Retail doesn’t cross borders ppts
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Retail doesn’t cross borders ppts
- 1. RETAIL DOESN’T CROSS BORDERS PRESENTED TO: PRESENTED BY: MBAIB 2B ANUJ MALHOTRA BRIJESH BAROT GAURAV SOOD JASPREET SINGH
- 2. INDIAN RETAIL INDUSTRY Expanded by 10.6 per cent between 2010 and 2012 and is expected to increase to US$ 750-850 billion by 2015. Food and Grocery is the largest category within the retail sector with 60 per cent share followed by Apparel and Mobile segment. Accounting for around 14-15 per cent of the gross domestic product (GDP), the Indian retail industry is estimated to be worth around US$ 500 billion currently
- 3. Major Players Pantaloon Retail/Future Group K Raheja Group Tata Group RPG Group Landmark Group Parimal Group Reliance AV Birla Group
- 4. Quiz on retail stores and their parent company Pantaloons – Future Group Bigbazaar - Future Group Hyper city - k Raheja Group Westside - Tata Group Croma - Tata Group Lifestyle - Landmark Group Max - Landmark Group Planet sports – Future Group Landmark - Tata Group Piramyd Megastore Megastore - Parimal Group More - AV Birla Group
- 5. Globalization’s lure is almost irresistible. With US economy struggling to expand and Europe on brink of recession, fast growing markets in the developing world offer the best opportunities for boosting revenues and profits When we focus on Grocery Retail Industry there are few exceptions, globalization benefits had not accrued to retailers. International players are almost entirely absent from even the largest retail markets. And every grocery retailer that has ventured overseas has failed as often as it has succeeded.
- 6. Top 5 Retailers in the world Walmart Carrefour Tesco Metro The Kroger company
- 7. Why Retailers go Global Since retailing is low margin business, big chains have been forced to move into overseas markets. Quest for greater economies of scale and scope A need to diversify risk A desire to attract new talent and create new opportunities for existing leaders. A need to make up for constraints imposed by regulatory agencies when a retailer becomes too big for its home market. Carrefour began to enter international markets after a law was passed in France in 1963 to restrict the development of large stores
- 8. Walmart American multinational retailer corporation Large discount department stores and warehouse stores World's third largest public corporation (Fortune Global 500, 2012) Largest retailer in the United States, and in the world 8,500 stores in 15 countries, under 55 different names (UK - Asda, Japan - Seiyu, India - Best Price, WOS in Argentina, Brazil, Canada)
- 9. • Mixed results in investments outside North America: – UK, South America, China are successful – Germany, South Korea, Japan were unsuccessful • Offer broad assortment with even lower prices • Meet local needs while leverage global resources • Winning in Global eCommerce
- 10. Reasons for failure in Japan Japanese tends to prefer quality over low prices, which constrasts with Walmart core value: EDLP (Every Day Low Price). When a nation has a very strong purchasing power, such as Japan, why settle for cheap stuffs when you can buy high quality expensive products and still have money to spare?
- 11. Japan is a small country with limited spaces, which has several implications for Walmart as below: Small housings and apartment sizes, with high rent prices means that Japanese would need to minimize their purchases. Several small purchases. High operating costs, especially because of the prices of rent and buildings in general. Inability to apply original supply chain model
- 12. Do you consider aspects such as waste resources and energy when purchasing daily products Waste Disposal in Japan: Trash categorization Costly trash disposal procedure Impact on Walmart .
- 13. Manufacturers Wholesalers Retailers Customers Line of governance “Retailers effectively represented the interest of the manufacturer, rather than that of consumers” (Tsukiizumi, 2004) • Protection from above • • Retailers are often protected from financial risks by wholesalers and manufacturers through a number of distinctive market practices (such as rebates). Price and distribution control Manufacturers and wholesalers controlled prices by enforcing districting and exclusive dealerships. Closed-network impact to government For foreign retailers, Japan’s complex retail and distribution system has long been inaccessible, so much so that the U.S. government considered it a nontariff barrier and a structural impediment for U.S.-Japan trade
- 14. Impact for Walmart SCM strategy Small profit margin Culture challenge Walmart supply chain management system aims for strategic sourcing to find products at best price from suppliers. Walmart establishes strategic partnerships with most of their vendors, offering potential long-term and high volume purchases in exchange for the lowest possible prices. Walmart’s business model is based on a low price strategy and low transportation costs allow it to sell its products at the lowest possible prices. EDLP allows Walmart to break even or make small profit per sales, while customers also win by saving money buying at low prices. Japan is used to the topbottom approach, while Walmart insists on bottom-up approach. Walmart has to challenge the unusually powerful Japanese suppliers and manufacturers to conform with its Walmart model.
