STORES Global Powers of Retailing 2009 - (Page 46) of investing in other emerging markets and even in some developed markets. As more and more retailers undertake globalization, the factors that enable success will become more evident. You are a brand In an era of slow growth, tight margins, and fickle consumers, the key to success is to differentiate. One critical element in successfully differentiating is communicating that difference to consumers. Hence, branding will require special attention from retailers who want to stand out from the crowd. Traditionally, branding has been seen as the special skill of product manufacturers, hotels, restaurants, entertainment companies, and others with direct connection to consumers. Aside from specialty apparel and luxury retailers, branding has not always been seen as important for retailers—especially those that sell food and other mass products. Yet for these retailers, branding has never been more important. Today’s most successful retailers typically have one of two attributes. First, there are those with the most efficient supply chains, which translates into lowest costs and prices. However, there are those retailers that do not attempt to match low-price leaders and have succeeded by managing their brands and demonstrating to consumers why they are different. Retailers that do not compete on low prices must successfully manage brands or ultimately fail. Indeed, the least successful retailers in recent years have been those with uncompetitive prices and undifferentiated shopping experiences. Re-think supply chains Over the past two decades, the world’s largest retailers have developed highly efficient supply chains that span the globe. The design of these supply chains was predicated mainly on the low price of energy, which made transport costs low and relatively negligible. In addition, the low wages in China’s big coastal cities and their modern port facilities rendered the country an excellent location from which to source goods. But today, things are changing. Energy prices, despite recent declines, are likely to be relatively high in the next few years and transport much more expensive than in the recent past. Wages in China’s large coastal cities are also rising, as is China’s currency, which will likely rise further. Overall, the cost of sourcing in China is going to increase. Many companies are already starting to re-think their supply chains. While radical action is not likely, companies will likely shift the emphasis of their supply chains at the margin, similar to what is happening now with suppliers. Specifically, companies will seek to diversify supply chains, especially to take advantage of lower cost in locations other than China, and shift some sourcing closer to final markets to reduce transport costs. There will also be a growing focus on producing in China for the Chinese market itself, assuming investment in stores in China Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its Member Firms. Disclaimer These materials and the information contained herein are provided by Deloitte Touche Tohmatsu and are intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). Accordingly, the information in these materials is not intended to constitute accounting, tax, legal, investment, consulting or other professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. These materials and the information contained herein is provided as is, and Deloitte Touche Tohmatsu makes no express or implied representations or warranties regarding these materials and the information herein. Without limiting the foregoing, Deloitte Touche Tohmatsu does not warrant that the materials or information contained herein will be error-free or will meet any particular criteria of performance or quality. Deloitte Touche Tohmatsu expressly disclaims all implied warranties, including, without limitation, warranties of merchantability, title, fitness for a particular purpose, noninfringement, compatibility, security, and accuracy. Prediction of future events is inherently subject to both known and unknown risks, uncertainties and other factors that may cause actual results to vary materially. Your use of these and the information contained herein is at your own risk and you assume full responsibility and risk of loss resulting from the use thereof. Deloitte Touche Tohmatsu will not be liable for any special, indirect, incidental, consequential, or punitive damages or any other damages whatsoever, whether in an action of contract, statute, tort (including, without limitation, negligence), or otherwise, relating to the use of these materials and the information contained herein. Copyright © 2009 Deloitte Development LLC. All rights reserved. http://www.deloitte.com/about
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.