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Developing Markets Poised for Growth

BY Marianne Wilson

Slow growth, heavy discounting and more fickle shoppers in recession-weary developed markets mean retailers should be increasingly focused on international expansion, according to the 9th annual Global Retail Development Index study from management consulting firm A.T. Kearney, Chicago.

“Retail executives have learned again that core markets like the United States and Europe are not the powerful engines of growth they would like,” said Hana Ben-Shabat, A.T. Kearney partner and co-leader of the study. “Reliance on developing countries for future growth is no longer a ‘nice-to-have,’ but a necessity. Establishing operations in a portfolio of countries both small and large offers the best path to global success for retailers.”

Developing economies in Asia, Latin America and the Middle East appear poised for remarkable growth, according to the study, which ranks the retail expansion attractiveness of emerging countries. Of the 30 markets studied, China came out on top. The country’s retail sales are projected to grow by more than 9% this year, as consumer confidence recovers, urbanization continues and the middle class keeps expanding, according to the study.

Forecasts call for GDP growth of more than 10% in China in 2010. Retail sales are expected to increase by more than 9%.

Demand for luxury products in China is so strong that analysts expect the country to become the world’s largest luxury market by 2015. In terms of formats, hypermarkets have experienced the strongest growth, and convenience stores are also growing fast.

India, the top-ranking destination in last year’s survey, fell to third this year. Despite the dip, A.T. Kearney notes that retail will continue to grow rapidly in India. But an influx of foreign players, limited and expensive desirable real estate, and foreign-investment restrictions have pushed the country’s retail market closer to maturity. A new concept making a big splash in the Indian market is “wedding malls,” which are devoted to nearly every aspect of weddings.

The Middle East and North Africa (MENA) region exhibits the most exciting retail-growth opportunities for international retailers. Eight MENA countries made it into the top 21 of this year’s study. They are Kuwait (2), Saudi Arabia (4), United Arab Emirates (7), Tunisia (11), Egypt (13), Morocco (15), Turkey (18) and Algeria (21). Retail sales are rising in this region, driven by higher disposable incomes, urban-population growth, a strengthening middle class and infrastructure investments.

Latin America, with four countries in the GRDI top 10, has remained resilient through the downturn. Higher personal incomes and improving business conditions are attracting foreign investors, and retailers are embracing trends toward organized retail formats.

As part of this year’s report, A.T. Kearney surveyed 60 retail executives from around the world. Nearly 80% have cited China, India, Brazil or Russia as part of their companies’ plans for short-term international growth.

Retailers from developed markets aren’t the only ones thinking expansion. Ninety-two percent of respondents from emerging markets say they are looking to expand beyond their home base, with nearly 30% citing a developed country as among their top three expansion targets.

“Expansion is no longer about retailers from developed markets moving into developing markets,” Ben-Shabat explained. “Now retailers from developing markets are using their unique insights into local business and culture to expand regionally in a trend that will shift the global retail competitive landscape.

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Five ways to reduce risk and increase efficiencies with the right service provider

BY CSA STAFF

By Monte Boyer, [email protected]

For more than two years now, retail facility managers have been hunkering down; deferring maintenance and postponing facility upgrades until the economy shows signs of improvement. Although "waiting for the dust to settle" is an understandable strategy for survival, it is not without risk. Dollars deferred today may pale in comparison to the ultimate cost of postponed maintenance. Equipment that hasn’t been properly serviced can become increasingly inefficient, unreliable or — even worse — prematurely fail.

Retail facility managers can reduce that risk, and at the same time increase efficiencies, by partnering with the right service provider. A good HVAC partner can help facility managers overcome some of the challenges posed by today’s economic environment through consolidation of efforts across both facilities and services, and by creating operational and energy efficiencies.

As a facility manager, here’s how you can reduce risk and increase efficiencies with the right service provider:

1. Select a vendor with the largest reach possible
Do yourself a favor; reduce your dependence on multiple, local vendors to perform maintenance. Instead, select a vendor that partners with you across your portfolio — preferably someone with national capabilities. Whether you’re responsible for eight facilities or 8,000, you can drive down costs through consolidation to one vendor that can meet all your needs. They’re out there. Some national service providers have thousands of technicians in place across the country. Service providers that are backed by a national or global infrastructure offer:

  • Quality control: By working with a national vendor, you can eliminate the huge variations in quality that are inevitable when contracting for service with a variety of local vendors.
  • Efficiency: Consolidation streamlines the maintenance process. Instead of dispatching calls, statusing issues and reviewing invoices of multiple vendors, one call to a single point of contact is all that is required. With the time saved, you and your staff can turn your attention to revenue-generating activities.
  • Reliability: Service calls can’t always wait. Larger service providers are available 24/7/365.

