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Operations Essay

5309 words - 22 pages

Redesigning retail: Operating model imperatives for international retailers

Deploying the right operating model can help international retailers drive profitable growth by balancing customer relevance and operational efficiency across diverse and dynamic markets.
Today’s consumers are a formidable bunch. Armed with more information than ever thanks to technology, they shop anytime, anywhere and with anyone they choose. Moreover, choice, convenience and service mean just as much to them as price. Evolving customer demands are driving retailers to tailor their offerings, expand into new business segments and enhance customer touch points. At the same time, competition— always fierce in ...view middle of the document...

9% 1.8% 8.1% 0.5% 3.8% 2.0% 3.5% 3.5% 1.9% 0.9% 6.1% 1.7% 7.7% 3.3% 2.2% 1.6% 7.3% 3.0%

32,362

23,961 16,345 8,714 B6 economies G6 economies

B6: “Big Six”—Brazil, China, India, Mexico, Russia and South Korea G6: France, Germany, Italy, Japan, United Kingdom and United States CAGR: Compound Annual Growth Rate

Figure 2. Internationalization of the world’s 100 largest retailers2
60 Number of world’s 100 largest retailers with: Presence in one country 50 Presence in two to four countries Presence in five to nine countries 40 Presence in 10 to 19 countries Presence in 20 or more countries 30

20

10
1Economist

Intelligence Unit; Accenture Analysis.

0

1986

1996

2004

2JA Dawson, “Scoping and conceptualizing retailer internationalization,” Journal of Economic Geography, 2007, vol. 7, p.373-397; Accenture analysis.

3

Yet entering emerging markets can be challenging—and not just because local players may enjoy structural or legacy advantages in understanding and servicing customers. Too often, the worldwide “race for space” has come at the expense of profitable growth. That’s largely because many retailers have failed to achieve sufficient and sustainable levels of customer relevance and operational efficiency across multiple markets, businesses, channels and brands. The key to striking this balance is to design the right operating model. This is no small feat. One model does not fit all—not least because different retailers are at different stages of internationalization (see Figure 3).

Nevertheless, when Accenture analyzed a representative sample of the world’s largest retailers, we found that leading companies are working to maximize synergies and efficiencies while delivering customer value—and they’re outpacing their competitors. Progressive international retailers have sustained a steady focus on operational efficiency, a key lever for achieving long-term high performance (see Figure 4). Moreover, our in-depth analysis, which included more than 40 one-onone interviews with retail executives and retail and operating model experts worldwide, identified three imperatives critical for designing and deploying effective international operating models:

1. Organize around your company’s competitive essence—what you do better than your rivals. 2. Recalibrate your international operating model regularly as market priorities evolve. 3. Leverage dynamic networks to enhance innovation, customer connection, agility and profitable growth.

4

Figure 3. Retailers at different stages of internationalization3
100% IKEA H&M Esprit Ermenegildo Zegna

80%

Ahold 60% Foreign sales/ Total sales 40% Tesco Best Buy 20% Kesko New Look Walmart Fast Retailing Casino Staples Coach Gap Office Depot Cencosud Auchan Group Otto Group Metro Group Groupe Carrefour

Inditex

Starbucks Coffee

The Home Depot 0% Complexity of international footprint (function of diversity of international markets)

Figure 4. Evolution of...

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