Vision - March 2009 - (Page 17) Sell Selling Cultural Is By Gary Arlen “U norganized retail” may sound redundant in the often chaotic consumer electronics (CE) merchandising business. But the term is typically applied to the mom-andpop stores that are so common in densely populated emerging markets, such as India, China and Eastern Europe, to differentiate them from the “organized” retailing structure of chains and big box merchants. For example, in India, stand-alone merchants handle 96 percent of retail sales, in China, their share is 83 percent, and in Poland, it’s 20 percent. Even in countries where the retail infrastructure is more highly developed, the “unorganized retail” sector represents the majority of total retail sales: 65 percent in Brazil, 60 percent in Thailand. By comparison, in the U.S. only 15 percent of overall retail sales now are handled by independent merchants. While it is harder to nail down how many of these stand-alone individual dealers sell consumer electronics and technology, the ratios are believed to be similarly large in emerging economies. In some cases, mass merchandisers, including “big box” retailers, are having trouble finding a toe-hold. For example, small shop owners in India have banded together to prevent big chains from moving into their turf. Their customers, who are comfortable with the personal services of neighborhood merchants, have supported this arrangement, perhaps unaware of the price savings they would enjoy if mass merchants became a shopping option. Meanwhile, in countries such as the Arabian Gulf states of Dubai and Abu Dhabi, which are positioning themselves as “shopping tourism destinations” for their region, high-volume “mega-stores” are sprouting up, with government and manufacturers’ support. These big retailers, some locally owned, others part of global chains, are carefully navigating the challenge of coexisting with the traditional, family-run stores of the local “souks.” This bifurcation of the global retail and distribution market encourages vendors to adapt their strategies and constantly review tactics. “We have learned that striking a balance between a central strategy through local tactics and execution cannot be over-estimated,” said Steve Dallman, vice president, Sales and Marketing Group www.ce.org and general manager of Intel’s Reseller Channel Organization. He noted that while the computer itself may be a “global commonality, Intel and the companies in its value chain must recognize that why the computer is purchased and how the computer is used differs dramatically” among markets. “The need for local management is critically important to our success as well as building a win-win relationship with our customers,” Dallman added. “Intel is introducing a new architecture or process technology each year. Without strong local partnerships, training and marketing, this pace of transition would be impossible to sustain and the pace of global innovation would slow.” Shifting Global Retail Landscape Collectively, the global retail scene is a work in progress, complicated by the current economic stress and the cultural expectations of shoppers in each region. Yet international retailing beckons merchants and distributors for many reasons. Emerging markets can offer “continued double-digit same-store sales growth and profits,” according to consulting firm A.T. Kearney. “Pursuing expansion into new markets appears to be the best means to further diversify and deliver continued growth,” the company said in its annual global business outlook. Among its top ten national opportunities, Kearney lists the familiar BRIC countries (Brazil, Russia, India and China), and also deems Vietnam, Egypt, Chile, Turkey and Morocco to be highly attractive. Yet all markets are not created equally. The MENA (Middle East and North Africa) countries around the Gulf region are attractive and have lured manufacturers, distributors and retailers. The new March/April 2009 Simeone Huber/Getty Images 17 http://www.ce.org
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