Kroger is one of the leading grocery chains in the United
States. However, unlike many of its US
competitors, Kroger does not have an international presence. Kroger could make significant gains on its
strategic goals and objectives by pursuing global expansion. As long as Kroger is aware of the risks associated
with global
expansion and properly prepares for this move, it should be successful. One of the easiest first choices for global
expansion would be Mexico. Although one
of Kroger’s main competitors, Wal-Mart, already has a presence in Mexico, they
are not nearly as entrenched as they are in the US markets. If Kroger can plan their expansion
strategically and properly examine the risks they should be successful in
reaching their objectives in Mexico.
Expansion Recommendations
If you look at the current state of Mexico and its economic
situation I recommend that Kroger expand its operations into this countries
markets. There are many reasons that
indicate that this could be a profitable move for the Kroger Company. Mexico’s economy has been gaining strength
in
recent years and now would be a good time to take
advantage of this for
Kroger. In fact real GDP has increased
by 4.4%, the fastest growth in nearly four years according to recent data from
the Institute of Statistics (see ex. 1).
The
retail sector of Mexico has flourished in recent years. This is especially due to the signing of
NAFTA. With this retail improvement,
quality of goods has increased along with a diversity of goods. This positive performance is reflective of
the rising of real incomes, expanding consumer credit, and greater competition
in the sector. These are all good signs
for Kroger to initiate expansion into Mexico.
While Wal-Mart has also taken advantage of this retail boom, they do not
yet have the type of stranglehold in Mexico as they do in many US
markets (see
ex. 3). Although Wal-Mart does have the
advantage of being in Mexico since 1991, there is still an opening for Kroger
to be successful in Mexican markets.
Taking all of this into account, there is an opportunity here for Kroger
to expand their operations into Mexico and continue their successes from the US
in a foreign country.
More summaries about the Kroger Expansion