2. Select a vendor with single-source accountability
Not only should you select a vendor that can execute nationally, choose one that delivers expertise across multiple services. Here’s where the efficiencies grow exponentially. Top-tier service providers offer expertise in everything from HVAC, janitorial, lighting, refrigeration, fire and safety to energy efficiency and sustainability; a suite of expert services managed by a single point of contact. One call ensures consistent performance, value and responsive service across all sites.

3. Select a self-performing vendor
Avoid working with a vendor who will manage contractors but outsource the work. Instead, partner with a provider whose employees actually perform the facility services. Self-performing providers make you their only priority. They take ownership of the work. And with a self-performing vendor, you can avoid subcontractor markups. With a national HVAC consolidator, you may have passed along the headache of managing multiple HVAC providers but you have not eliminated it.

4. Select a single-source provider to increase operational efficiency and effectiveness
Choose one provider that can see the big picture. If you currently work with 15 different HVAC vendors, and ask them to prioritize equipment replacement, you’ll get 15 different perspectives. Conversely, a single-source provider will consider all equipment from all facilities when identifying critical needs and setting priorities. By working with one point of contact who has a greater view of your portfolio, you can be confident that priority is given to issues most critical to your business. Strategic investments made today when costs are lower can provide your organization with a competitive cost advantage for many years.

5. Select a single-source provider to increase energy efficiency
Partner with a provider that can show you how to increase energy efficiency. The key will be getting access to facility data that’s relevant, meaningful and actionable — which the right service provider can deliver. Today’s most advanced technologies allow you monitor building performance in real time; identifying trends within buildings and across portfolios, spotting areas of concern and flagging underperformers. Some commercial control systems actually monitor themselves and send notifications when there’s a noteworthy event or when it’s time for a service call.

When priorities do call for the replacement of equipment, the right providers make sure you’re choosing the most energy-efficient solutions. Ideally, they even help to identify ways to leverage federally- or utility-sponsored rebate programs.

The right service provider
Choosing the right service provider requires careful consideration. Take the time to identify vendors who have national reach and are single-source, self-performing providers with demonstrated expertise in energy and operational efficiency. By partnering with a top-tier vendor, retail facility managers can reduce risk, increase efficiency and overcome some of the challenges posed by today’s economic environment.

Monte Boyer is VP and general manager, Johnson Controls National Service. Johnson Controls is an OEM supplier with over 125 years of experience in the HVAC industry. With more than 150 local branches throughout the United States and Canada, Johnson Controls National Service provides retail customers with innovative solutions and an expertise in HVAC, refrigeration, security and fire safety, as well as lighting applications. For additional information on Johnson Controls National Service visit www.johnsoncontrols.com or contact Monte at [email protected].

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Staples puts Kindle on Christmas list

BY CSA STAFF

Beginning this fall, Staples will offer several variants of Amazon.com’s popular Kindle wireless ereader device in its nearly 1,600 U.S. stores, the company announced Tuesday. Staples will offer a base model Kindle for $139, the Kindle 3G for $189 and the large-screen Kindle DX for $379.

“As part of our efforts to offer customers a wide range of top technology products and services at amazing values, the new Kindle is a natural fit,” said Jevin Eagle, Staples EVP merchandising and marketing.

Staples is the first office superstore to offer the Kindle, however, Target became the first conventional retailer to stock the product when Kindle endcap displays hit its stores several months ago.

The Kindle is Amazon’s best-selling, most-wished-for and most-gifted product for two years running. Although, it is unclear how much demand remains for the device after such strong sales, Staples has secured distribution of the compelling item just in time for what promises to be a challenging holiday season. Kindle promises to bring some needed energy to the office products retailer with interactive displays that allow customers to experience the product before they buy and to learn more about the product. Plans also call for Staples to offer a full assortment of Kindle accessories.

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