Internationalism is high on the agenda for 2011

In the past few years the retail sector has been dominated by the effects of the global economic crisis, with consumers in search of value and low prices. With signs of a slight improvement in consumer confidence in 2011, will customers return to shopping habits of old or has the retail landscape shifted to embrace a new set of values?

If we take consumer spending as an indicator of confidence, things are looking more positive. We are likely to have seen growth of about 7% in consumer spending during 2010, against a decline of 3.7% in 2009. This growth has largely been driven by consumers in emerging markets where spending has risen by as much as 22% against a rise of 3.8% in the developed world.

Growing consumer confidence has also filtered through to the retailers. In 2010 we saw a rise in retailer confidence, with the number of retailer market entries on a global scale rising to 305, up from 233 in 2009, but still short of a mammoth 541 in 2007. Mergers and acquisitions also rose to 513 in 2010, up from 467 in 2009, but again were short of the 2007 heyday when there were 1,393.

Unsurprisingly, it was the world’s largest retailers that drove this return to confidence, with Walmart’s offer for South Africa’s Massmart, Zara’s entry into India and Uniqlo opening its first Russian store dominating the headlines.

It is clear internationalisation is high on the agenda for the majority of large retailers. With the focus in developed markets largely on small formats, ecommerce and cost control, the world’s biggest retailers are looking towards emerging markets to drive sales growth.

While the renewed quest for internationalisation is being driven by the retailers’ quest to boost revenue, consumers are also driving this trend. In emerging markets consumers are increasingly demanding modern shopping facilities and brands.

Going into 2011, focus will be placed on Walmart’s pending acquisition of Massmart and its potential impact on the Southern African retail scene. There will also be interest in Indonesian retailer Matahari, put up for sale in November.

With Tesco planning to double its sales in Central and Eastern Europe there will be more than a tentative eye placed on its activity. Russia will remain a hot topic, with X5 Retail Group’s acquisition of Kopeika likely to put increasing pressure on international retailers to bite the bullet and enter the market.

Greg Hodge, research director, Planet Retail.

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