Private Label Manufacturers Association met in Amsterdam, this week the Canadian Council of Grocery Distributors meets in Vancouver and next week CIES, The Food Business Forum, convenes in Paris.

So, in the spirit of the season, several articles and a research project in this week's Supermarket News are aimed at global retailing. They are on Pages 10 to 14.

The centerpiece of this news coverage is a ranking, by net sales volume, of the 45 largest majority-food retailers in the world. One of the ways the chart, and the accompanying news article, can be particularly useful is to consider how many of the world's largest food retailers have a formidable economic presence outside the borders of their home countries.

Included on such a list would be Tenglemann, Germany; Carrefour, France; Aldi, Germany; Sainsbury, United Kingdom; Ahold, Netherlands; Delhaize, Belgium; Spar Handels, Germany; Dairy Farm International, Hong Kong, and many more. What motivates retailers such as these to reach far beyond their home countries? Glen Terbeek of Anderson Consulting is quoted in this issue on that: "This whole industry is built on the idea of growth, but most of the major players have maxed out in their markets. So their only choice is to expand overseas into less-developed areas. If you're a retailer in a nonsaturated market, watch out."

And that's the essence of it: When business in the home country is saturated, a search for less-saturated markets is activated.

Market saturation came to European countries some time ago, not just because the countries of Europe tend to be small as compared with those of North America, but because restrictive anti-expansion regulations often make store rollouts exceedingly difficult and costly.

That explains why relatively few food retailers in the United States have felt a need to expand to other parts of the world: There's still some room for expansion left in this nation, and barriers to expansion are fairly lax. Moreover, regional U.S. food retailers -- which describes virtually all of them -- can make a leap by acquisition or startup from one region to another. The extended company remains a fully domestic operation, of course, even though the distance might be great. For instance, Hannaford Bros., with a history of more than 100 years of running stores in New England, established a foothold in a faster-growing region by acquiring Wilson's Supermarkets in North Carolina. On the startup side, Byerly's, Edina, Minn., is expanding into Chicago by building stores in that market.

Those U.S.-based companies that have made efforts to build a retailing presence in other nations -- most conspicuously Wal-Mart and Price/Costco -- have actually bumped against saturation of the entire U.S. market, and so became subject to the same pressures that motivate companies in other parts of the world to jump boundaries.

This clearly shows that sooner or later domestic food retailers too will go global.

Letters to the editor and other comments can be sent using the e-mail capability of the web site at http://www.supermarketnews.com. Letters may also be sent to the mailing address at the top of Page 4. Letters may be edited for clarity and brevity. The web site also features weekly news updates, posted the Friday prior to SN's publication, along with classified advertising and information about Brand Marketing, the SN Directory and the SN Archive. A sample issue of the SN Group's weekly IS Solutions newsletter is also provided.