Hypermarkets are huge superstores. Hypermarkets have been very successful in Europe and other world markets. Many retailers now operate formats such as hypermarkets that perform many wholesale functions. In return, many large wholesalers are setting up their own retailing operations. Another reason why it is a challenge for hypermarkets in certain areas is because of location.
In western countries such as India hypermarkets would have to be located within cities opposed to the outskirts of urban areas which would create a problem of location. “People have cars but it’s a nightmare driving back and forth,” Padmanabhan says, “So if you’re looking at opening a big footprint store in a city you have a lot of constraints, apart from availability of space and location, regulation and things like that” (Padmanabhan, 2010). Wal-Mart expected the ...view middle of the document...
Competitive advantages foreign retailer enjoy in Asian Markets
The key is the ability to adapt to overseas market conditions largely determines success of international operations of foreign retailers such as Wal-Mart and Carrefour. Wal-Mart’s main competitive advantage has been its ability to offer the most competitive price to consumers by having a cost efficient operating system that ensures low costs. Another advantage is their spending power; they are able to penetrate the Asian market through small acquisitions or joint venture arrangement because of this. Being the first U.S. retailer in many of these markets will prove to be a meaningful competitive advantage during the next decade. By the time most rivals start to enter these markets, Wal-Mart and/or Carrefour should have an well-established presence, and a well-developed understanding of local customs and shopping tendencies.
Competitive advantages of local retailers
Local competitors have a very good competitive advantage they were their first. This makes them known by the public, adjusted to the culture and has relationship with distribution channels. In terms of location; major Korean retailers had already located their stores in key commercial areas and developed their distribution networks to optimize the merchandising and the retailing operations prior entry of foreign markets. In terms of marketing, it is critical that the stores are built in lucrative locations such as residential and key commercial areas with high levels of consumer traffic. However, it appeared the foreign late-comers such as Wal-Mart or Carrefour was not able to capture strategically important retail location.
Gereffi, G. (2007). Wal-Mart in China. Retrieved April 4, 2011, from Harvard Edu: http://www.hcs.harvard.edu/~hapr/winter07_gov/gereffi.pdf
Padmanabhan, P. (2010). India retail: Foreign chains eye the potential, but will they succeed? Retrieved April 4, 2011, from Indead Knowledge edu: http://knowledge.insead.edu/contents/paddy.cfm