Tesco poised for rapid growth

Source : Retail Week

According to Planet Retail’s 2010 Global Retail rankings, Tesco is expected to add nearly $50 billion in sales by 2014.

The UK-based Tesco is likely to grow group business by 50 per cent to reach $146 billion by 2014. This will result in an additional $48.7 billion in sales.

Growth will be driven primarily through international expansion in markets such as India, China and the US. New market entries are likely to be minimal in the short-term due to in-fill opportunities in the aforementioned markets; however, in the long-term expansion into Russia, Ukraine and Asian markets cannot be ruled out. As a result, international sales at Tesco are expected to reach $52 billion by 2014, accounting for more than one-third of total sales.

“Despite a lack of new store growth opportunities in its domestic market, the UK contributes to more than 70 per cent of Tesco’s profits and will, therefore, remain essential in terms of funding expansion overseas,” says Natalie Berg, Planet Retail’s research director. “While international development is to be accelerated under new leadership, the UK is poised for continued growth through both product and format diversification.”

Walmart is expected to add nearly $160 billion in sales over the next five years – more than Carrefour’s current size globally. Growth markets such as India and China will be key, as will Walmart’s three core markets: the US, the UK and Mexico.

Within the next five years, Planet Retail expects Walmart to enter both Russia and Turkey and, in the long-term, untapped English-speaking countries such as South Africa or Australia cannot be ruled out.

While international growth will be vital for other key players such as Carrefour and Metro, a renewed focus on their home markets will be equally important. Carrefour and Metro managed to retain their positions in this year’s global ranking; however, they both continue to struggle with saturated home markets and a high cost structure. Over the next five years, Carrefour and Metro are likely to streamline operations – both in terms of format and geography – to focus on their core assets