Foreign retailers are no pushovers - local competition to foreign operations of mass market retailers - Editorial

Discount Store News, March 21, 1994 by Tony Lisanti

The subject of international growth has certainly received its share of media coverage. And the message has been clear and consistent: opportunity awaits any U.S. company that expands its operations abroad.

Instant success for U.S. companies may well be the case in most industries including retailing. Consider Wal-Mart, Price Club and Toys "R" Us.

But despite all the advice offered by industry gurus about opportunities around the world and how easy it is to expand into other countries, little is said about the local competition many companies will face. The perception is that success is guaranteed. Many Americans share a cavalier attitude and it's easy to understand why the "Ugly American" syndrome exists.

There are many foreign retailers (and suppliers) that are in a strategic position to effectively challenge their U.S. counterparts. Here are just a few examples:

Mega Mercado. This 100,000-sq.-ft. supercenter, which was developed by Commercial Mexicana, is this Mexican retailers' answer--and a good one at that--to the Wal-Mart/Cifra supercenters. The first unit opened in Guadalajara a few months ago next to Price Club. It is one of the most functional, well-designed supercenters to debut in recent years. With another unit opening this spring in Mexico City and a dozen more planned, Mega Mercado poses a strong challenge to the other retailers in Mexico. Cargo Club. This warehouse club, which opened last week in Croydon, England, is cash and carry chain Nurdin & Peacock's answer to the U.S. club concept. It will be a tough competitor to Costco, which recently opened in London. Cargo Club will open two more clubs this summer.

Carrefour. The French hypermarket chain recently opened a 100,000-sq.-ft. membership hypermarket in Taiwan that put it in competition with Makro. If this test hybrid club, which is targeted to bussinesses and offers a greater selection of general merchandise, proves successful, it will give Carrefour an advantage in several markets worldwide.