Revisiting retail globalization

Deloitte

Description

The study explains that surviving retailers will need to seek new arenas for expanding. To achieve rapid growth, successful retailers will be wise to seek out new territories.

Informations

• Publié par: deloitte
• Publié le: 01 mai 2010
• Nombre de lectures: 281
• Langue: English

Extrait

Revisiting retail globalization A Deloitte Research Global Retail Study Deloitte Research – Revisiting retail globalization 13

Revisiting retail globalization In the year 1298, the Venetian navy was defeated in  Of course, we’ve been down this road before.  Indeed,  battle by the navy of Genoa.  One of the Venetian  Deloitte itself wrote about the imminent globalization  commanders committed suicide in disgrace.  He is long  of retailing several years ago.  And while many  forgotten.  Another surrendered calmly and lived to  retailers have taken their stores on the road, the  write about his experience and much else.  His name  industry remains far less global than many comparable  was Marco Polo.  The importance of Polo was his ability  consumer-oriented businesses.  Think about the  to observe and learn from experience — the experience  leading companies in consumer products, hospitality,  of defeat, and especially the experience of entirely alien  food service, telecommunications, and entertainment.   cultures.   These industries are far more global than retailing, with  the leading players achieving a much higher share of This is a lesson of importance to retailers interested  revenue and profi ts from outside their home markets  in being global companies.  For if we know anything  than is true of retailing. about this topic, it is that much is to be learned from failure and much is to be learned from observing the What went wrong? unfamiliar.  Plenty of retailers have failed in globalizing,  Why have so many retailers failed to go, much less  and many have succeeded.  In the spirit of Marco  succeed, outside their home markets?  The answer  Polo, this essay offers some lessons learned from both  is that retailing is a uniquely complicated business.   experiences.   It is the industry that maintains the closest and  most personal relationship with consumers, often Why think about this now? intersecting their lives on a weekly and even daily basis.  At a time when the global economy faces  Thus, achieving a successful personal relationship is far  unprecedented uncertainty, when U.S. retail sales are  more challenging when doing it in an alien culture.  In  falling, when Europe’s economy is on the verge of  addition, successful global retailing entails undertaking  recession, and when the big emerging markets are  a wide range of tasks.  These include managing  showing signs of signifi cant slowdown and fi nancial  diverse human resources who must engage in  risk, now does not seem the best time to discuss retail  personal interaction with customers, managing foreign  globalization.   human resources from afar, managing complex and  differing supply chains, managing relationships with Yet, whatever economic doldrums retailers fi nd  thousands of suppliers and other vendors in multiple  themselves in, the reality is that economic growth  business and regulatory environments, meeting the  will eventually return and surviving retailers will need  requirements of multiple regulatory regimes, and all  to seek new arenas for expanding.  Home markets  the while understanding the changing needs of diverse  for developed country retailers are going to be slow  consumers.  Clearly, this is not easy.   growing, saturated, and prone to excessive regulatory interference. To achieve rapid growth, successful retailers will be wise to seek out new territories. What better time to think about the dawn than when things are darkest? Deloitte Research – Revisiting retail globalization 1

2 So why bother? Find a competitive advantage Retailers go global for a number of reasons.  European  If there is no rule for choosing a strategy, then what  retailers are more prone to globalization than  is a retailer to do?  The answer is to fi gure out what  American retailers because they often face restrictions  the retailer might bring to the market that would  on development in their home markets.  French  enable it to beat the competition.  This can vary  hypermarkets come to mind.  Due to regulations, they  greatly and depends on the nature of the competitive  cannot easily open new stores in their home market.   environment.  In an emerging market that lacks much  Consequently, they principally seek growth in other  modern retailing, simply bringing modern supply chain  markets.  This is why the lion’s share of global retailers  management and merchandising as well as large  are based in Europe. fi nancial resources might be suffi cient.  In a more  sophisticated market, competitive advantage can come Some retailers invest globally in order to latch on to  about by offering a well known global brand, a unique  fast growing consumer markets, especially when their  format, a higher level of customer service, a more  home markets are stagnant.  Germany and Japan come  entertaining and informative customer experience, or a  to mind.  Retailers expand globally in order to leverage  more effi cient supply chain that enables low pricing.   their existing assets: global purchasing relationships, a global supply chain, a unique product, a unique format, or a well known brand. Finally some retailers globalize because foreign markets offer them low hanging fruit. That is, foreign retailers can bring leading edge practices to relatively unsophisticated markets. In doing so, they might blow away the competition (or at least that is their hope). Indeed, despite the challenges mentioned earlier, some retailers have actually been successful in doing this. What have global retailers done right? Choose a strategy — and then execute It is not suffi cient to decide to enter a promising market. There must be a strategy and it must make sense in the context of the market chosen. This is not a simple task and there is no scientifi c method for determining the appropriate strategy. Some pundits suggest that the strategy must be geared towards the unique qualities of the market. That is, they say it is most important to adapt. Others, however, argue that a retailer must bring to a new market the strengths it possesses at home. In other words, rather than adapt the retailer to the market, introduce a new idea to the market. Yet there are plenty of examples of success and failure for each strategy. In other words, there appears to be no good rule of thumb. Still, one rule does seem to apply. Whatever the strategy, the devil is in the execution. Deloitte Research – Revisiting retail globalization