Wednesday, October 28, 2009

Wal-Mart's Tough New Global Rival: AUCHAN; Everyday Low Prices Backfire in China

BusinessWeek -- Quick, what's France's answer to Wal-Mart? Until now, it has been Paris-based Carrefour, the global No. 2 retail chain. But increasingly, another French retailer, Auchan, is giving both Carrefour (CARR.PA) and Wal-Mart (WMT) a run for their money.

Auchan now has 132 big-box hypermarkets in China, including 110 operating under the brand name RT Mart in a joint venture with a Taiwanese partner. That puts it neck-and-neck with Carrefour, but behind Wal-Mart, which has 146 stores and owns a stake in a joint venture that has another 104 outlets.

Auchan also is thriving in Russia, where it has built or acquired a total of 34 outlets since entering the country in 2002 and is now the top Western operator of big-box superstores. Carrefour, which opened its first two Russian stores this year, abruptly reversed course this month and announced it was pulling out of the country. Wal-Mart and British retail giant Tesco (TSCO.L), another big discounter, have no stores in Russia.

At the same time, Auchan is pushing into locales ranging from Ukraine, where it plans to open three new stores by the end of the year, to Dubai, where it signed a deal with a local partner in 2008 to develop outlets across the Persian Gulf.

And here's the most interesting part of the article:

Wal-Mart's "everyday low price" strategy has backfired with Chinese shoppers, who often assume cheaper products are unsafe or counterfeit. And while Carrefour has a reputation for high quality, its stores have a "ruckus atmosphere," resembling Chinese street markets, which is a turnoff to middle-class shoppers, he says. In China, people are trading up. Auchan is positioned better than Carrefour and Wal-Mart to be able to grab that.


At 10/28/2009 2:16 PM, Blogger PeakTrader said...

Auchan doesn't seem to have a good track record. From Wikipedia:

"Auchan opened its first hypermarket in the United States in 1988 in Houston...A second Houston location was opened in 2000 in a building..., which had formerly housed a Target store. Right before Auchan had decided on a second location, there were 55 checkout stands.

Auchan also tried opening a store in the Chicago market in 1989. The store was a large hypermarket in the suburb of Bridgeview, Illinois. The store was not successful and was later bought by a local Chicago chain..., and converted into an Omni Superstore by 1991.

All US locations were closed by March 2003, leaving Auchan with no presence in the United States.

Auchan opened a number of stores in Mexico; the first of these opened in Mexico City in 1997 and eventually grew to five stores. Faced with stiff competition from Wal-Mart, as well as local superstore chains Gigante and Comercial Mexicana, and French rival Carrefour (who also sold their stores and left the country in March 2005) , Auchan decided to sell their stores to Comercial Mexicana and withdrew from Mexico in early 2005.

In 1997 Auchan sold its hypermarkets in Thailand to Groupe Casino.

In 2007 Auchan sold its Argentine stores to Wal-Mart and retired from this country.

Following a conflict with his Moroccan partner ONA, Auchan has sold its 49% in August 2007."


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