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Deploying the right retailer operating model can help international retailers drive profitable growth.
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 retail—is intensifying. Only the fittest or luckiest retailers have survived the global downturn, and investors are demanding ever better performance from them. Already-lean retailers are searching for new ways to achieve structural and operational efficiencies in a bid to outpace competitors. Furthermore, new players from other retail segments and industries are ramping up their retail presence. For example, big-name manufacturers including Apple, Procter & Gamble and Nike are now bypassing traditional retailers and reaching consumers directly through multiple channels.
Moreover, a growing numbers of retailers are going international—and small wonder. Home markets are saturated, but markets near and far, particularly in emerging economies, still offer white space. The world’s largest retailers are entering more and more countries, thus deploying the right operating model is essential to drive profitable growth across these diverse and dynamic markets. This Accenture point-of-view offers ideas and best practice to get started—and stay ahead of the curve.
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. 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.
Moreover, our in-depth analysis, which included more than 40 one-on-one interviews with retail executives and retail and operating model experts worldwide, identified three imperatives critical for designing and deploying effective international operating models:
Organize around your company’s competitive essence—what you do better than your rivals.
Recalibrate your international operating model regularly as market priorities evolve.
Use dynamic networks to enhance innovation, customer connection, agility and profitable growth.
As markets continue to become more liberalized, built out and interconnected, more and more retailers are turning to internationalization to drive incremental growth. These companies are increasingly pursuing less capital intensive options for international expansion, such as e-commerce, m-commerce and franchises.
Technology advances are enabling higher levels of efficiency and more flexible and affordable solutions for retailers’ international operations. These forces are converging to make capitalizing on international growth an imperative for most retailers. Retailers seeking to go global or expand their international footprint must ask themselves how they will get into the game or win it before they’re outmaneuvered by rivals. The answers lie within their international operating model.
By more effectively organizing around their competitive essence; regularly recalibrating their operating model as their markets and business evolve; and strategically leveraging dynamic networks, retailers can drive higher levels of performance in their international operations.
July 20, 2010
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