Discounters seen as opportunity for Wal-Mart

By Leah Vyse

- Last updated on GMT

Related tags Hypermarket

The world's leading retailer may be set to move into Germany's
discount market in a bid to salvage its position in the country and
strengthen its presence in Europe.

Since entering the German market in 1997 Wal-Mart has failed to make any money with its hypermarket format - but there is now speculation that the retailer seeks to acquire German discounter Norma, despite the saturated state of the country's discount market.

Analysts predict an expansion into this market would help boost the company's portfolio in Europe, giving it a more flexible position - enabling them to move into both France and Austria.

And it would put the retailer on a par with European rivals such as Carrefour, Casino, Tenglemann and Tesco, who have already expanded into the lucrative discount market.

Bryan Roberts, an analyst at Planet Retail, told​ :"There would be a degree of logic to such a move. It would bolster Wal-Mart's presence in Germany and open up a range of acquisition possibilities in other markets."

He added that although the retailer may not see an initial return, the management, which has already been "remarkably patient", might invest if it helps the company move into other markets.

"If they could be convinced that a sizable acquisition in Germany would be worthwhile they would be willing to wait."

"They have to do something in Germany, be it an acquisition or withdrawal."

Such an acquisition could also help Wal-Mart expand into the growing Central and Eastern European (CEE) markets, where the demand for discounters is on the increase.

Roberts claims the retailer has "missed the boat for hypermarkets"​ in CEE countries but the discount format would be a way in.

According to Planet Retail, the discount market is the fastest growing sector in global retailing and Europe is the leading discount region.

And it predicts that by 2009 discounters will account for 13 per cent of the global grocery market.

Wal-Mart is already active in discount retailing in South America and has five pilot stores in Mexico.

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