WAL-MART CAPTURES 22% OF LEADERS' VOLUME

Christina Veiders

Wal-Mart Stores, Bentonville, Ark., continued to strengthen its global presence and headed SN's Top 25 Worldwide Food Retailers with sales volume of $285.2 billion, up 11% for its latest fiscal year ending Jan. 31, 2005.

During the period, it acquired 118 units of the Brazilian Bompreco chain from Ahold and continued to build out its existing markets with new supercenters, discount stores and Neighborhood Markets. Wal-Mart is also eyeing greater penetration in Europe, and continues to look for new markets in Russia, India, Italy, Hungary, Turkey and Latin America, according to media reports. Wal-Mart now has nearly 6,000 stores in 13 countries.

SN's list is compiled from research published by M M Planet Retail (www.planetretail.net), a retail research firm with locations in London, Tokyo and Frankfurt, Germany. Only those companies that generate at least a third of their volume in groceries are included on the list, which is ranked by net sales. (See Page 14, opposite.)

As a group, the 25 worldwide food retailing companies generated about $1.3 trillion in sales. Of the group, the top 10 did 62% of the total volume, and Wal-Mart represented nearly a quarter (22%) of the total volume.

Among those top 10 retailers, France's Carrefour held onto the No. 2 position. It increased sales 3% to $90.3 billion. Feeling the heat from discounters in its home market, Carrefour is looking to grow internationally. Planet Retail cites its recent acquisition of controlling stakes in Turkish retailers Gima and Endi as an example of the direction it is headed. If the deals are approved, it will put Carrefour in first place in the Turkish grocery market.

Earlier this year, however, Carrefour withdrew from Japan after four years, selling its eight stores to Japan's Aeon. The French firm is expected to concentrate its resources on development in China instead.

Germany's Metro Group, known for its pioneering effort in using radio frequency identification technology, moved up to be the world's third-largest food retailer this year. Sales grew by 5.3% to $70.1 billion. Performance was aided by growth at home as well as in Eastern Europe and Asia.

Sliding to No. 4, Ahold, based in the Netherlands, continued its "Road to Recovery" efforts by divesting interests in Spain, Latin America, Poland and the United States. Sales dropped 7.3% to $64.6 billion. The retailer will attempt to strengthen its existing core markets in the U.S. and Europe.

Great Britain's Tesco pushed into No. 5, displacing Kroger, which dropped to No. 6. With sales up 18.7% to $62.2 billion, Tesco's growth is attributed to its various formats, including hypermarkets and convenience stores in developed and developing markets, competitive prices, a strong private label and large nonfood offering.

While Tesco is strong and growing in its home market, it entered China last year with a 50% stake in Taiwan-based hypermarket chain Hymall with 25 stores.

Kroger reported a year of mixed results in 2004 and battled price competition, supercenter expansion, diverse retail formats, and rising health care and pension costs. Sales rose 4.9% to $56.4 billion for the period. As the leading conventional food retailer in the U.S., Kroger concentrated on expanding its Marketplace units last year by converting five former Fred Meyer stores in Utah to the Smith's Marketplace name. It also opened the first Kroger Marketplace store in Columbus, Ohio.

Remaining at No. 7 is Germany's Rewe, which posted a 4.1% sales increase to $50.7 billion. Last year the company went through several top management changes. Its executive board has been reorganized, with Achim Eigner recently appointed managing director. The company plans to open 580 stores, including 350 in Germany and 230 in other countries. The company only plans to invest in existing markets. Italy and Russia are reported to hold potential for Rewe.

Costco held onto the No. 8 slot with sales up 13% to $47.1 billion. The warehouse club operator said it plans to concentrate on organic growth by opening 20 to 30 stores a year over the next several years. It is said to be eyeing new markets in Ireland, Australia and New Zealand.

Rising up one rank to No. 9, French-based ITM Enterprises, which owns a majority stake in Intermarche, posted estimated sales of $44 billion. The French distributor withdrew this year from the German market by selling its struggling Spar-Handels stores as well as its discount supermarket chain Netto to German firm Edeka. ITM invested heavily to turn Spar around, but found discounter Aldi and Lidl stores formidable competitors.

Moving up several rungs to take No. 10, Germany's Schwarz Group increased sales 10.4% to an estimated $42.6 billion with its limited assortment stores (Lidl) and discount hypermarket (Kaufland) and superstores. It has pursued aggressive expansion outside its home base and is now in 10 countries. It plans to move into six more this year in Eastern and Central Europe, said Planet Retail.

Newcomers to this year's list include Walgreens at No. 14, which does 37% of its business in grocery sales, according to Planet Retail. Morrisons in the United Kingdom also entered the list at No. 24 after its $4.8 billion acquisition last year of its U.K. rival Safeway. The merger doubled Morrisons' revenues and significantly boosted its store count to 559.

While Canada's Loblaw fell off the listing this year, it showed growth within its home market with increased private-label penetration, an emphasis on nonfoods, a revamped supply chain and expansion of its Real Canadian Superstore format. Japan's struggling retail giant Daiei also fell off this year's list.