It will be of interest to understand the various steps global retailers take to establish themselves in the physical and online retail world. What are the changing features of the global retailing landscape ? Let us try to analyse some of them here.
1. Retailing modes : Except for Alibaba, both Walmart and Amazon has dual models of retailing. Walmart's dual model started with physical retail and then moved to combination of online and physical retail, the same as what Amazon is offering. The Amazon's dual model started with the online model and then moved to a combination of online and physical model. As of my understanding, only the last mile delivery is what is made possible with the physical model of distribution for Amazon.
2. Concentration in local markets : While Walmart and Amazon aims for global markets, Alibaba by the sheer size of Chinese market, gets almost 70% of its online business from China alone. Even though Walmart has operations in 28 countries around the world, there is a trend within Walmart to concentrate more in the United States as they feel US still offers the best market in the world for Walmart. This may not be true for Alibaba or Amazon.3. Organic or inorganic growth : Walmart's belief in inorganic acquisition of online retailer www.jet.com and retaining it that way was based on a realisation that building a new online platform from scratch would be a costly and time consuming proposition for Walmart. Building up on somebody who is already there makes economic sense too. It has helped it to retain its Jet.com clientele and improve on its online offering too. Jet.com is a good platform from which Walmart can think of expanding in a big way.
4. Rapid growth pace of global retailing : The rapid pace at which customers around the world are gobbling more and more products in a materialistic world which would make their lives easier and simpler plays a great role in the recent global trend to embrace retailing in a big way. The pace of change happening in a fast paced retail organisation is hourly from the earlier yearly schedules. Retail organisations need to be really on top of changes and adapt to changes fast in order to be able to respond to customer needs better.
5. The growth of the hybrid model : online grocery business is a fast paced one where customers get to select from a wide variety of items offline and cannot wait for days to take delivery. They do not mind having to go to a nearby physical store or warehouse to take delivery. Amazon and Walmart depend on the hybrid model of retailing in a big way.
6. Stress on environment sustainability efforts : In the physical retailing world, Walmart is always be known as a company which has stood for good practices like ensuring environmental sustainability of its business operations, be it buying vegetables or harvesting fish from the seas and ensuring low carbon footprint of its operations. The issue which Walmart would face in the online world, whether it matters if one is environmentally friendly (with long-term benefits) or not as much as one is customer friendly (short-term benefits).
7. Effective monitoring of sustainability efforts : Another very pertinent question If so, who will reliably monitor these claims of environment sustainability efforts by these three giant retailers of the world ? Can Alibaba or Amazon claim to be as environmentally responsive as Walmart which has been regularly publishing its sustainability efforts in a big way ?
8. Public acceptance of sustainability efforts over short-term customer convenience : An interesting question the world is waiting for an answer is will people appreciate the companies that work for the environment too rather than just for the customer ?
9. Upskilling employees : The retailing world is growing at a fast pace and it has become essential for decision makers not only to concentrate on the markets but also on upskilling the employees.
10. Exacting employee requirements : As stores get more on the cloud and physical stores become just distribution centres, the worker at the store needs to be able to handle and operate handheld devices, analyse data, ask questions, receive data and so on. The workers need to be more tech savy than of past years. Digital natives (tech savy) citizens or the millennials need to be part of the management team at any organisation that is planning to go ahead and lead the world. These digital natives will help the organisation handle disruption much better than older workers.
Here are some questions worth pondering for Indian retailers and people interested in Indian retailing.
a. In India, potentially the largest retail market in the world in another thirty years, will the initial Walmart strategy of joining hands with Airtel and presently going ahead alone fructify ?The author wishes to thank Harvard Business Review for some of the content for this article.
b. Will Alibaba strategy of entering the Indian markets through Paytm be successful ?
c. Should TESCO look for a more serious player than Tata to establish itself in the Indian market ?
Ref : 1. "We need people to lean into the future" - an interview of Walmart CEO Doug Macmillon with Adi Ignatius, Exe-editor, HBR, April 2017