Accenture: Retailers scale back global expansion
New York — The world’s largest retailers have been scaling back their global expansion activities, particularly in Asia, and turning their attention inward by integrating operations and strengthening their store, Internet and mobile sales channels, according to a new report by Accenture.
The Accenture Globalization Index, which analyzes Planet Retail data for nearly 500 of the largest global retailers and examines their entry into new markets, reveals that retailers entered 17 markets in the October 16, 2012 — January 15, 2013 quarter, down from 43 markets in the year-ago period. (New-market entries include the opening of a new retail format – physical store or website, launch of a new country-specific website, acquisition of a company in a target market, creation of a joint venture or launch of a franchise in a target market.)
Big retailers made five market entries in the United States in the July 15 – Oct. 15 quarter. Additionally, U.S. retailers launched the highest number of overseas expansions – 14 out of a global total of 43 —during the period, as well as in the Oct. 16 – Jan. 15 quarter, accounting for seven out of 17 expansions globally.
“It (the U.S. market) continues to be an extremely attractive established market for retailers to enter, either as a location for a flagship opening or as part of a larger market-entry strategy,” said Chris Donnelly, global managing director of Accenture’s Retail Practice.
Retailers were less focused on expansion into Brazil, Russia, and India in the first quarter. In fact, Brazil and Russia recorded just one new retail market entry each and India had no recorded retailer market entries. Market entries into Brazil did increase slightly, however, with three market entries recorded in the second quarter.
“These findings suggest that retailers are already eyeing the next big thing for international growth,” said Donnelly. “Previously, Brazil, Russia and India were a greater focus for retailers seeking to expand into new markets. The experiences of the early retail entrants shed light on the challenges they faced and provided the next wave of entrants with more information about the risks and rewards.”
Moves by retailers into the six key emerging Asia markets – China, Indonesia, Kazakhstan, Malaysia, Pakistan and Thailand – fell significantly – from 13 out of the 43 new-market entries during the first quarter to just two in the second quarter. Accenture believes the drop indicates a retrenchment by retailers as they turned their attention from international expansion to multichannel reorganization.
“The operating model and supporting infrastructure required by retailers to meet their customers’ expectations for a seamless experience across all available channels is both time- and capital- intensive,” Donnelly explained. “These results suggest that retailers are focusing more on getting it right at home before exporting it internationally. Part of their effort to integrate the ecommerce experience into the main business may require a reorganization of the roles and responsibilities of the company’s top management team, which may be reflected in the decline seen in international expansion as retailers turned their attention to strengthening their internal structure.”
Other highlights of the study include:
- The most popular modes of market entry globally in the first quarter were organic growth – 17 of 43 market entries – followed by website launches with 13 market entries.
- During the second quarter, franchise expansion was the leading mode of market entry, with eight entries recorded. However, organic growth and website launches accounted for the vast majority of the other market entries during this period.
- Apparel retailers recorded 15 market entries in the first quarter of monitoring and also led the market entries in the second quarter, representing five of the 17 entries recorded.
Of the entries recorded between July and Oct., 13 were conducted through physical store openings and two through website launches.
Delhaize Group names Maura Smith general counsel
Brussels, Belgium — Global supermarket operator Delhaize Group, whose U.S. divisions include Food Lion and Hannaford Bros., has named Maura Smith as executive VP, general counsel and general secretary. Smith formerly served as executive VP of government affairs, general counsel and secretary of PepsiCo and has 30 years of corporate legal experience.
Smith will report to CEO Pierre-Olivier Beckers and is succeeding Michael Wallers, who is entering a planned retirement.
Starbucks shakes up senior management
Seattle — Starbucks Coffee Co. is shaking up its senior management team with five promotions and two new appointments. John Culver, head of the China-Asia Pacific region with more than 10 years of Starbucks experience, is being promoted to group president, China and Asia Pacific (CAP), channel development and emerging brands. Jeff Hansberry, a three-year Starbucks veteran who has worked on the channel development and emerging brands team, is being promoted to president of China and Asia Pacific and will report to Culver.
In addition, Starbucks’ head of Americas Cliff Burrows, a 12-year veteran, is being promoted to group president, Americas and U.S., Europe, Middle East and Africa (EMEA) and Teavana, while Michelle Gass while work on strategic growth initiatives with president/CEO Howard Schultz after spending two years working on growth in the EMEA region. And Kris Engskov, managing director of U.K. and Ireland, is being promoted to senior VP/president of EMEA.
In terms of new appointments, former Sephora executive Sharon Rothstein has joined Starbucks as global chief marketing officer, and Walt Disney Company executive Matt Ryan will join the company next week to head up long-term strategic planning and customer analytics. According to Starbucks, the executive shuffling will advance global growth by taking advantage of executive experience.