Familiar names retain their ranking in this year's list of top global players in food retail, but even big companies like Wal-Mart and Carrefour are exercising caution in their cross-border strategies.
Elsevier Food International, Vol. 6, Number 3, September 2003
Hayley Myers

Wal-Mart is easily the largest food retailer, through treated by many as a 'mass merchandiser'.
Whatever the categorisation, it is having a major impact on food retailing worldwide. It is the all-American hypermarket, a 'one stop' shop where the emphasis on systems and control has given the business a massive lead over the competition. Following its European acquisitions, it has moved ASDA up a notch in the UK, enabling it to cut prices and become the uncontested superstore price leader in the UK. It has unfortunately been much less successful in Germany, proving that even the best retailers need to have humility when operating in a foreign marketplace and adapt their offer to suit local conditions.
The next two in Mintel's retail ranking are major multinational players. Carrefour - the world number two - may have a turnover of only one-third of that of Wal-Mart, but it is the global leader in over three times as many countries. Carrefour has developed organically - usually using its own fascia. It has worked to adapt the retail offer to local market conditions but also seems to have been able to maintain control. Ahold has expanded by acquisition, and while we admire the way in which it has been able to raise the standards of local retailers - local front end, common back end -there have been major failures in controlling its subsidiaries, hence its current problems.

Growth problems
The fourth and fifth top-ranked retailers also illustrate the problems of growth. Both Kroger and Albertsons have found that expanding in as diverse a market as the US can be just as difficult as expanding in Europe. Both have recently suffered setbacks, though both are now on an improving trend again. Players from such large domestic markets are less likely to internationalise, or at least not until they are very mature. While having such growth potential within the domestic market is clearly a positive factor, it does mean that they are not developing experience in operating internationally.
At number six, the UK's leading retailer Tesco is following a mixed strategic game plan. Tesco is following a variety of paths for growth, but importantly it is not taking its eye off the competition at home. Tesco has set its sights on entry into emerging markets in Eastern Europe and Southeast Asia where it has an immediate competitive advantage. Importantly it knows what it is good at. And that is food retailing. It has stuck with its area of core competency and besides internationalising food retailing it is also rolling out a portfolio of complementary formats at home, from Extra hypermarkets, to Tesco superstores, Metro city centre c-stores and Express forecourt and neighbourfood stores as well as a successful online business.
Hard discounters: Voluntary groups are still major players, particularly in Europe and specifically in the food sector. However, although they remain very strong in some markets, the general trend is towards them losing market share. Essentially we feel that modern food retailing requires standards of control that voluntary groups cannot aspire to and they are prone to losing members and then have diffuculty in recruiting replacements.
German hard discounter Aldi is as innovative in its way in post-war retailing as Carrefour or Wal-Mart, although it is at the opposite end of the spectrum to those large-scale retailers.
Rather than seek growth through expanding the product offer, Aldi seeks market dominance through  being the price leader in a small number of absolutely in Germany, but is also limits the scope of the food retailers in that marketplace, so that the German food retail sector is far smaller than would be expected given the population and levels of wealth- an outcome of its total  price obsession, limited added value ranges and service, and lack of a move into the non-food area.

The way forward?
The grocery retail sector is only going to become more competitive, and retailers are going to have to find ways to compete and to differentiate their offer in order to increase sales, and importantly, margin. For many companies, the domestic market has become saturated, at least in terms of core formats, i.e. hypermarkets, discounters and superstores.  Therefore, for the largest players, domestic organic growth is not an option, either due to market saturation or planning legislation. Furthermore, in mature market, large-scale acquisition is unlikely due to regulation by competition authorities (for example, the ongoing Safeway deal in the UK).
One trend then will certainly be more cross-border moves. There has been much speculation about the development of giant pan-European and indeed global groups.
However, such ‘super-retailers’ simply have not expanded anywhere near to the extent expected. Indeed, the largest acquisition deal was actually a domestic deal between the French number one and two Carrefour and Promodes. Today, we have a whole raft of large food retailers dominating their mature, domestic markets. The question will be do they follow a path of growth into developing market, whether in Eastern Europe, Southeast Asia or Latin America, or do they actually join together in their home region of Europe.
Apart from market consolidation and internationalisation, retailers are also looking into other ways to grow their businesses. One of these is responding to consumer demand for more convenience, in terms of quality and choice of product offering and developing store formats and service. The UK leads Europe in terms of the convenience store concept. The format has been adapted to suit demand whether in city centres or local neighbourhoods, and this is a trend we will se more of across Europe and beyond.
Retailers are also investing in the development of ever more sophisticated own label premium ranges, particularly those giving added value such as ready meals. Again, it is really the UK players that lead here, historically Marts & Spencer. Premium own-label products do not only increase profit, but are an important means of store differentiation and competitive advantage.
Food retailers will also seek to grow margins through an increasing focus on non-food. The winners here will be grocers that manage to provide a truly authoritative range, whether in clothing, electrical or cultural goods, for example. In addition to a well balanced and focused product offering, retailers will need to provide service and effective merchandising in order to truly create a shop-in-shop experience, so that the range actively competes with the specialist sector as well as other hypermarkets.
The George clothing range at ASDA is just such an authority.