Irish food firms must adapt to global trends

REPORTS that Tesco in Britain grabbed half of the new retail space that became available in 2006 is further evidence of the growing reach of this retail giant.

Rival firm Asda complained this was bad for competition, which was a bit ironic given its parent, Wal-Mart, is the largest retailer in the world with sales of over €232 billion. This is almost equal to the combined turnover of the next four global retailers combined.

This behemoth is also one of the biggest, if not the biggest employers on the globe with a workforce totalling over 1.8 million.

Wal-Mart operates in 10 other countries including, Mexico, Canada, China, Japan and Britain, where it trades under the Asda name. It is presently moving into India following the announcement of a joint venture in November.

Despite the competition Wal-Mart reported a better than expected 1.6% increase in December sales, the biggest since August, as it continues to spread internationally.

On average the group is sued two to five times a day in the US alone. In 2003 chief executive Lee Scott Jnr earned close to €15m, including stock options, salary and incentive bonuses.

Wal-Mart globally serves close to 138m customers weekly giving a new meaning to the term ‘footfall’ used in the trade to denote the number of people who enter a store or a shopping mall on a daily basis.

In Britain, Wal-Mart is number three in the market compared with Tesco, which is the dominant retail player.

It is well known that £1 in every £8 in Britain is spent in a Tesco store while one in every £7 spent on groceries makes its way into a Tesco till.

Today it operates well over 2,000 stores across 10 countries in Europe and Asia and most recently it hit the west coast of the US.

In addition it is the world’s largest online supermarket and offers a wide range of services including banking, insurance and legal services.

Today it has revenues of over €50bn and is the third largest retailer in the world.

Though small by Wal-Mart standards, Tesco is one of the giants of the industry with 50% of its sales delivered under its own brand.

It was more than a touch ironic that the group’s planning permission success last year got Asda agitated, given the enormous presence of its parent on the global retail landscape.

From an Irish perspective the statistics from both groups demonstrate the enormous global reach of the food retailing sector.

It has implications for all of those involved in the Irish food sector from Kerry Group to the smallest player in the Irish market, trying to make a living by being part of the rapidly changing global food chain.

Retailing in all its guises is changing the landscape of our towns and cities and dictating where and how we shop. That’s one end of the equation. And the other worrying one is the demands that those major players can and are making on every aspect of food production here in Ireland.

Bord Bia and others are trying hard to help Irish firms adapt to the marauding presence of retail giants.

We have seen how the French are losing the wine war to offerings from the new world and other countries who have stepped up to the plate.

France today consumes less than half the amount of wine per capita it did in 1965, with litres consumed down from 160 to 70 per head of population and falling.

From an Irish food perspective, it is clear the sector as a whole will have to stay vigilant and continue to innovate while evolving strategies that will make it less vulnerable to the retail revolution being driven by the Tescos of this world.