The expansion of modern trade food retailing in Thailand

With a population of nearly 70 million people, Thailand is a large and attractive emerging market, drawing investments from various foreign food retailers since the 1980s. An economic crash and currency devaluation in 1997 brought both new challenges and opportunities, and led to a renewed wave of expansion, but also calls for regulation, which had not been strictly enforced. Thailand has been host to transnational retailers from many countries, several of which ultimately withdrew. The competitive landscape has continued to evolve, with a range of new store formats, expanded services, smart phone applications and online shopping, and a push to expand both private label brands and ready-to-eat foods. However, some of these offerings appear to have potential conflicts in terms of Thai consumer behaviour. Thai culture places low importance on time; few shop online, and the majority of consumers have low incomes, and thus may not be attracted to visit modern trade retailers for the same reasons as customers in the retailers' home markets. Despite this, Thailand is currently the second largest global market for 7-Eleven and Tesco's number two international market. This presents a paradox in that Tesco operates hypermarkets, while 7-Elevens are convenience stores. Do Thais want hypermarket style volume discounts, or higher priced convenience, or both? Thais traditionally have shopped in wet markets and enjoy fresh foods, which contradicts attempts by many retailers striving to sell ready-to-eat foods. Many Thais are concerned about face and status, which may be a barrier towards buying private label brands. This paper describes the history and expansion of food retailing in Thailand and also highlights how cultural differences may affect consumer behaviour. As the ASEAN Economic Community (AEC) aims to open borders more broadly, there will likely be more expansion of stores and potentially more cultural differences. Whether transnational or domestic, food retailers may need to further consider aspects of culture and consumer behaviour to determine whether to adapt their strategies, rather than copy and paste formats from abroad.     

Traces of foreign retailers – local knowledge-spillovers and strategy adaption within retail internationalization

ABSTRACT

Since the 1990s certain retail companies have evolved into some of the largest and most dispersed transnational corporations worldwide. However, within the ‘new era of retail distribution’ retailers are increasingly divesting from foreign markets. This study addresses these recent and under-explored dynamics by revealing the traces transnational retail corporations leave after divesting from a country. It explores the aspect of learning of host market retailers from entering transnational corporations (TNCs) and examines how foreign knowledge is adjusted in the business strategies of these local actors. It takes a fresh empirical slant using qualitative interviews with host market retail managers including former TNCs’ subsidiaries operating under domestic ownership. The emerging economy of Turkey serves as an empirical example. The paper finds that foreign retailers transfer firm-specific resources to the local retail through (1) demonstration and imitation, (2) vertical linkages with suppliers, (3) joint ventures and acquisitions, and (4) labor turnover of TNC trained staff. Certain successful local companies adjust the foreign knowledge based on their local knowledge and strengths, their high level of flexibility and deep territorial embeddedness, and create ‘hybrid’ business strategies. These findings suggest that dynamic capabilities are crucial to successful retailing in an international competitive environment. TNC managers should work with local staff in partnerships of equals and managers of locally operating companies should incorporate new knowledge by hiring TNC trained staff.     

Latin American retail: where modernity blends with tradition

Latin America's retail landscape has changed dramatically over the last 20 years. Attracted by deregulation and a sizable and growing market, modern retailers arrived looking for the next El Dorado. But signs of maturity appeared much before expected. Traditional retailers modernized their offer, while keeping their appeal to the emerging consumers. While chain retail has concentrated earlier than expected – and faster by the hand of crisis that are usual in emerging markets –, local chains have developed formats which add modernity to their understanding of their customers' base. By providing better access through convenience and credit to a broader range that even includes affordable design and quality, local chains are showing the way to the growing mass customers that form Latin America's new emerging middle class. And leveraging on this customer understanding, they are redefining concepts like convenience and crossing borders to grab the opportunity of the new emerging consumers. This article covers the evolution of retailing in Latin America over the past two decades, and provides insights on the segment that has brought the most significant growth: emerging consumers.     

The Effects of Retail Banner Standardization on the Performance of Global Retailers

Global retailers often face an important decision about the extent to which they should standardize or adapt their retail banners, a choice that the authors refer to as retail banner standardization (RBS). Drawing on the international marketing and retailing literatures, this study investigates how RBS affects the performance of global retailers in a longitudinal sample of 69 global retailers from multiple countries and sectors, across ten years. Findings indicate that the role of banner standardization in the successful performance of global retailers depends on retailer and market-level characteristics. Specifically, the results demonstrate that RBS improves retailer profitability as retailers increase their global penetration and emphasize status-based differentiation. Findings also suggest that banner standardization has stronger effects on profitability as retailers increase their focus on emerging markets and e-commerce. However, the authors also find that while RBS increases profits at low levels of global diversity, this effect becomes non-significant as retailers expand to highly diverse foreign markets. As such, the study provides important implications for global retailers while also filling the gap in banner/brand standardization/adaptation research that lies at the intersection of retailing and international marketing.     

