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International Perspective
on Developments in Retailing
Major Impact and Implications for India
Sue J F Evans
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Retailers belongRetailers belong
to a place calledto a place called
Retailers belongRetailers belong
to a place calledto a place called
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a population of mastodons
always ready for cannibalism
invading green pastures worldwide healthier than ever
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50
46
39
Nestl
Unilever
P. Morris73
Suppliers
P&G
Retailers A population of mastodons: Nine retailersbelong to Global Fortune 100
Global Fortune 100- Ranking and 2001 revenues in $bn -Ranking
Wal-Mart
40
41
44
50
54
60
220
62
93
89
83
72
68
56
55
46
3835
24
1
Home Depot
Ahold
Kroger
Metro
Sears
Target
Albertson's
Carrefour
Retailers
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Retailers: Always ready for cannibalism
Wal-MartWal-Mart
CarrefourCarrefour
CasinoCasino
CBDCBD
AuchanAuchan
ASDAASDA
PromodPromodss
Comptoirs ModernesComptoirs Modernes
LaurusLaurus
Jeronimo MartJeronimo Martiinsns
(Brazil)(Brazil)
Docks de FranceDocks de France
have bought over have bought over
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Retailers: Invading green pastures worldwide
International presence of top 20 retailers
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Retailers: Healthier than ever
20%
13%
11%10%
Return On Capital Employed (ROCE)- 2001 -
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Cannibalism will accelerate
Retailers are pushed to look for new "green pastures
Genetic mutation retailers succeed in building brands
Major trends
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Cannibalism: Suppliers still have the largest sliceof the cake, but retailers will fill the gap rapidly
Comparison of ROCE among retailers and suppliers2001
Retailers Suppliers
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And will emulate the concentration that hasalready taken place amongst suppliers
Leclerc
16
L'Oral
41 P& G
25
Coca Cola66
Intermarch
12
Private Labe
13
Unilever 9Unilever
25 Carrefour 12
Pepsi 8
Private Label
Henkel
20
Auchan 10
P&G 5
Colgate 10
Systme U 6
Colgate 3
Private Labe
12
Gant 4Cora 3
Other37
Other 8Other
13
Other35
Suppliers Retailers
Market shares in France- 2001 volumes, in % -
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Green Pastures : Retailers have already entered theobvious geographies and reached critical mass
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To help retailers prioritize their expansion plans,A.T. Kearney has recently published the GlobalRetail Development Index
Based on expert interviews and extensive local data
Covering 180 countries worldwide
Driven by three major questions
Economic stability
Political risk
Debt, credit balance
Is the country economicallyviable?
Modern retail area perinhabitant
Number of internationalretailers in the country
Is the retail market attractive?
Modern retail area growthrate compared to GDPgrowth rate
When do I have to go there?
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India ranks number 6 and is already veryseriously on the radar screen of major retailers
GRDI 2002Index between 0 and 100
70
76
61
62
63
65
69
69
70
Turkey
Chili
Vietnam
India
Morocco
Russia
Hungary
Slovakia
China
On the radar screen
57
61
57
56
56
55
55
54
52Mexico
Romania
Colombia
Bulgaria
Venezuela
Thailand
South Africa
Korea, Rep.
Ukraine
To consider To avoid
51
24
51
50
49
46
46
42
26
Argentina
Poland
Indonesia
Czech
Republic
Hong
Kong
Brazil
Philippines
Israel
Malaysia
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Genetic Mutation: When retailers succeed inbuilding powerful brands
= 100% private label = big results
Part of the Casino GroupSurface : 1,000 sqm
# SKU : 2,800 (mostlyfood)
ONLY PRIVATE LABEL
Pricing : Nielsen index 90Assortment : deep
Leader Price Concept
Leader Price
Leader Price
+10%
6%
Results
Sales evolution1st half 2002/2001
(pro forma)
Operating margin%
Global expansion(# stores)
France (100)Poland (70)ThailandArgentinaBenelux
Other supermarkets
3.9%
Other supermarkets
4.2%
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Implications for India
Be ready!
retail mastodons will enter the Indian "greenpastures"
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Organised retail in India will inevitably grow asincome levels and urban concentration increase
0
25
50
75
100
0 2 000 4 000 6 000 8 000 10 000
Indonesia Thailand
China
Brazil
Poland
Malaysia
India
0
25
50
75
100
0% 10% 20% 30% 40%
Indonesia
Thailand
Poland
Brazil
China
India
Malaysia
By 2007, the Top 10 states in India would have an average per capita GDP c $5,000By 2007, the Top 10 states in India would have an average per capita GDP c $5,000
Organized retailpenetration (%)
Organized retailpenetration (%)
Per capitaGDP ($)
Urbanconcentraon (% ofpop. In top8 cities)
GDP URBANISATION
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Implications for India
Be ready!
Be realistic!
. Small players can flourish in the changing
environment if they adapt themselves
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Evidence from other emergent markets shows thattraditional outlets will survive
1996 1997 1998 1999 2000
Specialists
Independent grocers
Convenience stores
Discounters
Cooperatives
Hypermarkets
Supermarkets
Source: Euromonitor
CHINARetail structure in number of outlets
(absolute numbers)
10,122,000
12,936,000
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Implications for India
Be ready!
Be realistic!
Be resilient!
Indian retailers can benefit from adopting latest retailmanagement techniques to improve efficiencies
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AND DON'T FORGETAND DON'T FORGET
dinosaurs sometimes disappear !!dinosaurs sometimes disappear !!