Global retail chain is on the brink of restructuring itself. With e-com comes razor thin margin trading. It has already broken the backbone of mortar shops. Globalization’s lure is almost irresistible. With the U.S. economy struggling to expand and Europe on the brink of recession, fast-growing markets in the developing world offer the best opportunities for boosting revenues and profits today. Here comes the margin game.
Major Retailers Are Not Interpreting Market Correctly
Take an example of Tesco. Tesco, one of the top three largest UK Supermarket chains and a major global retailer, entered USA market in November 2007. They opened first stores in the USA under the brand name ‘Fresh & Easy’. The company’s stated aim was to build a coast-to-coast business of more than 1,000 stores, and it constructed a costly supply infrastructure to match. Six years later at a cost of over $2 bn — in April 2013, Tesco confirmed it would exit the US Market.
Tesco was a retail giant that had a team of brilliant minds. Yet it failed. Miss – interpreting data and mishandling of talent can cause serious damage to your brand. This happened with Tesco.
Although British and Americans share a heritage and speak the same language, they have wide cultural differences. It is a common mistake of UK companies trying to break into the US market to think of the USA as one market.
Nine of America’s 10 Biggest Supermarkets Fail to Publicly Report Food Waste
“It’s appalling that America’s biggest supermarkets are doing so little to reduce their enormous contribution to the food-waste crisis,” said Jennifer Molidor, senior food campaigner at the Centre. “Food waste is a growing problem that squanders water and farmland, hurting wildlife and putting food security at risk. We can stop this massive waste, but only if supermarkets are part of the solution.”
Businesses that serve or sell food are responsible for 40 percent of food waste in the United States, with retailers accounting for more waste than restaurants or food-service providers (ReFED, 2018). Despite the significant role of supermarkets in the food-waste crisis, the industry has taken little meaningful action and made few public commitments to tackle the problem.
Major food giants generate tonnes of food waste every day, yet don’t comply to government guidelines. In today’s market, you have to win customers trust to sustain. And being environment friendly should be top priority.
The Pressure to Globalize
Retailers wish to enter global markets for a number of reasons. Common ones include a quest for greater economies of scale and scope, a need to diversify risks, a desire to attract fresh talent and create new opportunities for existing leaders, and a need to make up for constraints imposed by regulatory agencies when a retailer becomes too big for its home market.
Here are few of the important reasons of Organizational failure:
- Not having proper organizational discipline – such as too many SKUs, can inflate costs and erode profits.
- Optimism is good for business but being excessive optimistic, having large debt can cause financial failure.
- Management perceptions of reduced investment risks has given rise to overexpansion of the format, accompanied by inadequate site and market research.
- The quality of store locations, in terms of site or demographic characteristics, is less important when a store concept is unique.
- Small-store formats frequently require powerful—and targeted—positive image differentiation. Examples include low prices at Aldi and Lidl, produce at Sprouts and special products at Trader Joe’s. This appeal needs to be achieved and consistently maintained over time.