Hypermarkets and the Small Retailers in Malaysia: Exploring Retailers' Competitive Abilities

The emergence of multinational retailers, especially in grocery retailing, has changed the retail scenario in Malaysia over the last decade. In the past, grocery retail formats such as supermarkets, minimarkets, and night markets dominated the Malaysian retail scene, consumers are now given the choice of shopping in large retail outlets where new retail formats such as hypermarkets, warehouse clubs, and superstores now thrive and are increasingly gaining in popularity. Interestingly, large retail concepts are predominantly associated with multinational retailers such as Carrefour, Makro, Giant, and Tesco. The presence of large retailers brings with it the question of dominance and implications of changing customer preferences. This study assesses the perception of small retailers toward their abilities to compete effectively in an industry where large, multinational retailers appear to be dominating. It appears, however, that the small retailers possess distinctive qualities in relation to their strategic inputs that can essentially differentiate them from their larger competitors. It is suggested that some regulatory measures especially by local authorities are necessary, but this must not be to a point of curbing healthy competition among the different types of retailers.     

The Outlook for European Grocery Retailing: Competition and Format Development

This article analyses retail trends in the main European countries, and particularly format evolution and competition amongst retailing firms. On the basis of the existence of European retailing landscapes that are sometimes similar without ever being identical, the article analyses the impact of the main factors of change on different national markets. Whilst retail internationalisation and new entrants, commercial policy, legislative environments, technological innovations, consumers and buying behaviour will have a convergence effect on different countries' retail structures, substantial differences will still exist. European retailing in the coming years will probably be characterized by increasingly less marked differences between countries than one finds today, but market segmentation, variety and differentiation of retailing formats and brand names will be stronger within each country.     

Consumer satisfaction in retail stores: theory and implications

The substitution of small retail stores by the large stores has been a topic of debate among academics, practitioners, retailers and general public, especially in the context of foreign firms entering emerging markets such as China and India. The purpose of this research is to find out the determinants of consumer satisfaction in small and large retail stores in an emerging market, with a sample from India. Data were collected using a 39‐item structured questionnaire developed by the authors. The sample consists of 225 consumers who shop at retail outlets (Convenience sample of 125 consumers from small and 100 consumers from large stores respectively). Exploratory factor analysis grouped the 39 variables into 14 factors. Further, regression analysis revealed that six of the factors (Social desirability, staff friendliness, shopping economy, shopping ambience, family shopping and deal proneness) were major predictors of consumer satisfaction as they were found to be significant at 5% level. The significance of factors such as social desirability and staff friendliness imply that many consumers prefer those typical features of small stores, which in turn results in the likely coexistence of small retail formats in spite of the entry and proliferation of large retail stores from different countries. We posit three theoretical propositions to stimulate further research in this area.     

Retail corporate groups: Challenges of omnichannel management in Japan

Abstract

The omnichannel varies across countries due to different retail environments and retailers’ growth strategies. The Japanese big retailers’ omnichannel can be characterized by having multiple retail formats, such as department stores, general merchandise stores, convenience stores, specialty stores, Internet stores, and so on. They have grown by multiplying retail formats to appeal to different customer segments, and they have unique challenges in managing an omnichannel with many retail formats. These are (1) extremely wide variety of merchandise, (2) enormous quantity of data from transaction, inventory, logistics, and customers, (3) different organization structures and management, and (4) unique organizational capabilities in each retail format. From these challenges, we could propose further research issues as follows: (1) theoretical consideration of boundary-spanning functions among retail formats, (2) international comparative analysis reflecting the different conditions in each country, and (3) clarifying the characteristics of the omnichannel shopper in the Japanese omnichannel environment.     

Intermediate Supermarkets in China

Abstract

Intermediate supermarket formats share characteristics of traditional food stores and of the modern supermarket. Because they represent steps on the evolutionary path towards the “complete” supermarket they offer an alternative to the dominant food retail modernization route involving the transplantation of the supermarket model.

The paper reports the findings of a study of these intermediate formats in Shanghai. We discuss the origins, structure and operation of these stores and evaluate their contribution to the food retail modernization process. Surprisingly, few of the operators of these stores were traditional food retailers. Most were state-owned companies and private entrepreneurs from outside the retail sector.

Lack of managerial and financial resources and inexperience led many to open these formats rather than the “complete” supermarket. The weakness of this subsector means that the main vehicle for food retail modernization in Shanghai will continue to be the supermarket chains. But because of limitations on the chain's expansion, they may enter into franchising arrangements with the best among these intermediate supermarkets. Finally, it is suggested that intermediate formats are likely to play a more important role in secondary cities, in towns and in rural areas in China.     

