WORLD LEADERS 2001

JAMES FALLON

LONDON -- The status quo rules in global food retailing.

SN's annual list of the world's Top 25 largest food retailers indicates few major changes from the year 2000 ranking as the industry took a global breather on significant mergers and acquisitions. The result is a list that contains the same players, with the occasional shift in ranking due to smaller acquisitions and, in some cases, currency fluctuations that resulted in a lower translation of their sales into dollar figures.

Among the most significant changes are the leaps by Ahold of Zaandam, Netherlands, to fourth from sixth and the climb by Tesco of Cheshunt, England, to seventh from 10th position last year. Ahold's higher ranking stems from its move into food distribution last year, which gave it a multibillion dollar holding in the sector within a few months. Tesco, meanwhile, has benefited from continued strong growth in its domestic U.K. market as well as increasing revenue from its international operations in central Europe and the Far East.

Wal-Mart Stores, Carrefour and Kroger Co. retain the top three spots they occupied last year. Wal-Mart remains the world's largest retailer, although Carrefour is more international with operations in 24 countries compared with Wal-Mart's 10. Carrefour's ranking incorporates the first reported results from its merger last year with fellow French retailer Promodes. While there have been problems integrating the two chains, the merger reinforces Carrefour's position as the largest food retailer in France and one of the most international.

According to a recent report by consultants M M Enterprises, Carrefour now gets about 50% of its sales from its international operations, while only 17% of Wal-Mart's sales are from outside the United States. While the Carrefour percentage is impressive, it is dwarfed by those of Ahold, which realizes 82% of its sales from outside The Netherlands, and Delhaize "Le Lion," which gets 84% of its sales outside Belgium. For both companies, the United States is their largest single market.

Carrefour, Ahold and Metro of Germany are the most global food retailers. "These three retailers are involved in a relentless race which sometimes, particularly in the case of Carrefour and Ahold in Latin America, resembles a tit-for-tat scenario," the M M report said.

"However, it seems likely that 2001 could be a year of consolidation for Carrefour and Ahold, although Metro is intent on pursuing the internationalization of its core banners. It will be spearheading new Asian markets, as well as Russia, with its cash-and-carry banner, and is also intent on developing its large Kaufhof department stores on the international scene."

The major U.S. food retailers continue to lag in the international race, content with growing in the domestic market. Only two of the six American food retailers on the list other than Wal-Mart have international operations -- Safeway has stores in Canada and Winn-Dixie has stores in the Bahamas.

But while SN's list indicates a bit of a breather in the industry's consolidation, some analysts believe this is only temporary.

M M, for example, sees continued battles among food retailers in such growing geographical regions as Latin America, Central Europe, China and Thailand.

Meanwhile, Carrefour has become the first Western food retailer to enter Japan and the Middle East while Casino, Ahold, Auchan and Metro have begun to open stores in Northern Africa, M M said.