What Will It Take to Thrive in the Global Arena? Key Learnings and Insights from Global Best Prac9ces
What Will It Take to Thrive in the Global Arena? • Two strategies seem to dominate the global expansion race: – Expansion of mass market retailers in fast-‐developing countries – Expansion of “specialized” retailers with strong brands
• Innova9ve concepts and methods are needed to exceed customer expecta9ons in the global arena • This session will feature results and insights from a study (conducted by EbeltoH Group) evalua9ng retail interna9onaliza9on trends • Mango and Delhaize will share their perspec9ves and lessons learned during the execu9on of their company’s mul9-‐na9onal expansion plans
So You Want to be a Global Retailer? All You Need to do…
Deal With Na<onal, Regional & Local Laws & Restric<ons
Account For New & Entrenched Compe<<on
Perfect Supply Chain Strategies…in Very Different Market Condi<ons
Understand Local Consumer Tastes & Preferences
Adjust Pricing, Promo<ons, Merchandising & Mix
Select the Right Real Estate
Transfer Company Culture & Expecta<ons Across Countries
…No One Said It’s Going to Be Easy
But Global Remains Where The Growth Is… Sales growth and profitability by region/country (%) 20 15 10 5
19 14.9
15.4 9.3 5.7 5.3 3.8
4
7.6 4.7
3
3.5 1.5 2.1
5.5 5.6 3.7
5.6 4.2 3.3
4.4 4.9 1.3
7.4 5.2 3.7
4.7
5 4.7 4.1
4.9 4.7 4.1
0
2005-‐2010 Composite retail sales CAGR
2010 Composite retail sales growth
2010 Composite net profit margin
Results reflect Top 250 retailers headquartered in each region/country. *Compound Annual Growth Rate. Source: Published company data and Planet Retail
Retail Leaders are Driving Higher Growth Interna<onally… Retailer
2010 26
2015
9.8%
2.7%
7.7%
3.2%
10.5%
5.9%
7.4%
1.6%
67
41
64
33
38
67
61
Domes<c turnover CAGR % 2010-‐15
33 74
59
Interna<onal turnover CAGR % 2010-‐15
39
36
62
33 67
Source: IGD Research and es9mates. Note: Red = interna9onal turnover %, Blue = domes9c turnover % Source: MD
Despite Some Costly Mistakes Along the Way
Market Entries and Exits of Top 4 Global Retailers ENTRIES
Chile India South Africa
Bulgaria India Iran
India
Egypt Kazakhstan
EXITS
Russia Germany South Korea
Russia Algeria Thailand
Japan USA?
Morocco
So, How Do We Improve the Odds?
Global Ebeltog Group Study: Methodology • 18 Countries – 12 Developed Markets – 6 Emerging Markets • 8 Retail Sectors • 92 Retailers • 127,170 Stores
Interna<onaliza<on in Developed Retail Markets Varies Considerably Developed retail markets: average percentage of interna<onal stores 85%
85% 77% 68% 60%
55%
54%
51% 40%
2.43 1.49 0.33
Singapore Denmark Portugal
Spain
2.77
Germany
UK
29%
GDP $ trillion 0.84
0.24
37%
1.74
1.37
3.57
0.24
39%
France Netherlands Australia
0.64
USA
Canada Switzerland
Most Retailers Tend to Penetrate Similar Markets First When Expanding Interna<onally Analysis of the loca<on of stores within the retailers’ poriolios 17% 29%
18%
16% 9%
Emerging Developed
39%
Domes9c
54%
All Markets
74% 43%
Developed Markets
Emerging Markets
Interna<onalisa<on has Escalated in the Last 3 Years % change in number of interna<onal and domes<c stores over 3 years 47.4% 44.2% 40.1%
Interna9onal Domes9c
31.7% 25.3%
11.9%
All Markets
Developed Markets
Emerging Markets
Store loca9ons 9 Compe99ve opportunity
7
Local adapta9on
5
Keys to Success
Compe99ve pricing
3
Product realiza9on
1 Entry mode
Marke9ng
Failure Success
Technology systems
Local management Suitability of concept
Keys To Success (Or Avoiding the Path to Failure) 1. 2. 3. 4.