Selecting optimal intermediary channels in emerging markets: The case of Vietnamese toiletries

Abstract

Domestic distribution in Vietnam is characteristic of an emerging market in the beginning stages of modernization, with frequent changes in retail format, a fragmented distribution structure, and ambiguous regulations. This study uses field surveys and comparative analyses of individual enterprises in Vietnam’s toiletry products industry to identify suitable channel strategies for emerging markets in the early stages of distribution modernization. The results indicate that partnership channels are more suitable than hierarchy and market governance channels. Moreover, among the various types of intermediaries, distributors provide a key role in emerging markets where transportation functions are undeveloped. Finally, the study investigates the various methods of partner selection, finding that effectiveness-oriented networks are superior to large-scale efficiency-oriented networks because they have greater channel coverage in modernizing emerging markets. The findings demonstrate the optimal channel structures and partner selection criteria for distributors in emerging markets.     

Interformat competition in the grocery retailing

In the last few years, we have seen significant changes in the Italian retail environment which suggest that the patterns of retailing competition are more complex than in the past. In order to expand their target market in a context of economic recession, retailers are implementing new strategies aimed to stimulate the switching between different store formats. As a result, store formats are getting similar and new "hybrid" formats are emerging.This paper investigates the interformat competition between grocery store formats in the Italian retail market in order to understand which formats are converging and which, otherwise, are maintaining their distinctiveness. Our findings show that the rivalry between store formats (interformat) is becoming more intense than the competition within store formats (intraformat). These results have significant implication on both retailers and trade marketing strategies.     

Motives behind retailers’ post-entry expansion - Evidence from the Chinese luxury fashion market

This study aims to examine the motives behind retailers’ post-entry expansion in foreign markets. Through case studies of eleven participating luxury fashion retailers in China, qualitative data was collected from twenty-two executive interviews. Although their initial market entry was driven by both reactive (push) and proactive (pull) factors, the motives behind their post-entry expansion have become predominantly proactive, especially long-term growth strategies, the ambition to extend their brands and retail formats to more cities, and the experiences gained in entry markets. The desire to optimize the retail store portfolio through multiple channel strategies have slowed down the expansions of physical stores.     

Emerging Market Retail: Transitioning from a Product-Centric to a Customer-Centric Approach

In an environment with digital disruptions, retailers must adopt a customer-centric approach to survive and compete effectively. Retailers need to be agile and forward-looking in adopting the relevant analytics and performance metrics to bring a customer-centric approach across upstream and downstream activities in the retail value chain. However, retailers in emerging markets (EMs) need clarity on the specific analytics and performance metrics in the value chain that will enable them to transition from their current product-centric state to the desired customer-centric state. Employing a triangulation approach (i.e., literature review, marketplace evidence, and managerial interviews) in the fragmented retail landscape of EMs, this study provides an organizing framework that explains: (i) the need for a customer-centric approach across the retail value chain, (ii) the specific performance metrics that need to be adopted across upstream and downstream activities in the retail value chain to enable EM retailers to achieve their desired customer-centric state, and (iii) the role of analytics in providing insights to achieve these performance metrics and improving monetary and non-monetary firm performance outcomes. We also provide firm-specific and macro-level conditions that can influence the EM retailers’ adoption of relevant analytics and explain the different paths retail formats can follow to adopt analytics. We present a strategy matrix that enables retail managers to identify the appropriate analytics to be adopted at different retail value chain stages to achieve desired performance metrics. We also highlight future research opportunities in retailing in EMs.     

蔬菜市场批零价差和价格传递机制分析——以北京市为例

我国蔬菜的市场零售价格不断上升的一个重要原因是蔬菜批零价差过大。因此,研究农产品不同流通环节的价格传递机制,对于提高农产品流通效率具有重要意义。对北京蔬菜市场上小白菜、西红柿和土豆的价格变化进行研究,发现零售价格是影响蔬菜批零价差的主要因素,同时也发现蔬菜市场的零售商对某些产品拥有一定的市场支配力,能够通过一定的途径提高零售价格,扩大价差。     

The Linkage of Trades in Terms of Wholesale Business Formats in Japanese Distribution Systems

Abstract

Japanese distribution and particularly wholesaling are often suggested as having complex channel structures. This can provide difficulties for international retailers who wish to develop direct links with manufacturers and agricultural producers. Wholesalers, in this system, attempt to synchronize their buying and selling functions that gives rise to different types of wholesale business format. Unlike retail formats, wholesale formats seldom have relationships with the final consumer. Results of a survey of wholesalers are presented. The results show that the buying and selling trade relationships are driven by different factors depending on the business format of the wholesaler.     

