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Europe said to hold wealth of new retail ideas

By Edmund Mander

John Menzer, president and CEO of Wal-Mart’s international division.

LAS VEGAS — Globalization is making the world smaller — but not necessarily more American.

On the contrary, some of the world’s best retailing concepts can be found elsewhere, and they are being brought back to the States by U.S. and non-U.S. companies alike, according to observations made at the “Blockbuster” session presented by John Menzer, president and CEO of Wal-Mart’s international division, and Joseph H. Ellis, advisory director for Goldman, Sachs & Co.

“All the best practices are not all American best practices,” Ellis said, urging U.S. executives to travel and observe overseas counterparts, even if they have no plans for the foreign expansion of their own companies. “Bring them back [best practices] before a competitor does.”

The United States has much to learn from other countries, particularly the French, when, for instance, it comes to the presentation of fresh food, he said.

“It’s a profusion of sights and smells,” he said, describing the fresh market approach of Europeans to food displays, whether in their open-air markets or hypermarkets. “One thing is clear: When you get outside the United States, customers expect ‘fresh.’”

Fashion retailers are also teaching their U.S. counterparts a thing or two, with their bright presentation of chic clothing, Ellis said, noting the frenzy surrounding the arrival on U.S. shores this year of Hennes & Mauritz, Europe’s most popular and fastest-growing fashion chain. Other retailers, such as Spain’s Mango and Zara, also will make their mark on the United States, as they have in dozens of other countries, he predicted. “It’s a style of merchandising that is coming to the United States.”

No company is too large or too successful to learn some foreign tricks. Wal-Mart, which Ellis said could displace General Motors at the top of the Fortune 500 list this year and become the largest company in the world, is rapidly expanding overseas; currently it has 1,011 stores in 10 countries, and last year posted sales of $165 billion, up 25% over the previous year.

“We plan to become a global brand,” Menzer said. But in the process of exporting its stores, the company has imported some valuable lessons, noted both Menzer and Ellis. For instance, after opening stores in Latin America, Wal-Mart learned from its competitors that fruit makes a much more attractive display when it is not shrink-wrapped, observed Ellis.

The retail giant also has learned to build multilevel and subterranean stores in densely developed cities in Asia, and recently opened a multistory location in Los Angeles.

Even the concept behind the Wal-Mart Supercenter, relatively new to the United States, is a well-established French format — the hypermarket — that has long been familiar to customers outside the States, Ellis said.

“Retailing is going global, and competition will be worldwide,” Menzer observed, adding that Wal-Mart is not immune to future competition even at home, and is eager to learn from foreign retailers in their home countries before they arrive in the United States.

Retailers should also expect to make some mistakes when they expand, and Wal-Mart has made its share, he conceded. Massive parking lots in front of some of its Latin American stores forced customers arriving by public bus transportation to make long hot hikes from the roadside bus stop.

A pile of tennis balls exported from the United States to its Mexican locations failed to sell; the high altitude there kept them from bouncing.

More seriously, the company had to close its three Sam’s Club stores in Argentina, when a combination of poor location and high traffic congestion made them inaccessible to the more affluent clientele for which they were built.

Nevertheless, Ellis urged U.S. retailers to take the risk and spread out across the world.

For its part, Wal-Mart is focusing on expansion in China, Menzer said, as part of a continuing explosive expansion.