Nov Retail Kearney Organised Retail

8/14/2019 Nov Retail Kearney Organised Retail

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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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4

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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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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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 !!

Documents

Nov Retail Kearney Organised Retail