- 15. Japan-US Geert-Hofstede comparison Power Dominance Index • • Relatively equal Japan is more hierarchical than US. Individualism Index Masculinity Index Uncertainty Avoidance Index Long Term Outcome Index • • • • • • • • Contrasting Collectivism of supply chain and relation to customer is difficult for US. 91 Contrasting Japan strives for quality and perfection. While Walmart enters market with valuegoods approach 95 92 Contrasting Japan may have numerous restriction and laws which may be viewed as unnecessary by US. Contrasting Japan may plan ahead and more punctual and strict, contrast to US. 80 62 54 40 PDI 46 46 29 IDV MAS UAI LTO Japan United States
- 16. First changes brought by Walmart is by successfully persuading Seiyu to dismiss 25% of their HQ staff, including 1500 employees and managers. Japan never have anything like this mass layoffs, because this kind of action would create too much embarrassment for a typical Japanese company. Walmart, a US corporation, is seen as the outsider who meddle too much in Japan’s community (Communitarianism) Walmart viewed it as a company’s priority to cut cost, in order to implement EDLP (individualism) This created a climate of resistance for policies that Walmart is trying to implement Introducing cheap products from China doesn’t help, especially with bad relations between Japan and China.
- 17. High communitarianism: high peer pressure, need peer approval to make decisions. High uncertainty avoidance: tried and true is better, something new is to be avoided. Variety offered by Walmart is not attractive to Japanese, who tends to choose a small selection of tried and tested product. Not to mention, they are wary of the “new” products offered by Walmart.
- 18. Walmart failure in Germany Wal-Mart entered the German market at the end of 1997 with the purchase of 21 stores from Wertkauf and added to this in 1998 with the purchase of 74 Interspar stores from the French company, Intermarché. After only 4 years of operation in Germany it was clear that Wal- Mart was struggling with estimated accumulated losses at around 1 billion Euro, although only estimates were available as the company published no accounts.
- 19. Reasons The nature of the German market The acquisitions The senior managers Corporate culture Supply chain issues products Employee relations issues Pricing issues Customer relations issues Image and publicity Financial reporting.
- 20. By 2006, Wal-Mart had 85 stores remaining in Germany. In July that year these were sold to a rival company Metro. In typical fashion no financial details were disclosed but the deal is estimated to have been concluded at less than the value of the assets at a loss to Wal-Mart of US$ 1 billion. Just after the conclusion of the deal in Germany, Wal-Mart sold all its stores in South Korea and by 2007 operates in only 13 countries. Its international rival Carrefour operates in 29 countries. Historically Wal-Mart has always done best in markets closest to the USA, namely Mexico and Canada. Asda in the UK is a rare success contributing 43% of WalMart’s international revenue. The failure in Germany is summed up by two academics thus: “Wal-Mart’s attempts to apply the company’s proven US success formula in an unmodified manner to the German market.
- 21. CAREFFOUR As of 31 Dec. 2012, Carrefour group operates over 9,994 stores in 33 countries
- 22. Carrefour is closing up shop in much of South-East Asia. Its 44 stores in Thailand, 23 in Malaysia and two in Singapore are for sale.(2010) Carrefour was one of the first foreign grocers to open shops in South-East Asia in the 1990s. But the laterarriving Tesco proved cannier in figuring out what consumers wanted. When the firm found out that Thai shoppers travelled for miles by bus to its “big-box” stores, it opened smaller stores in rural towns. Carrefour focused on Bangkok's higher spenders and stuck to its hypermarket format.
- 23. On April 28, 2006, Carrefour, the second largest retailer in the world, sold its 32 hypermarkets in South Korea to E.Land Corporation6 (E.Land) for 1.75 trillion Won7. The sale marked the exit of Carrefour from the South Korean organized retail market. Then agreed to 1.48 trillion in september. As a part of the plan, Carrefour exited several markets including Japan, Mexico, Czech Republic and Slovakia and began concentrating on the markets where it had a strong position including Brazil, Poland, Turkey and China.
