Retail Strategies: Key themes for today's retailers

On the international front, India and China present significant opportunities.China has transformed retail supply chains in the past ten years, but both countries are evolving into vast consumer markets in their own right. This will offer huge growth potential to both domestic and international retailers, but a simple transfer of a tried-and-trusted retail formula from elsewhere in the world is doomed to failure.

Local knowledge – and a willingness to adapt a successful model to local tastes – is vital. For local players, using this knowledge and understanding to meet
the challenge posed by international retailers is the key.

Store roll-out remains a fundamental growth strategy in all major markets for those retailers that have established a strong, replicable formula. Despite this being a well-trodden path, many companies still experience major problems with consistency, site selection and the sheer complexity of the infrastructure required to run a significant chain of stores. Learning from the successes and mistakes of those who have managed this process can ensure the business is ready for accelerating the roll-out programme.

Meanwhile, technology is transforming the relationship between customer and retailer. From the retailers’ perspective, this can allow a vastly increased level of customer
knowledge and understanding that can be used to drive higher sales and customer loyalty. In the case of direct retailers, customers volunteer a lot of knowledge about themselves with every purchase and the best retailers use this extremely effectively to create a real dialogue with the customer. Stores, too, have sought to do this through ever more sophisticated loyalty card and promotion techniques.

Private equity is playing an increasingly important role in the retail sector. The relationship is about far more than just the provision of finance – it is also about the wealth of sector expertise that a private equity player can offer a retailer, including access to a global network of contacts and experts.

3i has already used this expertise to help more than 100 retail and consumer companies fulfil their ambitions. As the sector gets ever more complex, we hope to help many more navigate the retail landscape.

Roger Colwill
Lead Consumer Partner, 3i