Learning from emerging markets

For decades, retailers in emerging markets have benefited from importing the best-in-class practices from mature retail markets. However, with shifting of economic impetus towards emerging markets, it isn't a surprise that there are growing instances of global retailers learning best practices from emerging markets and deploying them in their fragile and mature domestic markets.

Carrefour is one such global retailer which has looked towards emerging markets - such as Brazil and the Middle East - for inspiration to reinvigorate its flagging fortunes in Europe. Some of these best practices include:

* Atacadao inspired Supeco hypercash format: Following the phenomenal success of Atacadao in Brazil, Carrefour has decided to integrate the concept of hypercash within its Supeco format in an endeavour to reinvigorate flagging big box fortunes in Europe.

* In-store operational execution: Years of neglect and lack of capital investment towards front and back-end infrastructure meant that in-store execution within Carrefour's European stores was at best below-par. While the retailer's European stores fared poorly in terms of availability (with frequent out-of-stocks) and lack of compliance; stores in emerging markets in Brazil and China performed much better courtesy of a more decentralised operational structure that empowered store managers to make localised merchandising decisions. The two in-store photographs from Carrefour - one from Brazil and the other from France - clearly highlight the contrasting levels of execution within the same category across the two markets.

With reinvigorating the European business high on George Plassat's agenda; Carrefour has started to adopt a more decentralised organisation structure in some of its European markets, namely France and Spain. Store managers have been given more autonomy, something which has helped the stores respond much better to localised needs. The move seems to paying-off well for the retailer with in-store execution witnessing a marked improvement versus previous years; something which also reflected in the improved like-for-like sales performances.

* New model of growth: Carrefour's successful partnership with Majid Al Futtaim in the Middle-East has helped the retailer uncover a new model for growth. The model of partnering/franchising with a local players not only enables cash starved retailers like Carrefour to expand or retain geographic footprints without making heavy capital investments, but helps focus attention on core strategic markets (such as France, Spain and Italy). Carrefour has already used this approach in some of its non-strategic European markets such as Greece and Turkey; and is likely to use the same model to expand footprint in some of the other emerging markets.

The author is Himanshu Pal, director of retail insights, Kantar Retail. Re-printed with permission.

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