1. 14/01/2013
What Will It Take to Thrive in the
Global Arena?
Key Learnings and Insights from Global Best Practices
What Will It Take to Thrive in the Global Arena?
• Two strategies seem to dominate the global expansion race:
– Expansion of mass market retailers in fast‐developing countries
– Expansion of “specialized” retailers with strong brands
• Innovative concepts and methods are needed to exceed customer
expectations in the global arena
• This session will feature results and insights from a study
(conducted by Ebeltoft Group) evaluating retail internationalization
trends
• Mango and Delhaize will share their perspectives and lessons
learned during the execution of their company’s multi‐national
expansion plans
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4. 14/01/2013
Select the Right Real Estate
Transfer Company Culture & Expectations Across Countries
…No One Said It’s Going to Be Easy
4
5. 14/01/2013
But Global Remains Where The Growth Is…
Sales growth and profitability by region/country (%)
20 19
15.4 14.9
15
9.3
10 7.6 7.4
5.75.3 5.55.6 5.6 5.2 5 4.74.1
3.8 4 4.7
3.5 3.7 4.2 3.3 4.44.9 3.7 4.7 4.94.74.1
5 3
1.52.1 1.3
0
2005‐2010 Composite retail sales CAGR 2010 Composite retail sales growth 2010 Composite net profit margin
Results reflect Top 250 retailers headquartered in each region/country. *Compound Annual Growth Rate. Source: Published company data and Planet Retail
Retail Leaders are Driving Higher Growth Internationally…
International turnover Domestic turnover CAGR
Retailer 2010 2015
CAGR % 2010‐15 % 2010‐15
26
74
33
67
9.8% 2.7%
41 36
59 64 7.7% 3.2%
33 38
67
62 10.5% 5.9%
39 33
61 67 7.4% 1.6%
Source: IGD Research and estimates. Note: Red = international turnover %, Blue = domestic turnover %
Source: MD
Despite Some Costly Mistakes Along the Way
Market Entries and Exits of Top 4 Global Retailers
Chile Bulgaria
ENTRIES India India Egypt
South Africa Iran India Kazakhstan
Russia Russia Japan Morocco
EXITS Germany Algeria USA?
South Korea Thailand
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6. 14/01/2013
So, How Do We Improve the Odds?
Global Ebeltoft Group Study: Methodology
• 18 Countries
– 12 Developed Markets
– 6 Emerging Markets
• 8 Retail Sectors
• 92 Retailers
• 127,170 Stores
Internationalization in Developed Retail Markets Varies Considerably
Developed retail markets: average percentage of international stores
85% 85%
77%
68%
60%
55% 54%
51%
40% 39% 37%
1.37 1.74 29%
3.57
2.43 2.77 GDP $ trillion
1.49
0.84 0.64
0.24 0.33 0.24
Singapore Denmark Portugal Spain Germany UK France Netherlands Australia USA Canada Switzerland
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7. 14/01/2013
Most Retailers Tend to Penetrate Similar Markets First
When Expanding Internationally
Analysis of the location of stores within the retailers’ portfolios
17% 18% 16%
9% Emerging
29% Developed
39%
Domestic
74%
54%
43%
All Markets Developed Markets Emerging Markets
Internationalisation has Escalated in the Last 3 Years
% change in number of international and domestic stores over 3 years
International
Domestic
All Markets Developed Emerging
Markets Markets
Store locations
9
Competitive opportunity Local adaptation
7
5
Competitive pricing Product realization
Keys to Success 3
1
Marketing Entry mode
Technology systems Local management
Failure
Success Suitability of concept
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8. 14/01/2013
Keys To Success (Or Avoiding the Path to Failure)
1. Have a clear reason for being (anywhere)
2. Listen (really) to the customer and have leadership flexibility
3. Partner (Acquire/JV) with Local Leadership & Talent: respect
local culture
4. Execute on great retail: well‐defined real estate strategy,
marketing, systems and infrastructure
Have a Clear Reason For Being…
Success Factors
Hornbach succeeded in The
Netherlands by having an all‐in‐one
offer of DIY under 1 roof.
FNAC succeeded in Portugal with its
added value model.
