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Accenture Globalization Index July 2013
Copyright © 2013 Accenture All rights reserved. 2
This quarter our Globalization Index shines a light on
two trends; the growing appeal of smaller format
stores and the increasing number of international
moves by emerging market based retailers.
The latest data shows an increase in the number of
market entries, and it is the grocers leading the way
with an emphasis on small formats, ecommerce sites,
and even temporary stores. These routes avoid the
heavy capital investment and the risk of a large and
partially redundant store network.
We believe the growing number of emerging market
based retailers expanding internationally suggests
both a growing confidence amongst those retailers
and, potentially, the early warning signs of saturation
in some emerging markets.
We are grateful to our colleagues at Planet Retail for
helping make this Globalization Index possible.
Introduction
Message from Chris Donnelly
Accenture Retail Industry
Managing Director
Message from Lindsay Cowan
Chief Knowledge Officer at
Planet Retail
Planet Retail is delighted to support Accenture in the
continuing Globalization Index Quarterly Review.
Worldwide, the retail landscape continues to evolve
at a rapid pace amid social, economic and
technological change, which are influencing retailers
investment decisions – both at home and abroad. I
am therefore pleased that Planet Retail is able to
offer their global retail intelligence to facilitate the
continued Accenture analysis of market entries.
In the three publications to date, the Accenture
Globalisation Index has identified a number of
topical, thought-provoking core trends within the
retail arena. These core trends are the ones which
we will see driving both imminent and future global
strategies for successful retailers.
Copyright © 2013 Accenture All rights reserved. 3
What does the Index measure?
Accenture and PlanetRetail have identified a universe of almost 500* of the largest grocery and non
grocery retailers globally and has tracked their entries in new territories.
Each market entry is tracked in terms of:
The Accenture Globalization Index
Note: * see methodology for more details
Period of Analysis:
16 January 2013 – 15 April 2013
There were 25 market entries.
This is up on the previous quarter of 17 entries
but still below the first Index when 43 market
entries were recorded.
Entry Format
Format or channel
with which they
entered
Source Country
Company’s home
nation
Target Country
Countries they
entered
Entry Vehicle
Entry vehicle they
used
25
Copyright © 2013 Accenture All rights reserved. 4
Market Entries for Q1 2013
Home
Market
Target
Market
Target Market
Region
Expansion
Direction Vehicle
US Brazil South America Developed>
Emerging Acquisition
US Hawaii North America Developed>
Developed Organic
US Canada North America Developed>
Developed Organic
UK China Emerging Asia Developed>
Emerging Organic
UK Thailand Emerging Asia Developed>
Emerging Ecommerce
UK Hungary Central & Eastern
Europe
Developed>
Emerging Ecommerce
UK Malaysia Emerging Asia Developed>
Emerging Ecommerce
UK Morocco Africa Developed>
Emerging Franchise
UK France
(Paris) Western Europe
Developed>
Developed Organic
UK The
Netherlands Western Europe
Developed>
Developed Organic
Portugal Columbia South America Developed>
Emerging Franchise
Portugal
Spain
(Canary
Islands)
Western Europe Developed>
Developed Franchise
Japan Philippines Emerging Asia Developed>
Emerging
Joint
Venture
Home
Market
Target
Market
Target Market
Region
Expansion
Direction Vehicle
Indonesia South
Africa Africa
Emerging>
Emerging Franchise
South
Africa Turkey
Central &
Eastern Europe
Emerging>
Emerging Franchise
Spain Canada North America Developed>
Developed Organic
UAE India South Asia Emerging>
Emerging Franchise
Thailand Denmark Western Europe Emerging>
Developed Acquisition
France Denmark Western Europe Developed>
Developed Organic
France France Western Europe Developed>
Developed Organic
Germany Italy Western Europe Developed>
Developed Organic
Germany UK Western Europe Developed>
Developed Organic
Sweden Chile South America Developed>
Emerging Organic
Sweden Qatar Middle East Developed>
Emerging Franchise
Turkey Egypt Middle East Emerging>
Emerging Organic
Copyright © 2013 Accenture All rights reserved. 5
Source and Destination of Market Entry
Source: Accenture Globalization Index
4
1
10
10
0
0
14
3
3
1
25
14
From Emerging
to Emerging
From Emerging
To Developed
From Developed
To Emerging
From Developed
to Developed
2012 Q3
2012 Q4
2013 Q1
One-fifth of all market entries in Q1 2013
were made by retailers based in emerging
markets - compared to 0% in Q4 2012 and
12% in Q3 2012. Over the three quarters,
seven of the nine market entries by emerging
market based retailers have been made into
emerging markets.
