LONDON, JULY 1, 2011 — Walmart – the world’s number one retailer – embodies a number of the key trends shaping grocery retailing in recent years, according to Kantar Retail*, which has just issued its annual Top 50 Global Retailer listing.

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These trends are: a strategic emphasis on opening neighbourhood stores; a more aggressive move into discount retailing; efforts to accelerate private label penetration; a robust foray into online retailing, and the realisation that long-term growth potential is to be found in the emerging markets rather than the crowded and competitive mature retail sectors.

“Many of the world’s largest retailers have been following Walmart in at least some of these strategies,” explains Bryan Roberts, Director of Retail Insights. “The net result is that the retail battlegrounds of the future are not France, Germany or the UK, but South Africa, India and China.

“Average store sizes, after decades of inexorable increase, are now declining as retailers run out of room for new hypermarkets in mature markets and as non-food demand slackens. Instead, retailers are realising that shoppers increasingly prefer smaller stores that are easier to shop and nearer to where they live or work. Furthermore, recession-hit shoppers are growing weary of paying a premium for convenience: proximity food retailing has become a major area of growth for many of the world’s leading players.”

Discount grocery retailers continue to have a profound impact on the retail landscape. Although saturation may have been reached in some Western European markets, discounters such as Aldi and Lidl continue to flourish in a diverse array of global territories, often prompting intense price competition and private label development among incumbent supermarket competitors.

Private label development is also a strategic cornerstone for virtually all the major retailers. “With its clear margin advantage, brand-strengthening capability and usefulness in reaching out to lower income shoppers, private label has been increasing in importance across the world,” continues Mr Roberts, “although market share has dipped in several mature markets where the sheer weight of branded promotional activity has narrowed private label’s price differential.”

Online retailing, particularly as part of a genuine multi-channel approach, is set to become a more important part of many retailers’ businesses. Tesco is well-regarded for the success of its dotcom grocery operations in the UK, and it is looking to export this prowess to most of its international markets. Walmart, meanwhile, is expanding general merchandise e-commerce to many of its markets and has recently launched a grocery e-commerce service in the US. Several European retailers – notably Auchan, Carrefour, Metro, Rewe and Tesco – have all found a degree of success from launching ‘click & collect’ or ‘drive’ concepts, with a number of these retailers planning to roll-out the service in a number of different markets.

In terms of specialist online retailers, the might of Amazon knows no limits. It continues to add new categories, enter new geographies, sharpen its pricing and augment its already impressive roster of services. “Kantar Retail forecasts already show Amazon becoming a top 10 global retailer in the near future,” concludes Mr Roberts, “while other projections have shown that the company might be the only serious contender to eventually rival Walmart in terms of sales. Several FMCG suppliers have hinted to us that they can foresee a world in which their major customers are Walmart, Tesco, Amazon and Lidl – a prognosis that might not be as far-fetched as it at first appears.”