- 24. Failure in South East Asia South Korea Choice of going alone(no local partners) Activist shareholders to reverse the firm's global expansion and focus on Europe. The company failed to localize its stores and the products sold according to the needs and preferences of Korean consumers. All top managements from France, this was not viewed favorably by the local employees, and Carrefour too often faced problems from local labor unions. Localization of products A pleasant shopping environment and friendly service are crucial to satisfy the tastes of South Korean customers South Korean customers tend to shop more frequently and buy less each trip than in other countries because of their desire for fresh food, such as high-quality meats and vegetables
- 25. System Due to Carrefour’s extreme level of store decentralization support areas that were not directly under store responsibility, such as IT and logistics, were normally treated as vendors. Over time this led to under investment and the company’s support services generally lagged behind the market leaders in terms of efficiency Culture Dint Understand the culture of South Korea and applied global strategies Ethics Negative attitudes toward foreign discount chain stores. Carrefour has been criticized for the treatment of its workers throughout the world Leadership Carrefour filed a court case against the local union, demanding damages for alleged losses caused by trade union members coming to work in their union jackets.
- 26. On the departure of Carrefour (and the subsequent departure of Wal-Mart) from Korea, the South Korean media reported that 'Native Korean retailers won a battle with the world's retail Goliaths.'
- 27. TESCO Tesco is the world's third largest retailer with a turnover of £72 billion ($115 billion), a presence in 12 countries with a market leader position in 6 of them. With over half a million employees, 6600 stores, and a strong online business, Tesco is dedicated to bringing best value, choice and service to millions of customers each week. What drives us is our Core Purpose, which is: WE MAKE WHAT MATTERS BETTER, TOGETHER.
- 28. Global Presence 1. UK 2. China 3. India 4. Malaysia 5. South Korea 6. Thailand 7. Czech Republic 8. Hungary 9. Ireland 10. Poland 11. Slovakia 12. Turkey
- 29. Failure in USA The stores had only self-checkouts. European model. Treat the US as one country Unfortunate timing- Recession Failure to understand that the US retail landscape is different from the UK's
- 30. METRO Is a German global diversified retail and wholesale/cash and carry group based in Düsseldorf. It has the largest market share in its home market, and is one of the most globalized retail and wholesale corporations. It is the fifth-largest retailer in the world measured by revenues (after Wal-Mart, Carrefour, Tesco and Kroger)
- 32. Kroger The Kroger Co. (NYSE:KR) is one of the world's largest grocery retailers, with fiscal 2012 sales of $96.8 billion. Kroger’s Family of Stores spans many states with store formats that include grocery and multi-department stores, discount, convenience stores and jewelry stores. We operate under nearly two dozen banners, all of which share the same belief in building strong local ties and brand loyalty with our customers.
- 33. Manufacturing Plants Kroger operates 40 manufacturing plants and packages and sells items for other retailers under the InterAmerican Products Company name. Dairies Bakeries/Delis Meat Plants Grocery Items
- 34. Private Brands Kroger Value Banner Brands Private Selection Simple Truth Organic
- 35. Alabama Alaska Arizona Kroger Fred Meyer Fry's, Smith's, Fry's Marketplace Arkansas California Kroger, Kroger Marketplace Ralphs, Food 4 Less, Foods Co. Colorado King Soopers, City Market, King Soopers Marketplace Kroger, Kroger Marketplace Fred Meyer, Smith's Kroger, Food 4 Less Kroger, Kroger Marketplace, Jay C, Ruler Foods, Pay Less, Owen's, Food 4 Less, Scott's Georgia Idaho Illinois Indiana Kansas Kentucky Louisiana Michigan Mississippi Missouri Montana Nebraska Nevada New Mexico Dillons, Dillons Marketplace Kroger, Kroger Marketplace Kroger Kroger Kroger Kroger, Dillons, Gerbes Smith's Baker's, Food 4 Less Smith's, Food 4 Less Smith's, City Market, Price Rite North Carolina Ohio Oregon South Carolina Tennessee Texas Utah Kroger Kroger, Kroger Marketplace Fred Meyer, QFC Kroger Kroger, Kroger Marketplace Kroger, Kroger Marketplace Smith's, Smith's Marketplace, City Market Virginia Washington West Virginia Wyoming Kroger QFC, Fred Meyer Kroger Smith's, King Soopers, City Market
- 36. The Retailers Golden Rules of Globalization
Notes de l'éditeur