This is a trend that we expect to see growing
strongly because the two prerequisites for
international expansion are falling into place:
• Firstly, it is often driven by growing
saturation in the home market and the
emerging markets are becoming more
competitive.
• Secondly, it is dependent on the retailer
having the capital and talent resources to
make the investment in researching and
entering the new market and many
emerging market retailers are reaching
this state.
Source and destination of market entry
Copyright © 2013 Accenture All rights reserved. 6
Emerging Market Retailers on the Move
Source: Accenture Globalization Index
Indonesian grocery retailer launched its online shopping platform in its home market.
Indonesian Convenience retailer opened its first store in South Africa.
South African homewares retailer opened its first store in Turkey. Thai retailer Central Retail
Corp. entered Denmark by acquiring department store Illum.
EMKE Group opened a shopping
mall in India.
Turkish hard discounter opened
its first store in Egypt.
Russian supermarket opened its first store in US
Chilean supermarket opened its first store in Peru
S African supermarket opened its first store in Democratic Rep Of Congo
Copyright © 2013 Accenture All rights reserved. 7
Market Entry via Smaller Formats – Reducing the Capital Intensity
Retailers are rethinking the investment in large estates of
large stores in new markets, especially where they have too
much space in their home market. As the future balance
between online and store based sales in all markets is
unknown and the belief that the online penetration in
emerging markets could ultimately be higher than in mature
markets there is a great reluctance to invest in too much real
estate and suffer the same drag on future profitability from
unwanted space as in the home market.
Instead they are entering new markets with smaller format
and temporary stores - pop-ups - to gauge consumer interest
and the potential success of a permanent store presence.
Small and temporary stores are helpful in building the brand
and seamlessly complement an online presence.
Small stores are also in tune with consumers increasing
desire for convenience - of time and of location.
Source: Accenture Globalization Index
© Planet Retail
Copyright © 2013 Accenture All rights reserved. 8
Small is Beautiful
WH Smith UK-based retailer has
opened 12 kiosks
across the Shanghai
underground network
and has secured 18
further locations to
open in the near future © Planet Retail
Aldi Süd German hard
discount retailer has
opened its first
small-sized,
convenience-
orientated store in
London © Planet Retail
Zalando German fashion
e-commerce
specialist has
opened its first
temporary store in
Milan, Italy
Source: Accenture Globalization Index
IKEA Swedish furniture
retailer opened
pop-up shops in
London train
stations Liverpool
Street and
Waterloo © Planet Retail
Copyright © 2013 Accenture All rights reserved. 9
The Top “5”: Number of Market Entries – Who, What, from Where, to Where and How
1
2
2
Target countries
Every other country
Denmark
Canada
3
3
3
5
11
Sector
Other Specialty
Home Garden & Auto
Department Store
Fashion & Accessories
Grocery
1
2
3
7
12
Entry Vehicles
JV
M&A
Website
Franchise
Company
Owned Stores
2
2
2
2
3
7
Source countries
Portugal
Germany
France
US
UK
Sweden
1
2
3
By Retailer
Everyone else
Marks & Spencer
Tesco
Source: Accenture Globalization Index
Copyright © 2013 Accenture All rights reserved. 10
Retailer Universe:
Top Retailers by Grocery Sales: Retailers that achieved grocery banner sales in excess of US$ 1.5 billion in 2011. Currently 250 retailers.
Top Retailers by Non-Food Sales (not already included in the grocer list): Retailers that achieved non-food banner sales in excess of US$ 750 million in 2011. Currently 239 retailers.
Globalization move definitions:
The opening of a new format in a new country (irrespective of whether a company has a different format already trading in that particular country).
The opening of a new country specific website (even if the retailer has existing operations in that country).
The acquisition of a company in a target market.
The creation of a Joint Venture in a target country.
The launch of a franchise operation in a target country.
Methodology
Copyright © 2013 Accenture All rights reserved. 11
About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with
257,000 people serving clients in more than 120 countries. Combining unparalleled experience,
comprehensive capabilities across all industries and business functions, and extensive research on
the world’s most successful companies, Accenture collaborates with clients to help them become
high-performance businesses and governments. The company generated net revenues of US$ 27.9
billion for the fiscal year ended August 31, 2012. Its home page is www.accenture.com.
Contact Details
To learn more about globalization contact:
Chris Donnelly
Senior Executive
London, UK
Takaaki Haraguchi
Senior Executive
Tokyo, Japan
David T. Richards
Senior Executive
Chicago, USA
Adrian Bertschinger
Senior Executive
Johannesburg, S. Africa