logging in or signing up International Retailing lalitshah Download Post to : URL : Related Presentations : Let's Connect Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Copy embed code: Embed: Flash iPad Dynamic Copy Does not support media & animations Automatically changes to Flash or non-Flash embed WordPress Embed Customize Embed URL: Copy Thumbnail: Copy The presentation is successfully added In Your Favorites. Views: 1036 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: August 31, 2011 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript INTERNATIONAL RETAILING: INTERNATIONAL RETAILING Dr. Sumeet Gupta, BE , MBA, PhD, ( National Univ. of Singapore)Slide 3: CARREFOUR FRANCE BASED RETAILERSlide 4: METRO GERMANY BASED RETAILERSlide 5: TESCO UK BASED RETAILERSlide 6: WAL-MART STORES INC US BASED RETAILERSlide 7: SEIYU JAPAN BASED RETAILERSlide 8: BEST PRICE INDIA BASED RETAILEROBJECTIVES: OBJECTIVES International marketing Marketing analysis and foreign market entry strategies International retail environment Selection of retail market Methods of international retailing Role of IT in international retailingSlide 10: WAL-MART STORES INC DOMINATING GLOBAL RETAILINGOUTLINE: OUTLINE The Humble Beginnings Expansion and Growth Strategy International Expansion Mexico Europe Asia Problems and Issues Lessons LearnedTHE HUMBLE BEGINNINGS: THE HUMBLE BEGINNINGSSlide 13: Founded by Sam Walton 1962Slide 14: Walton’s Initial LearningSlide 15: The First StoreSlide 16: The First Store Where was the store located and why?Slide 17: Volume and Inventory-turn velocity define competitive advantage in the discount retail business Concept works in small towns With population that were scratching a subsistence level of living Few employment alternatives Walmart could provide jobs at decent wages The Concept What was their Basic Strategy?Slide 18: Steady jobs at decent wage required to staff the store Small Operations in Rural Areas with minimal competition in retail thus allowing flexibility in pricing merchandise Low local real estate costs Stores were decidedly austere in appearance Low Operating Costs What were the Challenges?Slide 19: Walmart developed its own large warehouses to fulfill its needs Developed large logistics operations, complete with a fleet of truck and a private satellite system as well Thus costs were kept low Capitalizing on Challenges What were the Challenges?Expansion and growth: Expansion and growthSlide 21: Cheerful greeting by the senior citizens of the company Fully Stocked shelves with a wide range of products No backroom inventory Employee bonuses linked to departmental level performance Prices set as low as possible and variable from store to store reflecting the prevailing competition Very limited advertisements (bare-bones approach) featuring their own associates as models Operating Philosophy and CultureSlide 22: Flat organizational structure Frugality (Economy class travel, Stay at Budget motel on a sharing basis, not hiring taxis as far as possible, minimalist décor at the warehouse) Visitors had to pay for a cup of coffee even at headquarters Customer centric dictum (10-feet rule) Development opportunities to associates Promotions from within Equal opportunity for being promoted into management ranks and moved to headquarters Job enrichment and job rotation as a means of developing HR 360 degree feedback and performance appraisal system Operating Philosophy and CultureSlide 23: Centrally managed from its offices at Bentonville Group of buyers who negotiated discounts directly with manufacturers Negotiations carried out in a small windowless office Buyers were tough negotiators and demanded a wide array of price and service concessions Walmart was the largest single revenue generator for Hollywood (35% of all pet food sold in US, 24% of all toothpaste, largest volume of groceries, DVDs, CDs, toys, gunsm etc.) Its purchase volumes were very-very high and the supplier became rich quickly by supplying to them Suppliers needed Wal Mart more than Wal Mart needed them Supplier ManagementSlide 24: National Brand Strategy Well known brands at relatively lower prices thus demonstrating superior value to its customers Brands self-advertised and hence Wal Mart could reduce its advertising budget Wal-Mart could price Mattel Toys 22% below Toys R Us Supplier ManagementSlide 25: Private labeling Strategy Began with Ol ’ Roy Dog Food Its brands competed with National brand Manufacturers started manufacturing store brands for leading retailers Supplier ManagementSlide 26: Supplier ManagementSlide 27: Supplier’s Credentials Very stringent requirements in terms of product quality, shipping, stocking, and in-store displays Transactions to be conducted through Retail Link, a proprietary EDI (IS that allowed the electronic tracking of purchase orders, invoices, payments and inventories) RFID required imposed on its suppliers that would enable enhanced capabilities in tracking sales of individual items within its stores, a potential gold mine of inventory and customer preference data Supplier ManagementSlide 28: Tangible payoffs to suppliers in terms of inventory monitoring and management Jack Welch, the former CEO of General Electric, once observed that he learned more about the customers who bought GE light bulbs from Wal-Mart’s supplier reports than he did from his own marketing department. After all, the relationship between the manufacturer and the end user was no longer a direct one. It increasingly went through Wal-Mart. Supplier ManagementSlide 29: Suppliers could not raise their prices Walmart continued to compensate at old rates Billed its suppliers for missed or delayed deliveries Paid suppliers when their items was scanned upon sale to a customer E.g., Rubbermaid – Newell merger Supplier score card to keep track of the performance metrics of its suppliers Suppliers were required to uphold quite stringent standards of employment and fair labor practices at all their manufacturing worldwide (Wal-Mart Code of standards being displayed at suppliers facilities) Supplier ManagementSlide 30: Passive submission Active engagement in maximizing one’s own piece of Wal -mart Pie (Shelf capture approach) Newell-Rubbermaid offered a wide variety of largely non-seasonal, low technology, high-volume essentials that were relatively low priced. Positioned itself as a very responsive, highly flexible supplier It became the benchmark for supplier performance Rayovac began with offering 20% lower prices