THE question for investors is how they can play the Asian retail revolution. The answer is: with difficulty. For a start, in Kleinwort Benson's opinion, 'the supply of listed retailers on the cutting edge is limited'. It said most listed retailers 'are not ready for increased competition from good modern retailers and are seeing low and at times negative profit growth.' The key to benefiting from the retail revolution is to spot which retailers are in a process of transition which will allow them to profit from the changing environment, while avoiding those that are stuck in a rut. Kleinwort Benson separated listed retailers into a number of categories. The first was traditional retailers such as Indonesian supermarket chain Hero and Hong Kong's Dairy Farm, which would find themselves 'fighting an expensive rearguard action to defend market share' as more modern and more efficient competitors entered the market. The second was the traditional retailer which was mutating into a modern retailer. Included in this list were Hong Kong's Dickson Concepts, Thailand's Robinson Department Store and Indonesia's Matahari. These companies were attempting to increase efficiency, improve management and form strategic regional alliances to tap into the revolution. But as Kleinwort concluded: 'They have the potential to fly higher or crash and burn in the attempt.' The next category was the modern retailer at the cutting edge. Included were Hong Kong's Giordano and Thailand's Siam Makro, both combining growing economies of scale, advanced management techniques, good technology use and growing diversification. These companies, Kleinwort said, 'will set the pace in terms of pricing and hence have the greatest control over margin and sales'. While the supply of listed retailers is narrow, it is set to widen considerably. 'We anticipate that more modern retailers will go public to raise funds to finance their aggressive expansions,' Kleinwort said. 'Given the exciting prospects and scarcity value, these new issues are likely to generate strong demand.' Companies tipped to be coming to the market in the near to medium term include 7-Eleven in Taiwan (part of the President Enterprise Group), 7-Eleven in Thailand (part of the C.P. Group), Central Group in Thailand, the Ramayama Department Store in Indonesia and Malaysian hypermarket operator Giant. Also, opportunities could arise as a number of Asian retailers go regional. 'We believe some Asian retailers have a comparative advantage over Western peers due to similar cultures and the proximity to their home base, which will enable them to leverage on their resources and assets more efficiently,' Kleinwort said. 'We believe these Asian retailers will have an increasing impact in changing the Asian retail scene.' Companies tipped to go regional include Giordano, Dairy farm, Esprit, Yaohan and Theme from Hong Kong; and Singapore's NTUC Fairprice, Cold Storage, Delifrance and Metro Department Store.