Have a clear reason for being (anywhere) Listen (really) to the customer and have leadership flexibility Partner (Acquire/JV) with Local Leadership & Talent: respect local culture Execute on great retail: well-‐defined real estate strategy, marke9ng, systems and infrastructure
Have a Clear Reason For Being…
Success Factors Hornbach succeeded in The Netherlands by having an all-‐in-‐one offer of DIY under 1 roof.
FNAC succeeded in Portugal with its added value model.
Hollister succeeded in UK by crea9ng a sense of belonging and exclusivity.
“Iden&fy your points of difference. What does your brand do that few other companies do. This could be a product a<ribute, brand equity or a mark of quality.” Aus$n Reed / Burberry, UK
Listen (Really) to the Local Customer: With Flexible Leadership
Success Stories Starbucks succeeded in China by changing its format to suit local behavior panerns.
Media Markt succeeded in Spain by allowing local management autonomy.
Lidl succeeded in France by offering French na9onal brands, alongside their private label products.
“ Aldo’s success comes from understanding the consumer at the local level. We are looking for local differences… there is not much difference in the products and style for Italy, France and Canada, but there are big differences between UAE, Asia and Canada.” Aldo, Canada
Dressman failed in Denmark due to heavy local compe99on and three changes of CEO since entering the market.
Wal-‐mart failed in Germany due to acquiring two local chains, Wertkauf and Interspar, but dismissing almost all of the exis9ng staff.
G’Market failed in Romania because its parent company’s anen9on was diverted to other businesses.
Failure Factors
Partner (Acquire/JV) with Local Talent & Leadership
Success Factors Crate & Barrel succeeded in Canada by training staff to “educate” their customers in product knowledge.
Tesco succeeded in South Korea by partnering with Samsung and having great local leadership
Zara succeeded in Turkey because it offers its sales staff bener benefits.
“Everything is about people. You can’t have a great product without great people. We employ a truly interna&onal team of people, not just Dutch. The board consists of a variety of people with different backgrounds.” Hunkemöller, Holland
Failure Factors Best Buy failed in UK because its large store showroom format felt dated to the consumer.
Carrefour failed in Portugal by building stand-‐alone hypermarkets.
Carrefour failed in USA because the stores were much larger than the US customer was used to.
Execute Great Retail: Real Estate, Systems, Marke<ng
Zara Succeeded in Turkey by cuqng good deals with owners of the best and most frequented shopping malls.
Success Stories
Sephora Succeeded in USA by partnering with JCPenney.
Topshop Succeeded in Australia by choosing adjacencies next to other global brands.
“ In 1991 we opened our first store on Tverskaya Street (the premium Moscow shopping street) and this is s&ll our best store in terms of turnover today.” Yves Rocher, France
Lidl succeeded in France by expanding aggressively.
Success Stories
Kaufland succeeded in Romania by con9nuing to open stores and invest in distribu9on centers.
McDonald’s succeeded in Singapore by expanding into less concentrated and compe99ve suburban areas.
“ It’s not about plan&ng flags all over the world; it’s about making clearly defined decisions about which markets you want to dominate, and go in and dominate them.” Hunkemöller, Holland
Failure Factors Best Buy failed in Turkey because it chose to start up in secondary ci9es.
Walmart failed in India by loca9ng at substan9al distances from city centres to avoid high rental costs.
Carrefour failed in USA because it chose to locate in densely populated urban areas.
Keys To Success (Or Avoiding the Path to Failure) 1. 2. 3. 4.
Have a clear reason for being (anywhere) Listen (really) to the customer and have leadership flexibility Partner (Acquire/JV) with Local Leadership & Talent: respect local culture Execute on great retail: well-‐defined real estate strategy, marke9ng, systems and infrastructure
And We Hear From the Retailers Themselves…Mango and Delhaize
The Future Is Already Here. It’s Just Unevenly Distributed. WILLIAM GIBSON
Get in touch:
Ebeltoft Group Balmes,109 5º2ª 08008 Barcelona, Spain Tel.: +34.93 452 73 39 ebeltoft@ebeltoftgroup.com www.ebeltoftgroup.com