CEO of International Business Leaders Forum on supermarkets in emerging markets

The Trouble with Supermarkets - A Way Forward. March 2, 2007

A "Seeing the Possibilities" blog by the late Robert Davies who was the CEO of the International Business Leaders Forum (IBLF).

The world's largest supermarket operators are rolling out fast in the big developing countries and joining what, over the next ten years, will be a multi-billion global retailing revolution. In China alone the market will be valued as $596bn and India $300bn. In the process the big box brand names risk becoming the new lightening conductor for activists with real or perceived fears of devastation in local economies and cultures, exploiting the failures of globalisation in protecting the poor masses and small merchants.

Supermarkets and organised retail could bring immense opportunities, savings and raised living standards. They could, if they adapted their business models, be genuine drivers of more inclusive local economic development. Why does it have to be so contentious? Why are the cleverest logistics and supply chain operators and service companies known in business history sometimes so inept at making their own case and adapting their business model to the sensitivities of emerging markets? And what's to be done?

Expansion in China has so far been mute other than around real estate issues. But Monday witnessed predictable street protests in New Delhi by activists and small shopkeepers against the arrival of Wal-Mart as a retail partner in India which is just edging open the door to foreign participation in the retail opportunity which is currently only 3% organised. Last year there were protests against UK chain Tesco Lotus and other expansion in Thailand because of potential harmful effects on local merchants and jobs, resulting in Thailand's weakened Government pressing a freeze on expansion.

These and protests elsewhere, and the mounting propaganda against Foreign Direct Investment (FDI) in the massive retail opportunities in serving the swelling middle class consumer, is a sign that an argument will have to be won beyond reassurances of jobs and affordable shopping and reassurances that everyone will somehow magically benefit. The big retailers and their JV partners seem to be underestimating their long-term vulnerability of their position and reputation and the corrosive effect of the opposition, and can be blind to the learning and the simple creative business model changes that could help be a win-win.

Full article at http://www.seeingthepossibilities.com/?p=33