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From oxcart to Wal-Mart:

Four secrets to attaining emerging-market customers

Alejandro Diaz, Max Magni, and Felix Poh

To get items to clients in growing markets, global

manufacturers will need strategies for browsing through both the traditional and the contemporary retail scenery.

In growing markets all over the world, multinationals attempting to get their products to consumers are up against a staggering kaleidoscope of strategic and operational issues. At 1 extreme, they need to grapple with traditional retailers: the disorderly array of outlets, kiosks, street vendors, and other small entrepreneurs who seem to offer area customers a little of everything, whether it be groceries or perhaps branded items, such as drinks, small electronic devices, and personal-care products. In the other, multinationals must manage modern retailers—global giants, which include Carrefour, Petrol station, and Wal-Mart, as well as neighborhood leaders, including CR Vanguard, in Cina, or Reunion Pão para Açúcar, in Brazil—that are getting to be a powerful force in the rising world's quick-progress cities.

This duality is becoming more pronounced since we last published about attaining consumers in emerging marketplaces, five yrs ago; our emphasis then was largely on the ubiquitous mom-and-pop shop. 1 Today, full landscapes in emerging markets can be broken into three broad categories (see exhibit, which will focuses on food sales):

1See Alejandro Diaz, Jorge A. Lacayo, and Luis Salcedo, " Supplying ‘mom-and-pop' stores

in rising markets, ” mckinseyquarterly. com, March 2007.

2

•predominantly traditional markets, such as India, Nigeria, and Indonesia, exactly where small owners account for 98 percent, ninety-seven percent, and 85 percent of the industry, respectively2

•predominantly modern market segments, such as Chinese suppliers, Mexico, and South Africa, where modern trade already accounts for more than half of sales

•transitional markets, in which small business owners currently dominate but are getting rapidly elbowed aside by modern suppliers; in Chicken, for example , their very own share of sales offers shot up to 46 percent in 2011, from 26 percent in 2005

Q4 2012

As international manufacturers seem beyond countries as their device of Mom-and-pop

strategic planning, they will discover stark different versions within parts, Exhibit

2All market share numbers are the most current available (typically, 2011) estimations from reports

produced by Euromonitor and Globe Retail.

Exhibit

Emerging market segments present a mixture of retailing on the range from

mainly traditional to predominantly modern trade.

Total grocery retail market sales; 2011, %

Predominantly traditional

60 per cent of all grocery sales from traditional

outlets1

Modern

India

2

Dalam negri

15

Thailand

Argentina

In transition

40–50% of all food sales via

modern outlets2; significant development in

contemporary trade more than past 5 years

98

211

eighty-five

22

80

78

32

68

57

40

62

59

Thailand

41

fifty nine

46

46

54

80

Brazil

50

Russia

53

47

227

South Africa

fifty-five

45

45

Mexico

49

42

ciento tres

China

sixty two

1 Involves cooperatives, self-employed grocers, free of charge markets, and food experts. 2Includes hypermarkets, supermarkets, discounters, department stores, and convenience stores.

Resource: Euromonitor

thirty-three

Venezuela

Turkey

Predominantly modern day

50% or even more of all grocery store sales via

modern stores

100%,

dollar billion

Classic

50

113

38

504

3

towns, and local communities. (For more on city-based strategy setting, see " Unlocking possibly emerging-market metropolitan areas, ” on mckinseyquarterly. com. ) In Malad, a western region of Mumbai, the most important stores for food sales happen to be mom-and-pop shops, known as kirana, and the suburb's giant fresh fruit and veggie mandi, or perhaps outdoor industry. But as business-processing centers and new

houses spring up inside the...


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