Entry into the Russian market should be a priority for Wal-Mart within the next year, according to new research from food and grocery industry think tank IGD.
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Although Wal-Mart may be too late to gain first-mover advantage in Russia (Metro, Ramstore and Auchan are already present) it needs to enter within the next year in order to exploit the potential in this rapidly developing market, says IGD’s new report, Wal-Mart: Delivering Global Growth.
“IGD estimates that the Russian market is worth around €108.8bn (US$135.7bn), making it the fifth largest market in Europe,” said IGD chief executive Joanne Denney-Finch.
“It is a developing market that offers large-scale growth opportunities, and as such fits with one of Wal-Mart’s aims in its international expansion strategy – to target the largest markets. Russia benefits from strong growth in private consumption, decreasing inflation and consistent growth in GDP, rising personal and disposable income levels, declining unemployment and developing Western lifestyles,” she added.
Wal-Mart’s options for entry into the Russian market include joining with a consortium of local investors or retailers who could provide it with legal and cultural advice to aid its integration, or an acquisition of a major European retailer or local hypermarket player.
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By GlobalDataIn addition to targeting developing markets, Wal-Mart’s international expansion strategy also looks to enter established major global consumer markets. Therefore IGD believes that the other key target markets for Wal-Mart in Europe are Italy, Spain and France. They benefit from a very developed structure, high GDP and big consumer spending power and thus offer plenty of growth potential.