“Identify your points of difference. What does your brand do that
few other companies do. This could be a product attribute, brand
equity or a mark of quality.”
Hollister succeeded in UK by creating a Austin Reed / Burberry, UK
sense of belonging and exclusivity.
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9. 14/01/2013
Listen (Really) to the Local Customer:
With Flexible Leadership
Success Stories
Starbucks succeeded in China by
changing its format to suit local
behavior patterns.
Media Markt succeeded in Spain by
allowing local management autonomy. “ Aldo’s success comes from understanding the consumer
at the local level. We are looking for local
differences…there is not much difference in the products
and style for Italy, France and Canada, but there are big
Lidl succeeded in France by offering
French national brands, alongside their
differences between UAE, Asia and Canada.”
private label products. Aldo, Canada
Failure Factors
Dressman failed in Denmark due to heavy
local competition and three changes of CEO
since entering the market.
Wal‐mart failed in Germany due to
acquiring two local chains, Wertkauf and
Interspar, but dismissing almost all of the
existing staff.
G’Market failed in Romania because its
parent company’s attention was diverted to
other businesses.
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10. 14/01/2013
Partner (Acquire/JV) with Local Talent & Leadership
Success Factors
Crate & Barrel succeeded in Canada by
training staff to “educate” their
customers in product knowledge.
Tesco succeeded in South Korea by
partnering with Samsung and having
great local leadership
“Everything is about people. You can’t have a great
product without great people. We employ a truly
international team of people, not just Dutch. The board
consists of a variety of people with different backgrounds.”
Zara succeeded in Turkey because it
offers its sales staff better benefits. Hunkemöller, Holland
Failure Factors
Best Buy failed in UK because its large
store showroom format felt dated to
the consumer.
Carrefour failed in Portugal by
building stand‐alone hypermarkets.
Carrefour failed in USA because the
stores were much larger than the US
customer was used to.
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11. 14/01/2013
Execute Great Retail: Real Estate, Systems, Marketing
Success Stories
Zara Succeeded in Turkey by cutting
good deals with owners of the best and
most frequented shopping malls.
Sephora Succeeded in USA by
partnering with JCPenney.
“ In 1991 we opened our first store on Tverskaya Street
(the premium Moscow shopping street) and this is still
Topshop Succeeded in Australia by our best store in terms of turnover today.”
choosing adjacencies next to other Yves Rocher, France
global brands.
Success Stories
Lidl succeeded in France by
expanding aggressively.
Kaufland succeeded in Romania
by continuing to open stores and
invest in distribution centers.
“ It’s not about planting flags all over the world; it’s
about making clearly defined decisions about which
McDonald’s succeeded in Singapore markets you want to dominate, and go in and dominate
by expanding into less concentrated them.”
and competitive suburban areas. Hunkemöller, Holland
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12. 14/01/2013
Keys To Success (Or Avoiding the Path to Failure)
