Vision - March 2009 - (Page 18) arrivals must abide by local regulations, which often include partnerships with locally owned firms. For example, PNY Technologies, a New Jersey distributor of consumer and professional computer products, teamed up late last year with SKY Electronics, a 20-year old Dubai company, to handle products throughout the region. “The Middle East and Africa market represents significant untapped opportunity for PNY,” said Manoj Thacker, managing director of SKY Electronics. “We believe PNY will be a critical enabler in helping us to tap into that opportunity.” (www.PNY.com) Such new initiatives are balanced by new challenges. Emerging markets may present hurdles, such as finding and training employees and promoting retailing as a respective career path. In a description that applied both to customers and potential employees, the CEO of a fast-growing Indian firm acknowledged the problem. “You put a hypermarket in front of them; they’ve never seen it before. So there’s no way they can understand the concept,” said Sumant Sinha, CEO of Aditya Birla Retail, an Indian chain, speaking at a Harvard Business School conference last year, as quoted in Knowledge@Wharton. Sinha noted that Indian consumers are “extremely value conscious,” but added that “value is not just price.” They also expect convenience, quality and trust, he added, all of which stem from their relationships with trusted local merchants. That advice reflects recommendations from Deloitte, the global consulting firm, in its advisory on “Standing Out from the Crowd.” Deloitte suggests that retailers who are entering emerging markets should consider “selling services related to their core merchandise,” citing technology support (similar to Best Buy’s “Geek Squad”) as an ancillary feature that can support core retailing activities. “In part, demographics will play a role in driving this trend,” according to Deloitte’s analysis. “As people move from young adulthood to middle age, they tend to spend less on goods and more on services. Successful retailers will take advantage of this by using their existing brand equity to build new markets.” Big Box retailers and small business dealers provide somewhat different but important roles as this process takes shape in the evolving global sales ecosystem, Intel’s Dallman explains. “In most countries, we have seen an evolution of how products are sold, serviced and introduced into the consumer market. In the beginning of the cycle, the small business retailer was or is the primary source. They provide the first opportunity for many people in the world to purchase and experience a product built around Intel technology. “Over time the sales approach evolves and grows,” he continues. “The small/ medium business (SMB) seller will move into a niche that typically involves increased services, entrepreneurial vendors and focus on specific markets segments.” onymous with the region’s increasing appetite for mall-based shopping as well as the emergence of the big-box format.” “We are able to gauge the brand’s potential by analyzing the performance of its product ranges in various conditions and within a business plan agreed with our vendor partners,” he explains. Al-Futtaim Electronics handles brands including Panasonic, Sanyo and Toshiba in the Gulf region. One Size Doesn’t Fit All Other retail and distribution analysts offer even more specific advice for distributors and retailers exploring a role in emerging countries. “Real estate and human resources will “With a large migrant workforce the challenge is to offer the customer a consistent experience. This is only achieved through constant training of the disparate workforce.” — Vishesh L. Bhatia, group director: electronics, engineering and technologies, Al-Futtaim, Dubai As a result of that expansion, Dallman points out that many SMBs in emerging countries opt to specialize in segments such as gaming, education, productivity or other applications. “The small momand-pop store can focus and shift quickly to new products and market opportunities,” he adds. Vishesh L. Bhatia of Al-Futtaim Electronics in Dubai acknowledges that “Mom-and-pop dealers have lost considerable ground to big-box retailers.” But he observes that, “big-box retailers, under different market conditions, could find it difficult to expand and grow because mom-and-pop dealers typically cater to a different customer base: more focused on overseas traders especially from the African and Indian continents.” Bhatia, who is group director for the Electronics, Engineering & Technologies divisions of Al-Futtaim group, a Dubai-based distributor, retailer and customer care provider, also points out that the changing retail situation in the Gulf markets “is syn- be the critical drivers to build scale,” the TATA Strategic Management Group concluded in its recent analysis. “Retailers will need to think out of the box to ensure availability of real estate,” including developing properties on their own rather than waiting for mall developers to build shopping centers. TATA, part of the vast Indian technology conglomerate, said that the process requires a “long term view on ownership” as well as a process to “ensure availability of quality manpower in the rapidly growing market.” (www. tsmg.com) There are other differences in the evolving retailing landscape. In regions such as China and the Arabian Gulf where big box stores co-exist with independent dealers, there are complex decisions to make. Traditionally, retailers buy in small quantities, then order more frequently to replenish stock. That’s part of a selling tradition to avoid large inventories but keep rack space full. One recent example of retail success in Asia is the early 2009 sales data on flatwww.ce.org 18 March/April 2009 http://www.PNY.com http://www.tsmg.com http://www.tsmg.com http://www.ce.org
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