than Duracell and Energizer It gained a heavy market share (>80%) in its high margin products Wal-Mart accounted for 26% of Rayovac revenue in a relationship Supplier’s StrategiesSlide 31: Private satellite network that worked in conjunction with the EDI system and a point-of-sales system Own logistics through a central hub-and-spoke system of warehouses and distribution centers. Little inventory storage in these centers and active practice of cross-docking Mandatory usage of Retail link system to keep logistics planner in Bentonville informed about the availability of cargo for shipping to warehouses, thus enabling backhauling. Use of TechnologySlide 32: Different Stores for Different FolksINTERNATIONAL EXPANSION: INTERNATIONAL EXPANSIONSlide 34: Market potential based on economic and political risk, growth potential, and availability of real estate for development. Saturated Markets: Acquisition strategy Easy availability of Land: Organic Growth Unknown territories: Joint Venture Evaluation CriteriaSlide 35: Wal-Mart’s Mode of EntrySlide 36: Joint Venture with Cifra and later on increase its equity to 62% Bodega Aurrera stores targeted at lowest income strata Superama stores targeted at middle and high income customers 26% of all international revenues Leveraged location specific advantages in Mexico to grow a supplier base at relatively low cost and augment needs in other parts of the world (300 suppliers exported to its US based stores) Copied the template to Brazil ( Todo Dia ) and Puerto Rico Opportunistic product expansion (money transfer service from Mexico to US) MexicoSlide 37: Victim of price war due to its close rival Carrefour Price Comparison flyers distributed in Wal-Mart parking lots Carrefour was a leader in South American market and has strong merchandising experience as compared to Wal-Mart Brazil and ArgentinaSlide 38: In Germany through acquisition of Wertkauf (a German retailer that had fallen on bad times in 1997) Acquisition of Interspar Imported its own management team to covert the acquired stores into Wal-Mart stores Wal-Mart rural culture did not blend well with German sensibilities Language difference, distinctive market preferences, Prohibitive German laws Competition with Metro A.G., which was a formidable competitor and very good at merchandising Failure to actually implement their everyday low price strategy Europe-GermanySlide 39: Oligopolistic Market structure (Key Players: Metro-19.7, Rewe-13.6, Edeka /AVA-12.7, Aldi-10.1, Tengelmann-7.6) Ultra-low profitability in the industry (0.8% of sales) Family owned retailers (Principle of doing business is not maximization of shareholder value) Zoning regulations imposing sever restrictions on the construction of large-scale stores Euro Conversion caused confusion and Aldi was able to exploit its reputation for great value (high quality products at very low prices) Price and value more important than service and quality Retail legislation 80-84 hours/week store opening hours, Saturday and Sunday closed One cannot be a loss leader WalMart -Failure in GermanySlide 40: Flawed entry by acquisition strategy 21 Wertkauf stores (1997) 74 Spar hypermarkets at exceptionally high cost Euro560 million (1998 ) Organic growth was not possible WalMart -Failure in GermanySlide 41: Management by hubris and clash of cultures approach to labor relations Not able to understand or adapt to the specific conditions of doing business in Germany CEOs (e.g., Rob Tiarks ) were US citizens who were unwilling to learn German Ignorance with regard to the manifold complexities and the legal and institutional framework of the German retail market Executives looking for switching to other retailers because of Wal-Mart’s frugal approach Union had strong influence in Europe and therefore staff-cuts and firing was difficult (Strong labor protection regulations) Wage-bargaining was refused with labor union in Germany WalMart -Failure in GermanySlide 42: Balatant failure to deliver its legendary “we sell for less-always”, “EDLP”, “Excellent services” value proposition Aldi was undisputed cost and price leader in Germany. Wal-Mart could not systematically undercut Aldi and the other hard discounters Its assortment was not even substantially cheaper than the traditional retailers 10 feet rule or the concept of greeters did not meet with enthusiasm in Germany German customers are accustomed to self-service formats and additional staff only adds to labor costs Restrictive shopping hour regulations WalMart -Failure in GermanySlide 43: Bad publicity due to repeated infringement of some important German laws German anti-trust legislations ban all undertaking with superior market power from selling a range of goods below costs price without any objective justification All corporations must disclose their basic financial information including a balance sheet and an annual Profit and loss statement Obligatory deposit regulation requires retailers to provide a deposit-refund system for certain types of plastic and metal beverage containers or to refrain from selling any product bottled or canned in containers WalMart -Failure in GermanySlide 44: UK (Acquisition of Asda which worked the Wal-Mart way at 6.7billion pound in 1999) Local Managers were given leeway ASDA was already a successful venture Strategies from ASDA were imported to reform German venture and import fashion clothing into US to compete with Target (Up-market retailer in US) Europe-UKSlide 45: Korea: Acquisition of Makro (High real estate cost lead Wal-Mart to design stores encompassing 6-8 stories) Exercise its option to increase its holdings to become a majority partner Chains owned by the Korean Chaebols had better supplier links and long-term relationships (works on the principle of GuanXi ) Japan: Joint venture with Seiyu Asia-Korea and JapanSlide 46: Could roll out many of its strategies successfully Local purchases of 95% of its products Leveraged its Chinese supply network to export products worth $12 – 20 billion to its US operations Moved to Beijing and later into rural heartland of the country Promising but difficult markets Asia-ChinaLessons learned: Lessons learnedOBJECTIVES: OBJECTIVES International marketing Marketing analysis and foreign market entry strategies International retail environment Selection of retail market Methods of international retailing Role of IT in international retailingSlide 49: Wal-Mart in India. Will it Succeed? You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.