May 29, 2009
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US retail lull means prep time for int'l expansion

May 29, 2009

LAS VEGAS, May 29 (Reuters) - U.S. retail giants in home furnishings, food and clothing are expected to push into emerging markets such as Mexico, Brazil and China, once the U.S. economy and cash flows improve, executives said.

Gap Inc, one of the groups expanding internationally

"There are a lot of retailers who are in defensive mode right now, but a lot of retailers still have ambition to go abroad," said Anthony Buono, executive managing director of CB Richard Ellis (CBG.N), the world's largest commercial real estate services company.

Global retailers are eyeing new markets, Buono said at the International Council of Shopping Centers' RECon retail real estate show in Las Vegas last week.

Growth in Latin America, the Middle East and Asia as well as the prospect of a shrinking domestic economy is causing U.S. corporations to look abroad.

U.S. brands already expanding globally include Collective Brands Inc (PSS.N), owner of PayLess, which has its highest-performing stores in Colombia and Dunkin' Brands, which is operating Dunkin' Donuts shops in 31 countries from Bulgaria to Qatar.

Wal-Mart Stores Inc (WMT.N) is due to open its first cash-and-carry store in India on Saturday 30 May.

AutoZone Inc (AZO.N), Gap Inc (GPS.N) and Brinker International (EAT.N), the owner of restaurant chain Chili's, are expanding in Mexico.

Frozen yogurt maker PinkBerry, which has inspired cult-like status in its home market of Los Angeles, is opening a store in Kuwait City this summer, with another in Dubai to follow.


Joe Albright, Wal-Mart's vice president of international real estate, said diverse formats designed to appeal to many had made Wal-Mart's international unit a $100 billion business.

For many retailers, franchises and joint ventures offer common ways to expand because they minimize risk.

"It gives us an outlet to sell our product in, but we're doing it with a third party, who puts up the capital to open the store," said Levi Strauss spokesman Jeff Beckman. He added Levi's is now seeking "opportunistic" deals afforded by the economic downturn.

Brinker, operator of Chili's, plans to open up to 18 eateries in Mexico this year, adding to its portfolio of nearly 200. AutoZone is looking to add to its 160 stores in Mexico.

"We're here to do deals," AutoZone director of real estate Terry McKee said while at the convention.

The top brands sought by tourists, according to a study by mall developer Taubman Centers (TCO.N) and Shop America Alliance are: Nike (NKE.N), Levi Strauss, Gap, Polo (RL.N) and Abercrombie & Fitch (ANF.N). All of them are planning overseas expansions.

Abercrombie says international stores will eventually make up half of total sales from the approximately 8 percent today.

VF Corp (VFC.N), owner North Face and Vans, plans to open 70 stores this year, pared back from its previous rate of 100, with most on a proportional basis in Europe and Asia.

Besides full-price stores, retail outlets are another venue for global growth. U.S. brands are keenly interested in outlet stores in Russia, especially in Moscow, said Neil Thompson, chief executive of outlet developer Fashion House Development. His company is opening 16 outlet centers in Russia.

"I get two (calls) a week," from U.S. companies interested in opening stores first in Russia, Thompson said. (Additional reporting by Ilaina Jonas, editing by Leslie Gevirtz)

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