Retail Grocery in a Global Environment
Around the globe companies such as Walmart, Carrefour, Metro, Tesco and Ahold are names that come to mind when discussing international grocery retailers. Each of these organizations has realized significant benefit in pursuing international opportunities; with a large portion of their total revenue coming from foreign sales. Retail giant Walmart attributes just over 18% of its annual net sales to revenue generated in 15 non-US countries. Carrefour operates in 32 foreign countries which generate over 48% of its net sales. To ensure success in international business companies must adopt the right strategies based on local cultural, political environment, and resource availability; as well as brand promotion and logistics opportunities. While the challenges of international grocery retail are great, the opportunities and return are even greater. (MSG, 2013)
Opportunities
International commerce has been around for centuries. As early as the 14th century ships carried exported foods and spices to foreign markets for trade. While the methods and revenues have certainly improved, the basic opportunities have not diminished. Industrialization efforts in high population countries such as India and Japan often result in rapidly diminishing agricultural land and increased consumer revenue. This combination of more revenue and less domestic product creates a customer base that is eager for imported food goods and specialty products that were previously unavailable or unaffordable.; in short a financial opportunity for global grocery providers that rival domestic opportunities. While increased demand is certainly a driving force for global commerce, companies like Walmart also recognize the logistic opportunities of having a foreign presences in strategic areas of the globe. As technological advances make communication, and product promotion, available to more of the world, demand for products has begun to go outside of domestic markets and single imports. Consumers want wine from France, Spices from Malaysia, seafood from the U.S. and other country specialized foods. Effective global positioning can provide a global food provider with outlets and resources that provide the variety of products that their customers are seeking.
Challenges
Although a market may appear ripe for the entry of a global provider, governmental regulation may impede the plans of a would-be foreign presence. Although companies like Walmart have been trying to operate in India for years, it was not until just a few months ago that the Indian government was willing to allow the retail/grocery giant to operate within its borders. Even when a business is allowed to operate in a foreign market it may face additional regulatory costs, import tariffs and advertising limitations.
Beyond the financial and regulatory challenges that may exist, a global food provider will also be faced with the challenge of understanding, and integrating its business, into the
