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.
Revisiting retail globalizationA Deloitte Research Global Retail StudyDeloitte Research – Revisiting retail globalization13
Revisiting retail globalizationIntheyear1298,theVenetiannavywasdefeatedinOfcourse,we’vebeendownthisroadbefore.Indeed,battlebythenavyofGenoa.OneoftheVenetianDeloitteitselfwroteabouttheimminentglobalizationcommanderscommittedsuicideindisgrace.Heislongofretailingseveralyearsago.Andwhilemanyforgotten.Anothersurrenderedcalmlyandlivedtoretailershavetakentheirstoresontheroad,thewriteabouthisexperienceandmuchelse.HisnameindustryremainsfarlessglobalthanmanycomparablewasMarcoPolo.TheimportanceofPolowashisabilityconsumer-orientedbusinesses.Thinkaboutthetoobserveandlearnfromexperience—theexperienceleadingcompaniesinconsumerproducts,hospitality,ofdefeat,andespeciallytheexperienceofentirelyalienfoodservice,telecommunications,andentertainment.cultures.Theseindustriesarefarmoreglobalthanretailing,withthe leading players achieving a much higher share of Thisisalessonofimportancetoretailersinterestedrevenueandprofitsfromoutsidetheirhomemarketsinbeingglobalcompanies.Forifweknowanythingthanistrueofretailing.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.Plentyofretailershavefailedinglobalizing,Whyhavesomanyretailersfailedtogo,muchlessandmanyhavesucceeded.InthespiritofMarcosucceed,outsidetheirhomemarkets?TheanswerPolo,thisessayofferssomelessonslearnedfrombothisthatretailingisauniquelycomplicatedbusiness.experiences.Itistheindustrythatmaintainstheclosestandmost personal relationship with consumers, often Why think about this now?intersecting their lives on a weekly and even daily basis.AtatimewhentheglobaleconomyfacesThus,achievingasuccessfulpersonalrelationshipisfarunprecedenteduncertainty,whenU.S.retailsalesaremorechallengingwhendoingitinanalienculture.Infalling,whenEurope’seconomyisonthevergeofaddition,successfulglobalretailingentailsundertakingrecession,andwhenthebigemergingmarketsareawiderangeoftasks.Theseincludemanagingshowingsignsofsignificantslowdownandfinancialdiversehumanresourceswhomustengageinrisk,nowdoesnotseemthebesttimetodiscussretailpersonalinteractionwithcustomers,managingforeignglobalization.humanresourcesfromafar,managingcomplexanddiffering supply chains, managing relationships with Yet,whatevereconomicdoldrumsretailersfindthousandsofsuppliersandothervendorsinmultiplethemselvesin,therealityisthateconomicgrowthbusinessandregulatoryenvironments,meetingthewilleventuallyreturnandsurvivingretailerswillneedrequirementsofmultipleregulatoryregimes,andalltoseeknewarenasforexpanding.Homemarketsthewhileunderstandingthechangingneedsofdiversefordevelopedcountryretailersaregoingtobeslowconsumers.Clearly,thisisnoteasy.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–Revisitingretailglobalization1
2So why bother? Find a competitive advantageRetailersgoglobalforanumberofreasons.EuropeanIfthereisnoruleforchoosingastrategy,thenwhatretailersaremorepronetoglobalizationthanisaretailertodo?TheansweristofigureoutwhatAmericanretailersbecausetheyoftenfacerestrictionstheretailermightbringtothemarketthatwouldondevelopmentintheirhomemarkets.Frenchenableittobeatthecompetition.Thiscanvaryhypermarketscometomind.Duetoregulations,theygreatlyanddependsonthenatureofthecompetitivecannoteasilyopennewstoresintheirhomemarket.environment.InanemergingmarketthatlacksmuchConsequently,theyprincipallyseekgrowthinothermodernretailing,simplybringingmodernsupplychainmarkets.Thisiswhythelion’sshareofglobalretailersmanagementandmerchandisingaswellaslargearebasedinEurope.financialresourcesmightbesufficient.Inamoresophisticated market, competitive advantage can come Someretailersinvestgloballyinordertolatchontoaboutbyofferingawellknownglobalbrand,auniquefastgrowingconsumermarkets,especiallywhentheirformat,ahigherlevelofcustomerservice,amorehomemarketsarestagnant.GermanyandJapancomeentertainingandinformativecustomerexperience,oratomind.Retailersexpandgloballyinordertoleveragemoreefficientsupplychainthatenableslowpricing.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 executeIt 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