OPERATIONS

Accenture globalization report finds emerging market retailers on the move

BY Marianne Wilson

New York — The growing appeal of smaller format stores and the increasing number of international moves by emerging market retailers are two of the key trends revealed in the Accenture Globalization Index, Quarter One 2013.

“Retailers are rethinking their investment in opening large stores in new markets, especially when they already have too much space in their home market. Instead, retailers are choosing to enter new markets with smaller format and temporary stores (pop-ups) to gauge consumer interest in the brand and the potential success of a permanent store presence,” said Chris Donnelly, global managing director, Accenture Research.

The report analyzes Planet Retail data for nearly 500 of the largest global retailers and examines their entry into new markets. It found that global expansion increased in the first quarter (January 16 – April 15, 2013) as retailers entered 25 new markets. This is up from the previous quarter’s (October 16, 2012 – January 15, 2013) 17 market entries. But is well below the 43 new market entries during the period of July 15 – October 15, 2012.

In other first quarter highlights:

  • Grocery retailers led the way for global expansion with 11 market entries in the fitsr quarter, compared to only four market entries in the previous quarter. Apparel retailers’ global growth remained flat with five recorded market entries in the quarter. Department stores had three market entries. “Grocers are leading the way with an emphasis on small formats, e-commerce sites and even temporary stores,” the report stated. “These routes avoid the heavy capital investment and the risk of a large and partially redundant store network.”
  • Twenty percent of all market entries in the quarter were made by retailers based in emerging markets compared to 0% in fourth quarter 2012 and 12% in third quarter 2012. Over the three quarters, seven of the nine market entries by emerging market-based retailers have been made into other emerging market countries.
  • U.K. retailers launched the highest number of overseas expansions in– seven out of a global total of 25. U.S. retailers followed with three. In the previous quarter, those positions were switched with the U.S. launching seven and the U.K. with four.
  • Expansion into the U.S. halted. There were no market entries by large foreign retailers in the United States from Jan. 16 to April 15, 2013.
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News

Study: 81% research online before making big purchases

BY CSA STAFF

STAMFORD, Conn. — GE Capital Retail Bank’s second annual Major Purchase Shopper Study has found that a growing number of consumers extensively research and compare prices and financing offers before making major purchases.

According to the study, 81% of consumers go online before heading out to the store, up 20% from last year, and spend an average of 79 days gathering information before making a major purchase. While consumers carefully consider before they buy, 41% of random major purchase shoppers say they are more open to making a large purchase than they were a year ago.

The survey and interviews, conducted by Rothstein Tauber, a marketing research company based in Stamford, Conn., explored the shopping habits of 3,220 consumers nationwide who had recently made purchases of $500 or more and were in the market for major items in 12 segments, including appliances, electronics, flooring, home furnishings and bedding, home improvements, jewelry, eyewear, power sports products and lawn and garden equipment. More than 2,200 of the participating consumers were GE Capital Retail Bank account holders and one third of respondents were random shoppers.

“We took a deeper look at how consumers use digital tools to approach a major purchase, including the role of mobile devices and preferred search engines, keywords and sites,” said Toni White, CMO of GE Capital’s retail finance business. “While online research plays a bigger role throughout the major purchase process, 60% of consumers start by visiting a search engine, then go to the retailer’s website, and ultimately, 88% made their final purchase in store.”

The availability of financing options continues to be a key factor in a shopper’s choice of retailer, with nearly half of all shoppers researching payment options online before visiting a store. Financing influenced the decision to buy from a specific retailer for 77% of GECRB cardholders surveyed, and nearly half would not have made the purchase or would have gone to another merchant if financing was not available, indicating that merchant marketing, awareness and loyalty programs can impact sales.

Depending on the category, between 40 and 137 days were spent researching the purchase. While the study data represents the average major purchase experience, it is inclusive of shoppers who had a short decision cycle based on a critical need to replace an item. The GE Capital Retail Finance Annual Major Purchase Shopper Study represents the average major purchase experience. The data reflects recent purchases valued at $500 or more that were categorized by consumers as both need and want. Note some product category differences (i.e., eyewear and appliance shoppers may have a shorter consideration cycle).

The findings also revealed the following:

• For one out of four major purchase shoppers, the purchase was part of a larger project.
• Replacement and upgrades are the two most prevalent triggers to purchase.
• The length of the purchase cycle and price are highly correlated.
• Consumers say digital tools empower them to compare prices and find the best value.
• Shoppers search for the following when they visit the retailer’s website (in order of importance): warranty information (66%), pricing (52%), specs/model information (51%), payment/financing information (47%), sales/discounts, availability and shipping information.
• On average, consumers visited five unique retailers — at least three online merchants and two brick-and-mortar stores — before making their purchase.

“These insights can help guide merchants in building better businesses by developing holistic marketing plans and effective sales training and digital strategies,” adds White. “The propensity for using the credit program again was also high, with 79% of cardholders stating they are likely to use their card again, so cultivating loyalty and high customer satisfaction can lead to reuse, referrals and favorable reviews.”

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STORE SPACES

Loblaw to test natural foods store concept

BY Marianne Wilson

New York — Canadian grocery giant Loblaw Cos. will test a new retail concept called Nutshell Live Life Well, a freestanding brand targeted to health-conscious shoppers, the Financial Post reported. The move comes as Whole Foods Market eyes greater expansion in Canada.

The first Nutshell will open this fall in downtown Toronto. It will feature a broad assortment of prepared, fresh and packaged foods, a prescription pharmacy, natural health and beauty products, vitamins and supplements.

“This is different than anything offered in a Loblaws’ affiliated store, corporate or franchise models,” said spokesperson Julija Hunter in an emailed statement to the Post. “It will have a community-based and interactive orientation, more broadly focused on health and wellness, with an emphasis of natural value and health.”

In May, Whole Foods Market said it saw the potential for 40 or more stores in Canada, what it currently operates only nine locations.

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