
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, October 29, 1993                   TAG: 9310290134
SECTION: BUSINESS                    PAGE: A-11   EDITION: METRO 
SOURCE: Orlando Sentinel
DATELINE:                                 LENGTH: Medium

NEW SALES TURF: IS IT OVERSEAS?

This month's announcement that Woolworth Corp. will close 700 stores and cut 13,000 jobs hit almost as hard as the news earlier this year that Sears, Roebuck and Co. would shut down its catalog outlet stores and abandon its 106-year-old "wish book" that lives on in the memories of so many Americans.

Both moves, however, tend to lend credence to the forecast of former Dallas retailer Stanley Marcus: "By the year 2000, big retailers will either be global or they'll be gone." In short, the U.S. retail industry is caught on the horns of an international dilemma. The battle for market share continues to be fought on the pricing front rather than through geographic expansion.

Therein lies the problem for American merchants. During the frantic 1980s, retail shopping space grew far faster than the U.S. population. As major retailers spread their chains from coast to coast, the industry realized it had reached a stage it was not prepared for - maturity. In marketing parlance, that is a way of saying the United States had reached a point at which there was more retail space than customers.

The sluggish economy and lack of consumer confidence does not bode well for the immediate future of the U.S. retail industry. The experts generally agree that the United States is overstored. And while that should provide some good bargains for this year's Christmas shoppers, the retail sector could continue to be in for more bumps and surprises over the next few years as it plots new strategies.

Larry R. Katzen, managing partner of Arthur Andersen & Company's Worldwide Retail Industry Practice, thinks the search for new turf should lead retailers abroad - but not without great care and a lot of homework.

The good news, Katzen said, is that the whole world is fascinated with America's lifestyle, tastes and fashions. The bad news is that each and every country is unique.

This, however, has been a hard lesson for U.S. businesses to understand. Like Sears and Woolworth's, many retail chains seem determined to prove that what worked in the past will work in the future - or abroad. Having reached the apparent saturation point on U.S. soil, even reluctant warriors will be forced to do battle on foreign soil.

With much interest now focused on Mexico and the opportunities that might arise as a result of passage of the North American Free Trade Agreement, Katzen thinks it might be wise for retailers to think again. With the likes of Wal-Mart, Price Club, J.C. Penney, Dillard's and Neiman-Marcus already operating there, Katzen feels Mexico could become over-stored quickly if there is a territorial land rush south of the border. Some people think, he said, that Argentina, Chile and Brazil might offer much better retail markets than Mexico.

What Katzen recommends is that U.S. retailers systematically survey the opportunities aboard, seeking natural "fits" for their businesses and using a highly focused approach to analyse the emerging new markets. Who would have expected, for example, that good old American Hush Puppies would become a hot item in China?

Once they get the hang of it - and the confidence to have a go at it - Katzen thinks U.S. retailing giants will be back on the growth track. And, if global consumers like our Coca-Cola, Levis and television videos, he reasons, wait till they see our discount stores, warehouse clubs and category killers - all of which provide quality merchandise at lower prices.

by CNB