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How Giants Supermarkets Survive in Asia

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    Why do you think hypermarkets are more common in some countries than others? Hypermarkets are the combination of a department store and a grocery store. This model of a big-box store offers a large variety of products under one roof to the shoppers. Hypermarkets focus on high volume of sales meanwhile incorporating a low-margin. In order to accommodate that sort of business model hypermarkets are typically found in suburban areas or rural towns where there is plenty of space to accommodate the big-box store and parking as well as accessible by automobile.

    These hypermarkets are also typically found to be in countries that will allow their small local retailers to compete against these giants. Hypermarkets are becoming more popular in countries that are becoming more economically developed, whereas small retailers are decreasing and the larger stores are increasing. At the same time, these big-box stores will carry a wide variety of products and offer it at better prices than the small local competitor.

    However, some countries have put in place restrictions that restrict foreign investors to venture into their local economy. For example, India has placed restrictions on non-Indian firms to minority investments in most retail ventures (Gillespie & Hennessey, 2011, p. 373). Protests and riots have resulted from the local farmers, traders and small shopkeepers in fear of losing their livelihoods. What competitive advantages do foreign retailers such as Wal-Mart and Carrefour enjoy when they enter Asian markets?

    Foreign retailers such as Wal-Mart and Carrefour are attracted to international markets because these markets offer a higher growth rate. As home markets for these retailers become mature, their growth begins to slow down. What are some possible competitive advantages of local retailers? Local retailers may purchase supplies from retail outlets in order to increase their own inventory for sale. Another competitive advantage is to offer online retailing. This business model allows the local retailer to allow onsumers from anywhere to purchase their product. Are those advantages transferable to other Asian countries? The advantages are transferable however the question is do Asian retailers want to severe their relationships with their long-standing distributors. This will be a problem. For example, in South Korea, E-Mart bought the Wal-Mart stores because Wal-Mart just couldn’t dominate the local economy based on local retailers making a switch. Why do you think governments regulate retailing practices?

    It is important that governments look out for the small local businesses. So in order to keep the local small business owner employed the government must implement certain regulations. Here in the United States, big-box stores such as Target and Wal-Mart have put the “mom & pop’s” out of business. This creates the viscous cycle of empty store fronts and unemployed citizens. In turn, unemployment rates increase, spending decreases and there is an influx of empty stores looking to occupied by the next small business owner.

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