Italy, Turkey and Russia have been tagged as the next battlegrounds for the fight for European Retailing supremacy.

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Food industry think tank IGD said that the battle will move from markets such as Germany, France and the UK, which account for 32% of the overall European grocery market to smaller developing markets.


Louise Spillard, programme manager, IGD says: “Increasing planning and competition regulations in the major European grocery retailing markets means we will see retailers increasingly concentrate on organic growth in emerging markets. Tesco has a strategy to develop local share in a select number of overseas markets where it can grow organically rather than attempting a large acquisition in a major market where the business risk is greater.


“Other leading retailers, such as Carrefour and Auchan, are also focusing their European ambitions on markets which have a lower level of market concentration. As a result we can see things starting to hot up in Italy and predict that Turkey and Russia will be the next battlegrounds.”


Italy

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The Italian grocery retail market is going through a period of deep transformation. IGD analysts believe that the limited development of modern retailing, changes to the legal framework and the prosperity of the country make Italy an increasingly attractive market for international retailers.


French groups, Carrefour (which already holds the number two position) and Auchan (no. 3) are both expected to increase their activities. Casino (France) and Tesco have indicated interest in the market and US group Wal-Mart is expected to focus on France and Italy next after establishing itself in the UK and Germany. IGD estimates the Italian grocery retail market to be worth €134bn making it the fourth largest grocery market in Europe.


Turkey


Despite recent economic difficulties, Turkey will be the next hot spot. The country’s growing population (60% of consumers aged between 15 and 35) and its geographical position as the gateway to Central Asia, leads IGD to believe that its strategic importance will increase in the future.


Carrefour and German group, Metro already operate in Turkey, and IGD expects other companies to pursue the opportunity. For example, Tesco has just announced an agreement to hold partnership discussions with Turkish retailer Kipa, which has a 10% market share of the retail trade in Izmir (Turkey’s largest city). Casino reportedly held talks with two major retailers, and Wal-Mart has been rumoured to be considering entry.


Russia


The Russian retail market is estimated to be worth €99 billion and IGD believes that between 2005 and 2010 the Russian opportunity will become increasingly attractive as the other emerging markets begin to be saturated with the presence of global retailers. 


Auchan has just opened a store in Moscow and plans to open ten stores by 2006. German retailer, Rewe has already indicated an interest in taking part in a project restructuring the wholesale trade system in Moscow. Wal-Mart has reportedly met the mayor of Moscow with the aim of discussing retail developments in the city.


Louise Spillard says: “We estimate that by 2006 the European grocery retail market will grow by over 17% to €1.4 trillion and the top ten retailers will account for over one third of the market. There will be movement on the leader board as these small, but important battles are won and lost but we believe that Carrefour, Aldi, Lidl and Ahold will be the most likely victors. In addition, Tesco looks well placed to improve its European standing, with recent moves in Poland and Turkey signalling that the retailer intends to have a long term future at the forefront of European retailing.”