Retail giant Tesco is set to overtake Carrefour as the second largest retailer in the world in the next five years, according to new research from IGD.
IGD’s latest report, Global Retailing: Preparing for Change, predicts that Tesco will grow at a faster pace than French retailer Carrefour, with forecasts suggesting a compound annual growth rate of 11% and 7% for Tesco and Carrefour respectively between 2007 and 2012. This will sit them behind Wal-Mart, currently in the number one spot.
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Emerging markets are likely to attract even greater interest in the future as retailers enter a new phase of globalisation, characterised by a more cautious approach and a greater focus on asset performance. Low prices, a strong value message and operational efficiency will also be important for success.
“The next few years are likely to be challenging for the leading global retailers, yet all are well placed to achieve further growth, particularly internationally,” said Joanne Denney-Finch, IGD’s chief executive. “Scale alone will not determine who will win in today’s global trading environment. Global retailers must also show increased simplicity, greater efficiency, flexibility and strong brand positioning to succeed.”
International expansion in markets such as China, US and India is expected to contribute to Tesco’s annual turnover reaching US$157.1bn by 2012. Carrefour is also expected to achieve strong growth in high potential markets such as Brazil and China, enabling it to offset a slowdown in more mature regions like Western Europe.
Wal-Mart will increase its turnover by around $100bn in the next five years
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By GlobalDataReport author Jonathan Gunz, senior business analyst at IGD, added: “Emerging markets will not be immune to the global economic slowdown, yet the pace of growth will continue to outstrip that of the developed world.
“We estimate that in grocery, retail markets in China and India will each grow at a compound annual rate of 13.2% between 2008 and 2012, exceeding any other country in the top ten.”
IGD predicted Indonesia, Ukraine and Vietnam as other emerging markets to watch.
