Page 65 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes Sectoral Expansion

The John Lewis Partnership runs a chain of some 25 department stores. In addition it also
operates 120+ Wait raised supermarkets. There may seem little connection between the two but
both are pitched at the mid to upper market and so have a similar target market and
complementary retail offers. The company also has its own manufacturing operations and owns
brand is important for both chains. The advantage of being a multi-sector retailer concentrating
on the home market is that it is familiar with the domestic consumer market and its brand image
is strong enough to transfer from one sector to another.
Global Expansion

An example of such a retailer is the German ‘hard discounter’ Aldi. The company was founded
in the immediate post-war years with an orientation on heavily discounted limited lines of
generic products. Since the 1960s Aldi has moved into numerous European markets and also the
US, using a method of organic growth. Although a number of alternative fascias are used, all
stores are practically identical. This generates vast economies and efficiencies of scale. Despite
moving into a variety of markets, Aldi has made the very minimum of adaptations to its retail
offer.
Table 3.1: Combined Sectoral and Global Expansion

Country Format Developments
UK, France Internet Major retailers seeking to exploit potential of
the Internet
UK Discount villages Clerks success prompts retailers to invest in
mall-style development
France Factory outlets Sector has become dominated by a handful
of specialist operators
Czech Republic, Discounters Lidl’s geographic expansion plans to boost
Croatia, Hungary, strength of discounter channel
Poland, Slovenia
Russia, Czech Internet Increasing access to computers and
Republic, Slovenia development of credit cards boost growth
Hungary Factory outlets Factory outlets increasingly appealing to
price- conscious consumers
Mexico, Argentina Discounters The end of the review period saw price-
sensitive consumers attracted to discounters
Mexico Warehouse clubs Increasing number of outlets open during the
review period
Colombia Service Stations Outlawing of kiosks benefited service stations
in several cities
Japan, China, Warehouse Clubs Foreign retailers develop format
Indonesia
Japan, South Korea Discount superstores Format benefits from consumer price
sensitivity
Japan South Korea Internet Channel benefits from strong technological
infrastructure
US Dollar stores Major players experiment with format
US Warehouse clubs Unit expansion leads to head-to-head
competition
US Airport retailing Increased security poses threat to sales,
although it also increases the time
consumers spend in airports
Australia Internet Consumer good show strong growth, but
outpaced by travel and tourism, insurance,
and miscellaneous services
Australia Category killers Unit expansion drives strong growth
Morocco Supermarkets/ French companies drive emergence of the
hypermarkets sector
South Africa Garage forecourt Demand for convenience encourages sector
stores expansion
Egypt Discount superstores International export standards boosting
supply of ‘seconds’ for discount superstores

Source: www.euromonitor.com

60 LOVELY PROFESSIONAL UNIVERSITY