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MERCHANDISERS PUSH TO GAIN MARKET SHARE OUTSIDE U.S. BORDERS: KPMG PEAT MARWICK SURVEY OF TOP U.S. RETAILERS AND WHOLESALERS

 NEW YORK, March 23 /PRNewswire/ -- Major U.S. merchandisers who have already expanded overseas, or are considering doing so, most frequently select Canada and Mexico as primary targets, according to a survey of international investment trends conducted by the merchandising group of KPMG Peat Marwick.
 The survey found that more than half of the 200 largest merchandisers (i.e., retailers and wholesalers) have expanded abroad or expect to soon. Merchandisers who currently have international operations say that increasing market share is the primary advantage to international expansion. Of those planning to expand -- 36 percent of respondents -- three out of four said they will invest in Canada first and nearly two out of three said they will expand to Mexico. A few respondents plant to invest outside of North America. About one-third plan to expand to the European Community and about one in 10 will invest in Asia and the Pacific Rim.
 "Heightened interest in international investment is a result of significant advances in technology as well as trade agreements that are moving the retail and wholesale industry into the global arena," said William M. Rowe Jr., national director of the merchandising practice for KPMG Peat Marwick. "A favorable view of the potential competitive opportunities of a NAFTA ratification has also motivated interest in expanding, specifically to Canada and Mexico," he added.
 While both groups feel it's favorable, NAFTA is already having a greater impact on companies considering expansion than on those that have already invested abroad. According to the survey, 85 percent of companies considering expansion had a more favorable view of NAFTA than the 55 percent of companies that were already conducting business through foreign operations. "NAFTA will play an important role in lessening the concerns over trade barriers and restrictions that cause initial hesitation with potential Canadian and Mexican investors," said Rowe.
 The "International Investment Survey" tracked 200 retail and wholesale operations with annual 1991 sales ranging from $300 million to over $40 billion. It had a greater than 30 percent response rate.
 Highlights of Survey Findings
 Finding 1 - Market Share Motivates Expansion Efforts
 Increasing market share was cited by over 50 percent of respondents who currently have foreign operations as the most important reason for expanding internationally. None of the respondents indicated they were motivated by commonly perceived reasons such as tax advantages, cost savings or foreign competition in the United States.
 Finding 2 - International Expansion Proves Profitable
 Over 80 percent of participants expected an increase in revenues from foreign operations over last year. Most of the respondents (77 percent), who currently have foreign operations, said that revenues from foreign operations were less than 5 percent of total revenues, but 15 percent reported that foreign operations accounted for a greater share (up to 50 percent) of total revenues.
 Finding 3 - Specialty Stores Lead in Pursuing Expansion
 Specialty stores have been more aggressive than any other merchandiser category in expanding abroad. Nearly one-third of specialty store respondents have set up foreign operations compared to wholesalers (23 percent), convenience and discount stores (15 percent each) and supermarkets (8 percent).
 Finding 4 - Merchandisers Considering Expanding Soon
 Of the 36 percent of respondents who said they were considering expanding overseas, the majority planned to do so sooner rather than later. Fifty-six percent said they would expand within one to three years; 19 percent expected to expand in three to five years and the balance felt that international expansion was more than five years away. Greatest interest in foreign expansion was expressed by specialty stores (38 percent), followed by department stores (19 percent) and drugstores (14 percent).
 Finding 5 - Political Risk and Trade Regulations Head Concerns
 Political risk and profit repatriation topped a list of concerns of merchandisers who have already invested abroad. Those considering expansion said their primary concerns were trade regulations and distribution/vendor relations.
 Finding 6 - Strategic Alliances Most Common Expansion Method
 Most expansion efforts have been arranged through joint ventures (46 percent) and equity investment of less than 50 percent ownership (38 percent). Other methods have included: 100 percent owned investment (23 percent), acquisition (15 percent), majority ownership (15 percent), acquisition of another domestic company with foreign operations (8 percent), or a licensing arrangement (8 percent).
 Through 135 offices in the United States, KPMG Peat Marwick provides industry-specific accounting, taxation and consulting services to a broad range of businesses and other organizations in the financial, commercial and service sectors. The worldwide KPMG network has more than 76,000 people in 125 countries. KPMG Peat Marwick's merchandising group provides industry-focused professional services to more than 2,000 retail and wholesale clients.
 -0- 3/23/93
 /CONTACT: Barbara A. Kraft of KPMG Peat Marwick, 212-909-5266/


CO: KPMG Peat Marwick ST: New York IN: REA SU: ECO

CK-AH -- NY035 -- 8650 03/23/93 11:56 EST
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Date:Mar 23, 1993
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