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Accenture Globalization Index July 2013

Copyright © 2013 Accenture All rights reserved. 2

This quarter our Globalization Index shines a light on

two trends; the growing appeal of smaller format

stores and the increasing number of international

moves by emerging market based retailers.

The latest data shows an increase in the number of

market entries, and it is the grocers leading the way

with an emphasis on small formats, ecommerce sites,

and even temporary stores. These routes avoid the

heavy capital investment and the risk of a large and

partially redundant store network.

We believe the growing number of emerging market

based retailers expanding internationally suggests

both a growing confidence amongst those retailers

and, potentially, the early warning signs of saturation

in some emerging markets.

We are grateful to our colleagues at Planet Retail for

helping make this Globalization Index possible.

Introduction

Message from Chris Donnelly

Accenture Retail Industry

Managing Director

Message from Lindsay Cowan

Chief Knowledge Officer at

Planet Retail

Planet Retail is delighted to support Accenture in the

continuing Globalization Index Quarterly Review.

Worldwide, the retail landscape continues to evolve

at a rapid pace amid social, economic and

technological change, which are influencing retailers

investment decisions – both at home and abroad. I

am therefore pleased that Planet Retail is able to

offer their global retail intelligence to facilitate the

continued Accenture analysis of market entries.

In the three publications to date, the Accenture

Globalisation Index has identified a number of

topical, thought-provoking core trends within the

retail arena. These core trends are the ones which

we will see driving both imminent and future global

strategies for successful retailers.


What does the Index measure?

Accenture and PlanetRetail have identified a universe of almost 500* of the largest grocery and non

grocery retailers globally and has tracked their entries in new territories.

Each market entry is tracked in terms of:

The Accenture Globalization Index

Note: * see methodology for more details

Period of Analysis:

16 January 2013 – 15 April 2013

There were 25 market entries.

This is up on the previous quarter of 17 entries

but still below the first Index when 43 market

entries were recorded.

Entry Format

Format or channel

with which they

entered

Source Country

Company’s home

nation

Target Country

Countries they

entered

Entry Vehicle

Entry vehicle they

used

25


Market Entries for Q1 2013

Home

Market

Target

Market

Target Market

Region

Expansion

Direction Vehicle

US Brazil South America Developed>

Emerging Acquisition

US Hawaii North America Developed>

Developed Organic

US Canada North America Developed>

Developed Organic

UK China Emerging Asia Developed>

Emerging Organic

UK Thailand Emerging Asia Developed>

Emerging Ecommerce

UK Hungary Central & Eastern

Europe

Developed>

Emerging Ecommerce

UK Malaysia Emerging Asia Developed>

Emerging Ecommerce

UK Morocco Africa Developed>

Emerging Franchise

UK France

(Paris) Western Europe

Developed>

Developed Organic

UK The

Netherlands Western Europe

Developed>

Developed Organic

Portugal Columbia South America Developed>

Emerging Franchise

Portugal

Spain

(Canary

Islands)

Western Europe Developed>

Developed Franchise

Japan Philippines Emerging Asia Developed>

Emerging

Joint

Venture

Home

Market

Target

Market

Target Market

Region

Expansion

Direction Vehicle

Indonesia South

Africa Africa

Emerging>

Emerging Franchise

South

Africa Turkey

Central &

Eastern Europe

Emerging>

Emerging Franchise

Spain Canada North America Developed>

Developed Organic

UAE India South Asia Emerging>

Emerging Franchise

Thailand Denmark Western Europe Emerging>

Developed Acquisition

France Denmark Western Europe Developed>

Developed Organic

France France Western Europe Developed>

Developed Organic

Germany Italy Western Europe Developed>

Developed Organic

Germany UK Western Europe Developed>

Developed Organic

Sweden Chile South America Developed>

Emerging Organic

Sweden Qatar Middle East Developed>

Emerging Franchise

Turkey Egypt Middle East Emerging>

Emerging Organic


Source and Destination of Market Entry

Source: Accenture Globalization Index

4

1

10

10

0

0

14

3

3

1

25

14

From Emerging

to Emerging

From Emerging

To Developed

From Developed

To Emerging

From Developed

to Developed

2012 Q3

2012 Q4

2013 Q1

One-fifth of all market entries in Q1 2013

were made by retailers based in emerging

markets - compared to 0% in Q4 2012 and

12% in Q3 2012. Over the three quarters,

seven of the nine market entries by emerging

market based retailers have been made into

emerging markets.