- Accounting for around 14-15 per cent of the gross domestic product (GDP), the Indian retail industry is estimated to be worth around US$ 500 billion currently. Home to one of the top five retail markets in the world, India offers immense scope of growth and opportunities in this arena. As of now, almost 90 per cent of the Indian retail sector is controlled by tiny family-run shops i.e. the unorganised segment. Thus, organised retailers have a lot of room for further penetration in this flourishing economy. In 2010, larger format convenience stores and supermarkets accounted for about 4 per cent of the industry, and these were present only in large urban centres. Now the trend is changing, and such concepts are mushrooming in smaller cities and towns as well. Organised retail segment is expanding at 20 per cent a year, driven by the emergence of shopping centers and malls and growing middle class
- Pantaloon RetailPantaloonsCentralBrand FactoryEzoneHometownPlanet sportsBigbazarFoodbazarKB’s Fair Price Shop K Raheja GroupShoppers stopCrossword,InorbitHyper cityTata GroupCromaLandmarkPoltrona Frau Group Design CenterStar BazaarTashiWestside RPG GroupSpencer’sBooks and BeyondMusicWorld Landmark GroupCentrepointBabyshopSplashShoe MartLifestyleBeautybayIconicQ Home DécorCandeliteMaxShoexpressEmaxLifestyle Department StoresSPAR hypermarketsLandmark InternationalFootwear Division Parimal GroupPiramyd MegastorePiramyd SupermarketJamin RelianceReliance FreshReliance TrendsReliance FootPrintReliance Digital AV Birla Group More
- Offer broad assortment with even lower pricesOffer more product variety, achieve lower price by reducing expense, increase productivity and leverage technology to improve supply chain efficiency.Meet local needs while leverage global resourcesAlways align service to fastest-growing consumer demand in market, focusing on EDLP, targeting middle-income customers looking for quality-value combination.Winning in Global eCommerceBold competitive advantage by real-time communication between stores, distribution centres and the home office. Currently offers social, mobile and global platforms
- Japan is a small country with limited spaces, which has several implications for Walmart as below:Small housings and apartment sizes, with high rent prices means that Japanese would need to minimize their purchases. Lack of storage room to store purchases. A typical apartment in Japan would be 1LDK (1 room apartment with Living, Dining, and Kitchen area). 1 LDK apartment would be about only 27,55 sqm.Several small purchases.Minimize purchases, they would make their purchases several times a week, in small quantities. This means that stores would have to be readily available within reasonable distance, and bulk purchasing is discouraged. Compared to Walmart usual practice of centralized, big stores, with bulk purchasing to save costs, a neighborhood convenience store would be more suitable for the Japanese people.High operating costs, especially because of the prices of rent and buildings in general. Average commercial land prices in Japan is USD 2,017/sqm, with average commercial land price in Tokyo reaching USD 19,956/sqm, followed by Osaka with average commercial land price of USD 6,360/sqm.Inability to apply original supply chain modelLots of stores, lots of supplies to be delivered, but no warehouse space, or overtly expensive warehouse space, since space is a premium in Japan. Walmart’s supply chain management that is one of the strengths of Walmart in US, and based on US model, can't be applied here. That's why Toyota invented JIT: to avoid the constraint of using warehouses, and hence, adding more costs to the product line.
- Trash categorizationIn Tokyo, trash (gomi) has to be divided into three categories (combustible trash, non-combustible trash, recyclable trash) for proper disposal. Costly trash disposal procedureDisposal of bulky waste, such as a table, a shelf, or an old TV, requires a special procedure. You need to call the local ward office and arrange for a time for them to pick up the bulky waste. Before they come, however, you need to buy a sticker to stick on your large trash. To throw away an old TV, for example, costs about 300 yen.Impact on WalmartThis legendary Japanese environmental consciousness about waste disposal, added to their minimalist lifestyle, would discourage any bulk purchases from Walmart, effectively nullifying Walmart’s economic-scale-driven model.
- STSTEM Due to Carrefour’s extreme level of store decentralization support areas that were not directly under store responsibility, such as IT and logistics, were normally treated as vendors. Over time this led to under investment and the company’s support services generally lagged behind the market leaders in terms of efficiencyCULTURE Dint Understand the culture of South Korea and applied global strategies.ETHICS Negative attitudes toward foreign discount chain stores. Carrefour has been criticized for the treatment of its workers throughout the worldLEADERSHIP Carrefour filed a court case against the local union, demanding damages for alleged losses caused by trade union members coming to work in their union jackets.