Retailer Expansion into Asia Slows as the Focus Switches to Multichannel Reorganization, Accenture Study Shows
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, new analysis by Accenture (NYSE:ACN) reveals.
According to the Accenture Globalization Index, which analyzes Planet
Retail data for nearly 500 of the largest global retailers and examines
their entry into new markets, while the retailers entered 43 markets in
the July 15 - October 15, 2012 quarter, that number fell to just 17 in
the following quarter: October 16, 2012 - January 15, 2013. 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.
Moves by retailers into the six key markets in “Emerging Asia” – 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,” said Chris
Donnelly, global managing director of Accenture’s Retail Practice.
“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.”
U.S. Remains an Attractive Market Despite the Competition
Big retailers made five market entries in the United States in the July
15 – October 15 quarter, an indication that the country remains a
popular target for expansion. Additionally, U.S. retailers launched the
highest number of overseas expansions – 14 out of a global total of 43 –
in the July 15 – October 15 quarter, as well as in the October 16 –
January 15 quarter, accounting for seven out of 17 expansions globally.
“The United States is still the largest single marketplace in the world
and, while it is incredibly competitive and overstored, it does have a
long history of being the launch pad for new concepts,” said Donnelly.
“It 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.”
Decline in Retailer Expansion Into Brazil, Russia and India
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.
“The timing of entry into a new market is crucial; too early and the
market is not ready, too late and the competition is entrenched,” said
Donnelly. “These findings suggest that retailers are already eyeing the
next big thing for international growth. 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.”
Among the other highlights of the study:
-
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 October, 13 were conducted
through physical store openings and two through website launches.
-
The first-quarter entries spanned 12 countries in both mature and
emerging markets: China, Colombia, Dominican Republic, Hong Kong,
Japan, Latvia, Malaysia, Mexico, South Africa, Thailand, the United
Kingdom and the United States.
-
Grocery retailers made 12 market entries during the first quarter of
monitoring, but accounted for only four of the 17 market entries
during the second quarter. The first-quarter entries were noteworthy
since the three ecommerce expansions by three of the largest global
grocers were all made in emerging markets.
About the Research
The retailer universe identified by Accenture and Planet Retail
encompasses the top retailers by grocery sales (retailers that achieved
grocery banner sales in excess of US$ 1.5 billion in 2011 – currently
250 retailers) and the 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. A
total of 489 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
About Accenture
Accenture is a global management consulting, technology services and
outsourcing company, with approximately 261,000 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 Aug. 31, 2012. Its home page
is www.accenture.com.