The latest ranking of supermarket groups in Latin America by M+M Planet Retail shows that the majority of foreign players in Latin America come, not surprisingly, from the US. Indeed, the region's biggest player is Wal-Mart, which recently added to its Mexican unit with the acquisition of the Brazilian Bompreco.
Wal-Mart already has Latin American sales well in excess of all its rivals, but with just its opeartions in Mexico and Brazil of any size, it still has considerable room for growth. It has also made no secret of its intention to expand into other Latin American countries in the future, laying down challenge to both local players and its international rivals looking to close the ever-widening gap with the world's number one.
Even the company closest to Wal-Mart in terms of size - France's Carrefour - still has a massive mountain to climb. Although it is the leading European player in Latin America, and indeed holds second place in the overall rankings, its market share of 3.1 per cent is less than half that of Wal-Mart (7.7 per cent), a fact not helped by its decision to withdraw from the Chilean market last year.
So could Carrefour spearhead a new European invasion of Latin America in the next few years as the economies there begin to stabilise? Present mainly in Argentina and Brazil, two countries among the worst hit by currency devaluations over the last two years, Carrefour has weathered the storm remarkably well, rolling out a new strategy adapting its store formats to the demands of each local market - rather than the blanket hypermarket approach it adopts in the majority of its foreign markets.
With this strategy now firmly in place, the benefits are clear: like-for-like sales in local currency terms rose 12 per cent in Argentina and 7 per cent in Brazil in the second quarter of this year. Currency exchange rates continue to take a toll, but the 30 per cent or more declines in sales caused by fluctuations are now a thing of the past, and local growth is enough to keep sales advancing even after the impact of currency translation.
Carrefour has nonetheless been circumspect in its expansion in Latin America, choosing not to bid for any of the local operations put up for sale by Ahold (including Bompreco), and its commitment to only targeting markets where it has a possibility of market leadership could hold it back in the short term (not to mention the need to sort out its domestic business first), perhaps leaving the way open for compatriot Casino to move into the vacuum.
Casino has also weathered the currency storm well, although its operations in the region are much smaller than those of its compatriot with a market share of just 0.4 per cent leaving it in 14th place in the overall ranking. But Casino is keen to expand its business there - it backed out of buying Ahold's Brazilian business over a failure to agree terms and could still be interested in the G. Barbosa unit - and with ahold's demise it is now the most international retailer in Latin America, with a presence in six countries.
There are a number of names missing from the list of international retailers in Latin America, not least Germany's Metro and Britain's Tesco. Both these groups have been expanding rapidly outside their home markets, pushing into eastern Europe and Asia, and the likelihood of them seeking acquisitions in Latin America cannot be ruled out. Another French retailer, Auchan, has also dipped its toes into the Latin American market with a pre-crisis investment in Argentina, and it too may be tempted back as the situation stabilises.
So which countries will these European groups target if they do decide to enter the fray? Large markets such as Mexico and Brazil are already highly competitive, and opportunities for growth there are perhaps limited, although Argentina could offer some prospects - provided its political and economic climate stabilises enough - with the Coto and La Anomina chains among the possible takeover targets.
The other big market, Chile, is also one of the most difficult for foreign groups to enter - indeed, both Carrefour and Ahold sold their operations there after failing to dent the market dominance of D&S and Cencosud.
M+M suggests that it is in fact the smaller markets in the region which are likely to attract the most interest, notably Puerto Rico which has one of the strongest economies and the highest standard of living of all Latin America. But it is also the most consolidated market in the region, with the five largest retailers account for more than 55 per cent of sales. A takeover of one of these well-established groups would undoubtedly be a strong market entry, although its proximity to the US could count against European players.
Other chains which have performed well - and which could therefore prove interesting to acquisitive Europeans - include E.Wong in Peru, Ecuador's Supermercados la Favorita and Mexican convenience store operator Oxxo.