U.K. Retailers Missing South American Opportunity, Kearney Says
U.K. retailers Marks & Spencer Group Plc (MKS), Tesco Plc (TSCO) and J Sainsbury Plc (SBRY) are missing an opportunity by excluding South America from their expansion plans, according to a report by global management consulting firm A.T. Kearney.
Brazil is the most attractive emerging market for retail expansion, according to Kearney’s global retail development index, with Uruguay, Chile and Peru among the 10 most attractive countries. The index ranks the attractiveness of retail expansion in emerging markets based on economic and political risk, the retail market, and the difference between gross domestic product growth and retail growth.
“Tesco, M&S and Sainsbury’s do, are present or planning developments in eastern Europe and Asia, which are emerging markets, but have not shown plans to open stores in South America,” Emmanuel Hembert, principal at A.T. Kearney, said in an e-mailed report. “It is clear to us that U.K. retailers may be missing out by not actively considering South America.”
Wal-Mart Stores Inc., the world’s largest retailer, plans to invest 1.2 billion reais ($759 million) in Brazil this year, as it seeks to benefit from the expansion of Latin America’s largest economy. Carrefour SA, the second-largest retailer, also has stores in Brazil, as well as Colombia and Argentina.
Uruguay is the second-most attractive country after Brazil, followed by Chile, India and Kuwait, A.T. Kearney’s index shows.
Tesco is expanding in China with its Lifespace shopping malls and hypermarkets, along with more stores planned at its U.S. Fresh & Easy chain and across eastern Europe.
Sainsbury is considering moving outside its domestic market into China, while Marks & Spencer is extending stores in Shanghai and re-entering France after a 10-year hiatus.
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