India: Brand overload

Quote from WSJ article:

"India's store shelves groan under the weight of consumer brands. About 900 new food and beverage brands alone have been launched there in the past two years. Yet while shoppers enjoy ever more choice, it is getting harder for companies such as Procter & Gamble and Hindustan Unilever to preserve profit margins."

Consumer Products Goods sector is going to be a very competitive market in this decade to create large values for investors. The winners will be ones who are Unique versus Distinctive. See my previous blog on the subject here, or win on price points.

World Retailing: China's Wild West

In the Financial Times World Retailing this month, "The Wild West with razor-thin margins" documents the complications associated with exponential growth opportunities associated with open markets.  Specifically, the case of "Huang Guangyu, founder of the giant Chinese electronics retail chain Gome, was named China's richest man two years ago... But in February, he cele- brated his second Chinese New Year behind bars, awaiting trial on vague charges of bribery and stock manipulation."

Chinese retailers ramped up their growth fast... more importantly, as good friend and colleague Mr. Tony Tsai, CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co. highlights, the Chinese retailers have adopted methods of understanding their shopper and consumer as well.  China is a place where the behavioral change of the shopper and consumer is simply very fast in comparison to the developed markets because "people who were at subsistence level a few years ago are becoming consumers."

The article states:

“Retailing in China is still highly regional, highly frac- tured and overpopulated,” says Paul French, manag- ing director of retail consul- tancy Access Asia.

For example, in the western city of Chengdu, half a dozen high-end mega-malls are scheduled to open in the coming months. A giant statue of the late Communist leader Mao Zedong now points towards a Cartier store crowded in next to a Starbucks.

The wild west environment in which Mr Huang carried out his ambitious consolidation and which ultimately saw him toppled has spawned a cut-throat model that has been widely replicated."

Yet, China may also be developing its own in-store shopper engagement and conversion models:

"Companies such as Gome and Suning, its biggest competitor in the electronics sector, rely on product agents instead of inhouse salespeople as a way of con- trolling costs.

This means that when customers enter most Chinese appliance stores, the only people directly employed by the retailer are the cashiers, the security guards and the warehouse staff."

One thing is for certain, China has a ways to go in its experimentation as the shopper and the consumer remain an evolving base from needs vs. desires to affordability vs. affluence.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Fight for the Shopper and Buyer in the US

In the Financial Times World Retailing this month, "Stores prepare to fight for every last customer" covers the retailers approach in the US to convert their shoppers to buyer and loyal customers.

"Glenn Murphy, chief executive of Gap, ... has a hard-nosed view of what to expect this year from US retailers, as their customers gradually emerge from last year’s slump in spending.

“It is going to be mano a mano,” he told a recent investors meeting. Success will not be “based on square footage and capital. It is based on execution, differentiation, knowing your target customer . . . and fighting for every one of them”."

Interestingly where the square footage was the measure for retailer growth now:

"Most US retailers have slowed or stopped square footage growth. Notable exceptions include those that have benefited from the frugal consumer mood. Dollar General, the discount store, is planning to add 600 out- lets to its 8,700 network, and TJX Companies, the end-of-line retailer, is increasing its square footage growth rate from 3 per cent in 2009 to 5 per cent.

In contrast, Wal-Mart, the largest US retailer, is slowing its square-footage growth rate to less than 2 per cent, compared with more than 7 per cent in 2006."

So how does this conclude?

"“They’re all saying they will win the market share fight. But they can’t all win a bigger slice of the pie,” [Emanuel Weintraub, a veteran retail consultant] says."

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Sustainability

In the Financial Times World Retailing this month, "Green moves make savings" discusses the influence of the shopper on pushing the retailer towards "green".

"Joanne Denney-Finch, chief executive of the IGD, says she is not seeing strong evidence of retailers opting for the schemes that save most money, partly driven by consumers.

“The shopper has been very clear [that] it’s not price at the expense of all the other things on their wishlist,” she says."

Interestingly, during a seminar in Pakistan to some of the top non-profits and philanthropic organizations in the development sector, I put up a slide with three large alphabets only - CSR.  I found a bit of education in the discussion that followed on how the development sector views for-profit organizations of the world using CSR (Corporate Social Responsibility) in marketing and perception value.

I am thrilled to have worked at Procter & Gamble where social responsibility is inherent in all business.  Have a look at a "Sustainability Report" here from nine years ago.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Operations and Retail Staff Matter

In the Financial Times World Retailing this month, "Global view with a local focus" highlights the shift in emphasis on optimization of retail operations and engaging the retail staff to convert the shopper into a buyer/consumer.

"Don Williams, head of retail at BDO, says that if businesses have underlying operational issues, these will be thrown into sharp relief: “Tough operational conditions magnify issues mercilessly. You are going to be exposed if you have an operational flaw,” he says.

But Mr Hyman points out that retailing is not just about strategic vision. Having the right staff in stores will be a key weapon.

“One of the things that is really going to sort the men from the boys is store managers,” he says. “More and more, this battle is going to be fought on the sales floor, not in the boardroom.

“So having a brilliant strategy that is articulated in a compel- ling way in the boardroom is academic, unless it can actually be executed, which means . . your regional and store management, and staff loyalty, never mind cus- tomer loyalty, will play a much bigger part.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World's Largest Retailer Pays Bonuses

In business news this week - "Wal-Mart paid out $933.6m in bonuses to 1m of its workers. The retailer has not had to ask for government assistance."