Consumer Product Redistribution

Abstract

Formats for product redistribution are emerging and evolving, creating alternative channel options for consumers' disposition of unwanted possessions. These retail formats operate in both informal (e.g., garage sales) and formal (online auctions) economies. As consumers participate in redistribution channels, some retailers are confronted with new competition and the potential for declining sales. This article expands on both recycling and disposition literature by examining consumer disposition behavior and the flow of used products through various redistribution channels. Strategies are offered to address consumer disposition behaviors as well as to assist retailers in combating traditional and non-traditional competition.     

Numeric or weighted distribution? The effect of different channel performance metrics on market share

Abstract

Previous studies have found a convex relation between weighted measures of distribution and market share for consumer products in developed economies, while companies in emerging markets often use a non-weighted (numeric) distribution measure to manage their channel strategy. In contrast to the markets with high retail concentration, the numeric distribution could be best suited to a more fragmented retail market in which the percentage of physical distribution is important. We investigate the effects of expanding numeric versus expanding weighted distribution by studying stores in channels and regions characterized by structural differences in an emerging market. Our data come from retail audits in Brazil and include 91 soft drink manufacturers, 195 brands and 1,110 stock-keeping units. Our study highlights the importance of numeric distribution as a performance measure in this market. Additionally, we show that the effects of numeric and weighted distribution on market share vary by region and channel format.     

Barriers to the advancement of modern food retail formats: theory and measurement

The recent expansion of global food retailers into emerging economies has made the study of food retail modernization especially relevant at this time. We present a framework to analyze limitations to market share growth of retail formats based on diffusion across consumer segments and by product category. We then propose a measurement approach, based on consumer surveys, that quantifies the impact of these processes on supermarket market share. Food retail modernization is then examined in Hong Kong by this approach for two points in time. In a 1995 diagnostic study, we find that geographic and economic segment diffusion of supermarkets is complete, but that product category-dependent diffusion (specifically perishables) is not. The latter, thereby, becomes the major restriction on supermarket share gain. In 1999, a second study measures the impact of the introduction of superstores, a large modern format, on the perishable restriction to modern format share growth. Consumers perceived superstore perishables to be superior to supermarkets’, but these views had little impact on the ability of modern format to wrest additional share from traditional markets. We discuss diagnostic and monitoring applications, and extensions of the approach to other retail contexts.     

Channel Intermediaries and Manufacturer Performance: An Exploratory Investigation in an Emerging Market

Channel intermediaries (hereafter, intermediaries) are among the most critical elements of any supply chain as the bulk of manufacturing output is transported through them. However, we have a limited understanding of the approach a manufacturer should take to achieve the dual goal of increasing profitability and intermediary satisfaction. To provide manufacturers with practical strategies to boost their performance and their intermediaries’ satisfaction, we rely on three related studies. In Study 1, through interviews with managers and intermediaries, we find that distribution alignment across intermediary, market, and product types may be a practical strategy for both manufacturers and intermediaries. In Study 2, by using a robust empirical methodology with data from a construction product manufacturer operating in an emerging market, we find that various combinations of intermediary, market, and product types affect the manufacturer’s performance differently. Accordingly, through a supply-side examination, we quantify the revenue impact of reallocating the studied manufacturer’s retail distribution resources among different intermediary-, market-, and product-type combinations. In Study 3, through a field implementation, we find that our recommended intermediary alignment strategy from Study 2 substantially boosts both the manufacturer’s performance (by fourteen percent in revenue and thirteen percent in profit) and intermediaries’ satisfaction (by 7.71%). Thus, with our qualitative, empirical, and field studies, we contribute to the existing research in channel management, emerging market retailing, retail distribution, and marketing strategy.     

Applying the scenarios method to capture uncertainties of retail development in emerging markets

Retail development in emerging markets has been the result of key driving forces operating in a variety of ways leading to unpredictable and complex patterns of retail change. Existing theories of retail change remain inadequate for capturing the complexities inherent in emerging markets. In order to capture the impact of the complex interplay of driving forces on retail change in emerging markets, the authors adopted the scenario method which accepts structural uncertainty and allows for multiple interpretations of multiple futures for the phenomenon under study. An example case study is presented, where four possible visions for retail development in emerging markets in Asia are identified. The four scenarios are firstly, a scenario where Traditional Retailers dominate through mom and pop stores, a second one where Regional Retailers dominate, a third one where Discounted Retailers dominate and a fourth where Mixed Retailers gain predominance. The scenarios highlight that the politics of retailing give rise to new conventions of competition in emerging markets, which sustain the coexistence of a variety of retail formats in these markets. The scenarios approach demonstrates that the nature of consumer behaviour rooted in traditions and customs alongside rising aspirations sustains a dual model of retailing in emerging markets. The paper concludes with reflections for retail development theory and implications for practitioners and policy-makers.