The List: The Global Retail Wars

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Tesco

Headquarters: Hertfordshire, Britain

Strongest in: Europe and Asia

Stores worldwide: 3,262 in 13 countries

Annual revenues: 42.6 billion ($85.2 billion)

Why Wal-Mart should worry: Although Wal-Marts $379 billion in revenues in 2007 far eclipses any of its peers, the company hasnt managed to dominate international markets as it has at home. That means Wal-Marts rivals have a fair shot at the biggest prize in retail: the rapidly expanding global middle class, which analysts expect will jump to 52 percent of the worlds population by 2020, up from 30 percent today.

Tesco operates in 13 countries compared with Wal-Marts 14, but its international operations already account for 26 percent of revenues, besting Wal-Marts 24 percent. Tesco is planning to open 11.5 million square feet of new space this year, 80 percent of which will be outside Britain. Wal-Marts international focus to date has been mainly on Latin America. Tesco, meanwhile, has spread itself broadly throughout Europeespecially the emerging markets of Eastern Europeand Asia. And in India, where management-consulting firm McKinsey estimates the middle class will soar to 583 million people by 2025, savvy partnership deals could give Tesco an edge. The chain is rumored to be in talks with Tata, which owns the largest chain of non-food stores in India, and Landmark, another large retailer. Wal-Mart has already partnered with Bharti Enterprises in India, but with joint wholesale operations still in the planning stages, Tesco sees a chance to give Wal-Mart a run for its money.

NOAH SEELAM/AFP/Getty Images Reliance Retail

Headquarters: Mumbai, India

Strongest in: India

Stores worldwide: about 600 stores in India

Annual revenues: unavailable

Why Wal-Mart should worry: Two words: Mukesh Ambani, the chairman and managing director of Reliance Industries and the worlds fifth-richest person. In 2006, Ambani invested $6 billion in creating Reliance Retail. His goal? To create a retail revolution in India. Thanks to the Indian governments restrictions on foreign investment, which force certain retailers to partner with Indian companies to enter the market, Reliance has a built-in advantage. The company owns almost 600 stores already and has plans for thousands more across 1,500 towns and cities in India. The group expects to create 1 million jobs and earn $25 billion in annual sales by 2011.

OLEG NIKISHIN/Getty Images Auchan

Headquarters: Lille, France

Strongest in: Europe

Stores worldwide: 1,128 in 12 countries

Annual revenues: 44.2 billion ($65 billion)

Why Wal-Mart should worry: A growing rival to Carrefour, the top French retailer, Auchan aims to expand its operations in Europe and China. Already, the company earns nearly half its revenues through its global operations, and more is on the way. Recently, Auchan partnered with Taiwans Ruentex to set up RT-Mart, now the second-largest foreign hypermarket in China by revenues, after Carrefour. Wal-Mart currently has 203 stores in China; RT-Mart plans to double its presence to 130 outlets by the end of this year. But because RT-Marts stores are strategically located in Chinas more affluent eastern areas, the company earns the highest revenue per outlet of any foreign chain, including Carrefour. In addition to its expansion in China, Auchan plans to add 14 stores to its Russian chain, Ramstore, and at least 10 more stores in Ukrainemarkets Wal-Mart hasnt even entered yet.

YOSHIKAZU TSUNO/AFP/Getty Images Aeon

Headquarters: Chiba, Japan

Strongest in: Asia

Stores worldwide: 1,790 in 9 countries, plus Taiwan and Hong Kong

Annual revenues: $41.3 billion

Why Wal-Mart should worry: In 1988, the Financial Times called the company, then known as JUSCO (now an umbrella group that adopted the Aeon name in 2001), one of Japans most internationally minded retailers. Today, that description still rings true as Aeon plans to triple the number of stores it operates in China to 45 during the next five years, while expanding in other major markets in Asia, including Malaysia and Thailand where it already maintains a presence. The stagnating Japanese market is prompting Aeon to search for new opportunities, and finding a local partner in India to develop shopping malls is thought to be Aeons next major venture. With its track record of successful growth in Asiaits operating revenue grew more than 7 percent in 2007Aeon is a formidable player in places where Wal-Mart has been unable or unwilling to expand. Any attempt by Wal-Mart to do so now would mean pitting itself against a long-established, profitable, and trusted regional behemoth.

PATRICK STOLLARZ/Getty Images Metro Group

Headquarters: Dusseldorf, Germany

Strongest in: Europe and Asia

Stores worldwide: 2,221 in 31 countries

Annual revenues: 64.3 billion ($94.77 billion)

Why Wal-Mart should worry: Wal-Mart might be the worlds richest retailer, but Germanys Metro is the most global, operating in 31 countries around the world. In fact, of the companys 133 store openings last year, 115 took place outside Germany. Metro was quick to move into the former Soviet bloc countries in the 1990s and the emerging markets of India and China more recently. Last year, its foreign outlets accounted for a massive 59.1 percent of total revenues, and international sales were up 13.6 percent. Metro even subverted Wal-Marts decade-long effort to crack the German market when in 2006 the American giant sold all 85 of its German outlets to Metro for less than the value of the assets. Wal-Mart incurred a $1 billion pre-tax loss. Confident and successful at entering developing markets and with strong international networks in place already, Metro will remain one of Wal-Marts toughest international rivals.

KUROTASHIO Cencosud

Headquarters: Santiago, Chile

Strongest in: Latin America

Stores worldwide: 554 in 5 countries

Annual revenues: $7.6 billion

Why Wal-Mart should worry: Cencosud is still small compared with the likes of Carrefour and Metro. But considering that Latin America is essentially the core of Wal-Marts international operations, the Santiago-based chain could be a dangerous competitor. Since becoming Chiles largest retailer, Cencosud has expanded rapidly, moving into four more Latin American countries. Last December, it acquired Perus largest retailer, Grupo Wong, which Peruvian media speculated was a takeover target of Wal-Mart. Cencosud already leads the market in Argentina, and in late 2007 it acquired Brazilian supermarket chains GBarbosa (with annual sales of $900 million) and Mercantil Rodrigues (whose annual sales amount to $100 million). Cencosud is also planning to invest an additional $60 million in Brazil. Wal-Mart has stated it will invest $693 million in the country this year, more than 10 times as much. But Cencosuds expansion plans dont stop there: The company is working with Frances Groupe Casino to develop home goods stores across Colombia, and it plans to increase the number of stores it operates in Argentina. Wal-Mart is the retail king of Latin America for now. But with a 52 percent boost in net profit between 2006 and 2007 and major international expansion in the works, Cencosud is certainly a regional rising star.

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