1. Have a clear reason for being (anywhere)
2. Listen (really) to the customer and have leadership flexibility
3. Partner (Acquire/JV) with Local Leadership & Talent: respect
local culture
4. Execute on great retail: well‐defined real estate strategy,
marketing, systems and infrastructure
And We Hear From the Retailers
Themselves…Mango and Delhaize
e-Q&A
Text NRF2013 and your
question to 22333
Tweet @poll NRF2013
and your question
e
Go to www.pollev.com and type
NRF2013 and your question
12
13. 14/01/2013
MANGO
100% SPANISH CAPITAL
1984 FIRST MANGO/MNG STORE
ON BARCELONA’S PASEO DE GRACIA
AT A SECOND-LARGEST EXPORTER IN THE
SPANISH TEXTILE SECTOR
GLANCE
MORE THAN 2.500 MANGO/MNG
STORES IN 109 COUNTRIES
11.000 EMPLOYEES WORLDWIDE
OVER 2.500 STYLES EVERY SEASON
100 MILLION ARTICLES PRODUCED
EVERY YEAR
1984
FIRST MANGO
SHOP IN
PASSEIG DE
GRÀCIA,
BARCELONA Barcelona, Spain
1992
MANGO BEGINS
GLOBAL
EXPANSION
WITH STORES IN
PORTUGAL AND Porto, Portugal
FRANCE
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14. 14/01/2013
1995
MANGO.COM
IS CREATED
1998
MANGO POSITIONS
ITSELF AS SPAIN’S
SECOND LARGEST
TEXTILE EXPORTER
2002
CONTINUED
EXPANSION INTO
NEW MARKETS:
AUSTRALIA,
BULGARIA, CHINA
Rome, Italy
& ITALY TUNISIA
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15. 14/01/2013
2005
MANGO TOUCH IS
DEFINED AS A NEW
FASHION VENUE
DEDICATED
EXCLUSIVELY TO
Barcelona, Spain
ACCESSORIES
2006
MANGO ENTERS
THE US MARKET
New York, USA
2008
H.E. BY MANGO
IS CREATED,
AIMED AT THE
YOUNG, FASHION-
CONSCIOUS MALE
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16. 14/01/2013
2008
MNG BY MANGO
STARTS
COLLABORATION
FOR SHOP-IN-SHOP
WITH JC PENNEY
2009
3RD EDITION OF
EL BOTÓN
AWARD TO
SUPPORT
YOUNG TALENT
IN FASHION
DESIGN
REASONS DIFFERENT TAX REGULATION
AND LEGAL STRUCTURES CAN
TO
BE AN ADVANTAGE FOR YOUR
BUSINESS.
DIFFERENT ECONOMIC CYCLES
EXPAND
DEPENDING ON THE AREA CAN
BENEFIT YOUR EXPANSION.
DOMESTIC MARKETS OFFER A
STRONGER COMPETITION AND
A LIMITED NUMBER OF
OPPORTUNITIES.
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17. 14/01/2013
DIVERSIFY
YOUR RISK IS NOT
CONCENTRATED
ONLY IN ONE
MARKET
HOW TO STUDY HOW NATIONAL
AND LOCAL LAW AND
PREPARE REGULATION CAN
AFFECT YOUR BUSINESS
MARKET RESEARCH FOR
EXISTING & POTENTIAL
COMPETITION
ADAPT
YOUR SUPPLY
CHAIN TO LOCAL
MARKET
CHARACTERISTICS
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18. 14/01/2013
UNDERSTAND
& ADAPT
YOUR PRODUCT
AND MARKET
STRATEGY TO
THE LOCAL
CONSUMER
ADJUST
PRICES, PROMOTIONS,
PRODUCT, ETC. TO THE
NEW MARKET
FOR EXAMPLE,
SPECIAL COLLECTION
FOR COLD AND
TROPICAL COUNTRIES
ADAPT
SPECIAL
COLLECTION
FOR ARAB
COUNTRIES
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19. 14/01/2013
ADAPT
SPECIAL
COLLECTION
FOR ARAB
COUNTRIES
COLLABORATE
WITH LOCAL
PARTNERS TO
SELECT THE RIGHT
LOCATION AND
EXPANSION
STRATEGY Tokyo, Japan
CHOOSE
THE RIGHT
BUSINESS MODEL
FOR YOU
FRANCHISE STORES:
CONSIGNMENT
OUT RIGHT PURCHASE
Aurillac, France
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21. 14/01/2013
SHOP-IN-
SHOPS
Chavannes, Switzerland
TURNOVER DISTRIBUTION
Middle East 10%
North & South
America 5%
Europe 65%
Africa 2%
Australasia 1%
Asia 17%
Forecast 2012
EXPANSION
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22. 14/01/2013
Globalization,
success or failure?
