Global Trends in Grocery Retailing

Retail is the process of selling consumer goods and/or services tocustomers through multiple channels of distribution to earn a profit.Demand is created through diverse target markets and promotionaltactics, satisfying consumers' wants and needs through a lean supplychain.

Retailers have diversified across product boundaries

• Most leading retailers have

developed their own private-

label program

• Retailers have increasingly

ventured into new formats

o discount format

o Virtual store

Changes in the global retail landscape

uniform worldwide prices

cross-border supply chains

retailers may threaten to ban a

manufacturer

Rationalize assortment and

eliminate brands

The more concentrated the retail market, thegreater the power and size of the retailersoperating in those marketsPower shift between suppliers and retailers

Internationalization of grocery retailing

Scale of entry

Mode of entry

Order of entry

Adaptation of retail format to

local market conditions

Familiarity of store format used

to the parent company

Strategic entry decisions: Inventorize how retailersmake decisions in theirinternationalization processand how these decisionshave impacted their futuresuccess in their new hostmarkets

attention tocompetitor’s priordecisions whendeciding on entrytiming and size; paycloser attention todecisions of homecompetitors

The ultimate performance metric for foreignentries is the exit of grocery retailers fromforeign markets

Growth and regional differences in private-label success

Countries’ national cultural environment

• Less where cultural power distance and cultural uncertainty avoidance is high

Economic-institutional environment

• Certain economic infrastructure should be present

• Government efficiency

• Business efficiency

• Technological resources

• Human resourcesRetail environment

• Private-label shares are higher when retail concentration is higher, more international retailers are active, hard discounters are present

• International retailers - leverage their private label skills across multiple countries

Format diversification

Retail formats

• Hypermarkets

• Supermarkets

• Discount stores

• Convenience stores

City-center formats

Discount chains

Success of hard discounts is a major source of concern forconventional supermarkets and national brand manufacturers Discounters are direct market-share competition with

conventional supermarkets and put pressure to increaseoperational efficiency and decrease prices

Contributed to further, quasi-unobstructed, private-labelgrowth

National brand manufacturers and discounters are starting to cooperate

• Price differential bet. NB and discounter’s private label brand

• Between store differential for the NB bet. the discounter and conventional retailers

• Attractiveness of the outer cases

• Innovativeness of the national brand

Disadvantages

• NB may cannibalize their own sales and sell them at lower price

• Friction with other retailers in the channel portfolio

Format diversification

Conventional retailers fight back

Format diversification

Hard discounters – no or limited national brands in their assortments

Soft discounters – more national brands

Multi-format retailer – internet

• Country character: perceived value from the internet

• Security protection of perceived value is stronger for countries with weak rule of law

• high national identity give more weight on whether there is cultural congruity bet. the site and themselves

• Individualistic countries give more weight to pleasure, security protection, and customization in perceived value judgments than people from collectivistic countries

• Internet gives opportunity for global retailers to globalize and localize

• threat of new players entering the market which may not

Conclusion

Increasing concentration in the

industry

Urge of many retailers to

internationalize

Growing success of private labels

Increasing popularity of discount format

Transition of many retailers into multichannel

operaton

advances in information technology

shift towards mire in-store promotions

changes in the use of slotting allowances

legal developments

assess competitive strengths and position themselves –reexamine success factors

Restructure business systems, locally and globally

Create new relationships with vendors

Manage alliances and partnerships

Outsource non-critical activities

Build truly international management teams

Adjust concepts and profit formulas to achieve sustainable levels of return

Operate effectively as internet-based retailers (e-retailers)

ensure brand relevance with targeted consumers

Leverage global scale and best practices while understanding local needs

Leverage information systems and business processes for greatest effectiveness and synergy

Identify market space

References• Global retailing in the connected economy. (1999).

Chain Store Age, 75(12), 69-82. Retrieved from http://search.proquest.com/docview/222047147?accountid=50192

• Overcoming the hurdles in global retailing. (1996). International Journal of Retail & Distribution Management, , XI-XII. Retrieved from http://search.proquest.com/docview/210971179?accountid=50192

• Peterson, H. (2014). 4 Ways American Grocery Shopping Is Changing Forever. http://www.businessinsider.com/trends-that-are-changing-grocery-stores-2014-4