After hunkering down and sticking to the knitting during the recession, the attractions of trading in foreign climes are once again moving up the retail agenda despite the rather uncertain trading conditions at home.
Sainsbury’s, which has traditionally adopted a ‘here be dragons’ world view of anywhere much further than Dover after its ignominious retreats from Egypt and the US, is the latest to ponder international growth. The grocer is sussing out possibilities in China.
Sainsbury’s backwardness in venturing overseas is illustrated by the fact that competitors it trades next to in Bognor have been making themselves comfy in Beijing for some time.
And Walmart moved the dial this week with plans for a daring push into sub-Saharan Africa. Its proposed $4.2bn (£2.66bn) takeover of South African group Massmart is a sign that the pace of internationalisation is being ratcheted up and now the scramble is on for a toehold in ‘emerging’ emerging markets.
Perhaps the next big market for Brits might be Brazil. The whisper is several well-known UK store groups are taking a look and it might stage retail’s next big carnival of international expansion.
China is such a big market that, should it choose to open there, Sainsbury’s should have plenty of opportunity to grow. But, despite others’ success overseas, it is right to be cautious before pushing ahead. International markets have a habit of upsetting retailers’ best-laid plans and the dangers of doing business in some outweigh the opportunities.
Take Russia, where a few weeks ago rival shareholder groups duffed each other up in the foyer of hypermarket group Lenta. The R in BRIC looks pretty toxic. You rarely hear Western retailers trumpeting about their success there. Is it just coincidence that it is one of the few big international markets where Tesco has no presence?
No comments yet