Global Retailing

Global Retailing Trends:

No doubt that organized retailing in developed world is far ahead than in India. According to estimates, over 80% of all retail sales in the USA is accounted for by the organized retailers while in Europe, this figure accounts to 70%, 40% in Brazil and Argentina and nearly 35% in Taiwan and Korea.

According to U.S. Department of labour, more than 22.5 million Americans are employed in the retailing industry in over 2 million retail stores. Retailers throughout the globe now have understood that sustainable competitive advantage can be achieved only by those retailing firms that integrate consumer demand directly into their merchandising and supply chain planning workflows. Global retailers know that if they have to stay ahead of changing consumer shopping habits and increasing merchandise choices, committed ethical behavior, community involvement, innovative promotions and pace with new technology is essential.

Besides this, in the recent years following trends in global retailing have been observed:

1. Going Internationalization:

As the domestic markets are becoming saturated, retailers have started looking to overseas markets for business growth, economies of scale, especially in Asia. Similarly staples and Nike are entering the Indian and Chinese markets. Target and Dollar stores (US based) also continue to grow their geographic presence aggressively in Asian countries.

Further, geopolitical developments, including Tie-ups, joint ventures, trade pacts within the regions is facilitating movements of goods and services across frontiers. The North American Free Trade Agreement (NAFTA) – and its likely extension to include some additional central and South American nations in the coming years, – the European Union (EU) and future alliances will gradually but steadily abolish traditional geographical and political borders.

2. Value driven retailer to values driven retailer:

Value retailers like Wal-Mart, Costco and Target which previously were recognized as the destination for the monthly stock-up trip now continue to improve “shopability,” by providing more convenient store layouts and shopping experiences that make the customers buying quicker and easier.

This trend focuses on programs designed to meet consumer lifestyles and needs based on money, time, family size and type, and personal and social obligations. Timberland provides “nutritional label” on their products detailing the energy used in making the shoes, the portion that is renewable, and the factory’s labor record to show their impact on environment.

3. Enhancing service offerings:

Walgreen’s, for instance, has built a superior brand proposition around pharmacy authority and convenience. Walgreen’s capital spending, organizational energy, and marketing dollars all focus on delivering convenience at every level, through real estate strategy, quick in-and-out convenience, layout, assortment and micro-merchandising.

Best Buy has had a lot of achievements with its Geek Squad offering repair, support and installation services at all stores; PetSmart, the largest US pet supplies retailer, besides selling pets, is also providing pet services like Doggie Day Camp, grooming, training and boarding facilities.

A number of retailers associated with PetSmart, believe that since launching these services, they’ve seen a jump in both retail revenues as well as traffic to stores, which has boosted consumer loyalty.

Futuristic stores are increasingly seeking to interact with customers. In Nokia’s London store, customers removing a handset from its display can view product information that appears on the walls above. And upstairs, a lounge washed in blue-light provides a hyper- modern retail environment.

Across the street, the Apple store offers free email access, a ‘genius’ bar and a ‘learn-how-to’ theatre. It’s also worth noting Bangkok’s SpaceGal – a Star Trek-style lingerie store that subverts expectations about how the retail segment should appear and encourages interaction.

4. Expanding Private Brands:

To increase margins and draw increase awareness to store developed private brands as compared to well established or third party brands, retailers now are introducing their own store brands. Retail firms believe that these own or private labels have evolved from ‘cheap and nasty substitutes’ to the real thing though ‘copycat’ private labels still remain a strong strategy for retailers.

However, the copycat no longer depends on the price advantage to fight the branded product; it has improved on quality and offers a value proposition to the consumer. For example, Wal-Mart, casts the net wider on private labels to create a ‘house of brands’.

The only caution for retailers is that there should be a well thought-out blend of private labels and other brands. Manufacturers should also fight back by innovating: changing the way they look at consumers, seeking out early adapters for ideas, using sound marketing techniques and adopting a thorough product development process.

In India, Nestle (a well renowned Swiss MNC) popularized the coffee kiosk concept in India, where it offers various flavors through its vending machines installed at public places and places of high traffic such as PVRs, shopping plazas, food centers and office premises.

These vending machines come in different sizes and styles to meet varied needs of consumers at various locations. For instance, its high capacity multitask vending machines provides coffees with snacks, drinks, confectionary items and packed foods. Similarly Cadbury India, with the tie-ups of telecommunications companies like E-Cuba India and BPL Mobile has launched chocolate vending machines activated by mobile handsets in select corporate and congregation points in Mumbai.

5. Migration of retail format:

Over the past few decades, due to competition and entry of world’s largest companies in this sector, retail formats have been changing radically. The co-operatives and basic department stores of the early 20th century have given entry to mass merchandisers (Wal- Mart), warehouse clubs (Marko, Sam’s Club), hypermarkets (Carrefour), discounters (Aidi), convenience stores (7-Eleven), and category killers (Toys ‘R’ Us, Sports Authority). UK’s Tesco Group operates supermarkets, hypermarkets, departmental stores, convenience stores, neighborhood stores, mail order, and like most others recently cyber retailing (on­line retailing/e-stores).

The most important business philosophy for various old, emerging and new retailing formats is convenience in terms of ‘under-one roof, ‘one-stop location’, ‘time saving or ease of shopping, making consumers ‘king’ in real sense.

6. Consolidation:

Since the dawn of 21st century, there has been a substantial re-structuring of the retailing in globe especially in Europe. The implications extend afar Europe but they have had largely impact within European countries. This corporate restructuring not only involves changes in existing horizontal competitive relationships amongst retailers but also involves new forms of relationship with manufacturers, vendors and wholesalers.

For instance, Home Depot (an American retailer of home improvement and construction products and services), acquired 12 stores in China from Home Way (a Chinese retailer) in the year 2006. Similarly Best Buy (a Fortune 100 company and the largest specialty retailer of consumer electronics in the United States and Canada, accounting for 21% of the market) acquired 75% stake in Jiangsu Five Star Appliance (China’s third largest consumer electronic retailer).

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