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Globalization may not be the goal for U.S. retail REITs any longer, but retailers themselves continue to look for new opportunities, including some surprising areas.
Last week, CVS's US$2 billion offer to acquire Brazilian drug store company DPSP, which operates the Drogaria Sao Paulo and Pacheco chains, reportedly was rejected, according to Reuters. CVS entered the country last year, acquiring Drogaria Onofre, the eighth largest chain in the country. And Walgreens has a six-month option to acquire the 55 percent of the United Kingdom's Alliance Boots it doesn't already own.
But those are countries with already emerging or established middle classes. Even more interesting is the possibility of foreign retail getting a foothold in Ethiopia, which is launching a state-run wholesale company, Alle, which it plans to run as a private company, with the help of a more experienced foreign manager. Ethiopia has sub-Saharan Africa's fifth largest economy, but previously has barred foreign entities from involvement in many industries, including banking, though some international conglomerates including H&M have manufacturing facilities. Walmart, which acquired South African general merchandise chain Massmart Holdings in 2012, did hold talks with then-Prime Minister Meles Zenawi the previous year.
Ethiopia, with nearly 92 million people, is expected to become a middle class nation by 2025, and is seeing increasing growth in the supermarket and hypermarket sector. With a government now opening the door just a bit to outside entities, an opportunity could await.
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