Denis Knoops
SVP Affiliated Retail & New Markets
Delhaize Group • Revenues* €22.6 billion
• EBITDA €1.4 billion
• Net Debt / EBITDA 1.9x
• Rating
• BBB- / Baa3 with stable outlook
• Stores 3.388
• 75% supermarkets
• 25% convenience stores
• Countries 11
• Employees 158.000
• Selling m² 5.5 million
All figures as of September 30, 2012
Southeastern Europe
United States: Belgium:
- Stores: 1.550 - Stores: 834 (SEE) & Asia:
- Revenues: € 14.6 bn - Revenues: € 4.9 bn - Stores: 1.004
- Revenues: € 3.2 bn
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23. 14/01/2013
Delhaize United States
• Is the largest market for Delhaize Group
• Total Group Revenues:
* 65% come from the 5 U.S. banners
* Operating along the East coast
* From Maine down to Florida
* Covering 18 states
All figures as of September 30, 2012
Regional
Leading supermarket Low-cost Inspiring Fresh
supermarket operator in rural supermarket in healthy choices supermarket in
chain in the areas in Georgia for life in the Florida
Description Southeastern and Northern
Philadelphia and
Pittsburgh North East
U.S. Florida
Number of Stores 1.138 73 53 181 105
Georgia, Maryland, Virginia,
Southeast and Northern Northeast West coast
Area Mid-Atlantic Florida, South
North Carolina,
Pennsylvania, New of Florida
Carolina Jersey
Surface range
25.000 - 45.000 25.000 - 45.000 18.000 - 20.000 25.000 - 55.000 25.000 - 50.000
(sq.ft.)
Number of Products 15.000 - 20.000 15.000 - 20.000 6.000 - 8.000 26.000 - 46.000 28.000 - 42.000
All figures as of September 30, 2012
Delhaize Belgium
• A multi-format food specialist
• 834 stores, 16.500 associates
• Focus on fresh food, convenience & service
(1)
• Leading position with market share of +/-25%
• Balance of company-operated and affiliated
stores
All figures as of September 30, 2012
(1) Source: AC Nielsen, Dec 2011
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24. 14/01/2013
Delhaize Balkans
Market of
55 million
people Combined
equivalent to UK presence in • Strong regional position in the Balkans
7
countries
• Serbia: 360 stores
Romania
• Greece: 266 stores
Bosnia and Serbia
Herzegovina
• Romania: 153 stores
Montenegro
Bulgaria • Bulgaria: 42 stores
908
30.300 • Other: 87 stores
stores at
the end Albania employees
of Q3
2012
Greece
All figures as of September 30, 2012 except number of employees as of June 30, 2012
Delhaize Indonesia
• 51% Joint Venture in Indonesia
• Stores concentrated in major cities
(Jakarta, Bandung)
• Number of stores:
* 96 stores at the end of September 2012
* 15 store openings in 2012
* Faster expansion in coming years
• 5.357 associates as of June 2012
Globalization
• Why does it work ?
• Why does it fail ?
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25. 14/01/2013
Globalization
Why do no grocery retailers
operate in all 5
of the biggest markets ?
Why ?
• Walmart Not or no more in continental Europe?
• Tesco Not or no more in continental Europe?
• Carrefour Not or no more in US ?
2 theories about globalization
NOT YET >< NEVER
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26. 14/01/2013
Globalization (1st theory)
• Takes time
• Global is new
NOT YET • All industries move into that direction
• Economy of scale
‘NOT YET’ globalization
Success
Globalization (2nd theory)
• Synergies < differentiation
• Global efficiency < local effectiveness
NEVER • Global suppliers no interest to help
• Diseconomy of scale (local scale > global scale)
• Bureaucracy
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28. 14/01/2013
Sometimes we succeed
• Number 1 in Jakarta
Indonesia
Sometimes we succeed
22%
20%
18%
While operations in Greece are resilient
16%
14% • Our profitability is stable
12% • Market share is improving
10% • Proactively managing the risks
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2006 2007 2008 2009 2010 2011 2012
Market shares*
Greece
The source of the market share data is Nielsen
Sometimes we fail
# stores
35
Thailand
1
Time
1998 2003
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29. 14/01/2013
Sometimes we fail
# stores
100
Republic Czek
1
Time
1991 2008
Magic Recipe ?
?
Global is powerful
however
Local is beautiful ...
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30. 14/01/2013
The Future Is Already Here.
It’s Just Unevenly Distributed.
WILLIAM GIBSON
Get in touch:
Ebeltoft Group
Balmes,109 5º2ª
08008 Barcelona, Spain
Tel.: +34.93 452 73 39
ebeltoft@ebeltoftgroup.com
www.ebeltoftgroup.com
e-Q&A
Text NRF2013 and your
question to 22333
Tweet @poll NRF2013
and your question
e
Go to www.pollev.com and type
NRF2013 and your question
30
