The Challenge of Food Retailing in Developing Countries

For a variety of reasons — including technology, road infrastructure, shopping habits, and more — food retailing in developing countries can be complicated.
Recently, Peter Child, Thomas Kilroy, and James Naylor of McKinsey addressed this topic:
“Just 20 years ago, modern grocery retail appeared poised to conquer every consumer market in the world. Ambitious European grocers, having blanketed their home countries with supermarkets and hypermarkets, began setting their sights on growth both within and beyond the continent. They held particularly high hopes for China, India, and other emerging markets, where fast-rising consumer spending seemed to presage an unprecedented demand for gleaming new stores with large assortments, wide aisles, and bright lighting.”
“In the 1990s, the term ‘modern grocery retail’ was essentially a proxy for a small group of multinational grocers including Ahold, Aldi, Auchan, Carrefour, Costco, Lidl, Metro, Tesco, and Wal-Mart. It was widely presumed that these retailers’ entry into any market would lead to the demise of the traditional trade — the family-owned grocery chains, small independent stores, and informal merchants that at the time accounted for the vast majority of grocery sales in emerging markets. The prevailing expectation was that although there would be local differences due to cultural specificities, in every country the retail landscape would eventually consist of a combination of modern formats: full-line supermarkets and hypermarkets, convenience stores, and discounters.”
“These assumptions have been proved wrong. Global grocery giants are struggling to grow profitably in many emerging markets. Traditional trade has proved remarkably resilient. And the market and channel structures taking shape in individual emerging economies are distinct from one another, following no obvious pattern. Why did this happen? What, if anything, did multinational grocers do wrong? And what does it mean for the future of modern retail in emerging markets?”
Click on the image to read recommendations from Child, Kilroy, and Naylor regarding their “Seven strategic levers for success.”

 
McKinsey

 

This entry was posted in Global Retailing, Part 1: Overview/Planning, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 4: Store Location Planning, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer, Part 8: Putting It All Together, Technology in Retailing and tagged , , , , , , , , , . Bookmark the permalink.

One Response to The Challenge of Food Retailing in Developing Countries

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