This is a trend that we expect to see growing

strongly because the two prerequisites for

international expansion are falling into place:

• Firstly, it is often driven by growing

saturation in the home market and the

emerging markets are becoming more

competitive.

• Secondly, it is dependent on the retailer

having the capital and talent resources to

make the investment in researching and

entering the new market and many

emerging market retailers are reaching

this state.

Source and destination of market entry


Emerging Market Retailers on the Move


Indonesian grocery retailer launched its online shopping platform in its home market.

Indonesian Convenience retailer opened its first store in South Africa.

South African homewares retailer opened its first store in Turkey. Thai retailer Central Retail

Corp. entered Denmark by acquiring department store Illum.

EMKE Group opened a shopping

mall in India.

Turkish hard discounter opened

its first store in Egypt.

Russian supermarket opened its first store in US

Chilean supermarket opened its first store in Peru

S African supermarket opened its first store in Democratic Rep Of Congo


Market Entry via Smaller Formats – Reducing the Capital Intensity

Retailers are rethinking the investment in large estates of

large stores in new markets, especially where they have too

much space in their home market. As the future balance

between online and store based sales in all markets is

unknown and the belief that the online penetration in

emerging markets could ultimately be higher than in mature

markets there is a great reluctance to invest in too much real

estate and suffer the same drag on future profitability from

unwanted space as in the home market.

Instead they are entering new markets with smaller format

and temporary stores - pop-ups - to gauge consumer interest

and the potential success of a permanent store presence.

Small and temporary stores are helpful in building the brand

and seamlessly complement an online presence.

Small stores are also in tune with consumers increasing

desire for convenience - of time and of location.


© Planet Retail


Small is Beautiful

WH Smith UK-based retailer has

opened 12 kiosks

across the Shanghai

underground network

and has secured 18

further locations to

open in the near future © Planet Retail

Aldi Süd German hard

discount retailer has

opened its first

small-sized,

convenience-

orientated store in

London © Planet Retail

Zalando German fashion

e-commerce

specialist has

opened its first

temporary store in

Milan, Italy


IKEA Swedish furniture

retailer opened

pop-up shops in

London train

stations Liverpool

Street and

Waterloo © Planet Retail


The Top “5”: Number of Market Entries – Who, What, from Where, to Where and How

1

2

2

Target countries

Every other country

Denmark

Canada

3

3

3

5

11

Sector

Other Specialty

Home Garden & Auto

Department Store

Fashion & Accessories

Grocery

1

2

3

7

12

Entry Vehicles

JV

M&A

Website

Franchise

Company

Owned Stores

2

2

2

2

3

7

Source countries

Portugal

Germany

France

US

UK

Sweden

1

2

3

By Retailer

Everyone else

Marks & Spencer

Tesco



Retailer Universe:

Top Retailers by Grocery Sales: Retailers that achieved grocery banner sales in excess of US$ 1.5 billion in 2011. Currently 250 retailers.

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.

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.

Methodology


About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with

257,000 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 August 31, 2012. Its home page is www.accenture.com.

Contact Details

To learn more about globalization contact:

Chris Donnelly

Senior Executive

London, UK

[email protected]

Takaaki Haraguchi

Senior Executive

Tokyo, Japan

[email protected]

David T. Richards

Senior Executive

Chicago, USA

[email protected]

Adrian Bertschinger

Senior Executive

Johannesburg, S. Africa

[email protected]

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