Redesigning retail: Operating model imperatives for international retailers

Deploying the right operating model can help international retailers drive profitable growth by balancing customer relevance and operational efficiency across diverse and dynamic markets.
Todays consumers are a formidable bunch. Armed with more information than ever thanks to technology, they shop anytime, anywhere and with anyone they choose. Moreover, choice, convenience and service mean just as much to them as price. Evolving customer demands are driving retailers to tailor their offerings, expand into new business segments and enhance customer touch points. At the same time, competition always fierce in retailis intensifying. Only the fittest or luckiest retailers have survived the global downturn, and investors are demanding ever better performance from them. Already-lean retailers are searching for new ways to achieve structural and operational efficiencies in a bid to outpace competitors. Furthermore, new players from other retail segments and industries are ramping up their retail presence. For example, big-name manufacturers including Apple, P&G and Nike are now bypassing traditional retailers and reaching consumers directly through multiple channels. Growing numbers of retailers are going internationaland small wonder. Home markets are saturated, but markets near and far, particularly in emerging economies, still offer white space (see Figure 1). The worlds largest retailers are entering more and more countries (see Figure 2).

Figure 1. A billion new consumers1

Consumer spending in the G6 and B6 (real US$ billions, at Purchasing Power Parity) B6 2009 2030F CAGR 6.4% G6 2009 2030F CAGR 1.8% Top 15 conumer markets in 2025 (private consumption, US$ billions, at PPP) China United States India Japan Brazil Germany Russia Mexico France UK Indonesia Italy Iran South Korea Canada G6 B6 World 2009 2,934 9,235 1,945 2,238 1,188 1,508 1,083 905 1,136 1,272 543 956 370 659 702 16,345 8,714 39,467 2025F 13,324 12,332 6,793 2,405 2,145 2,058 1,888 1,576 1,544 1,474 1,397 1,256 1,218 1,111 1,000 21,068 26,837 63,427 CAGR 9.9% 1.8% 8.1% 0.5% 3.8% 2.0% 3.5% 3.5% 1.9% 0.9% 6.1% 1.7% 7.7% 3.3% 2.2% 1.6% 7.3% 3.0%

32,362

23,961 16,345 8,714 B6 economies G6 economies

B6: Big SixBrazil, China, India, Mexico, Russia and South Korea G6: France, Germany, Italy, Japan, United Kingdom and United States CAGR: Compound Annual Growth Rate

Figure 2. Internationalization of the worlds 100 largest retailers2

60 Number of worlds 100 largest retailers with: Presence in one country 50 Presence in two to four countries Presence in five to nine countries 40 Presence in 10 to 19 countries Presence in 20 or more countries 30

20

10
1Economist

Intelligence Unit; Accenture Analysis.

1986

1996

2004

2JA Dawson, Scoping and conceptualizing retailer internationalization, Journal of Economic Geography, 2007, vol. 7, p.373-397; Accenture analysis.

Yet entering emerging markets can be challengingand not just because local players may enjoy structural or legacy advantages in understanding and servicing customers. Too often, the worldwide race for space has come at the expense of profitable growth. Thats largely because many retailers have failed to achieve sufficient and sustainable levels of customer relevance and operational efficiency across multiple markets, businesses, channels and brands. The key to striking this balance is to design the right operating model. This is no small feat. One model does not fit allnot least because different retailers are at different stages of internationalization (see Figure 3).

Nevertheless, when Accenture analyzed a representative sample of the worlds largest retailers, we found that leading companies are working to maximize synergies and efficiencies while delivering customer valueand theyre outpacing their competitors. Progressive international retailers have sustained a steady focus on operational efficiency, a key lever for achieving long-term high performance (see Figure 4). Moreover, our in-depth analysis, which included more than 40 one-onone interviews with retail executives and retail and operating model experts worldwide, identified three imperatives critical for designing and deploying effective international operating models:

1. Organize around your companys competitive essencewhat you do better than your rivals. 2. Recalibrate your international operating model regularly as market priorities evolve. 3. Leverage dynamic networks to enhance innovation, customer connection, agility and protable growth.

Figure 3. Retailers at different stages of internationalization3

100% IKEA H&M Esprit Ermenegildo Zegna

80%

Ahold 60% Foreign sales/ Total sales 40% Tesco Best Buy 20% Kesko New Look Walmart Fast Retailing Casino Staples Coach Gap Office Depot Cencosud Auchan Group Otto Group Metro Group Groupe Carrefour

Inditex

Starbucks Coffee

The Home Depot 0% Complexity of international footprint (function of diversity of international markets)

Figure 4. Evolution of sampled international retailers economic performance4

14% Average Return on Assets Average Return on Sales 10%

12%

8%

6%

4%

2%

0%

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

3Company

Annual Reports and Planet Retail Annual Reports; Accenture analysis.

4Thomson

Reuters; Accenture analysis.

Organize around your competitive essence

Use your competitive essence to guide operational decisions
A retailers competitive essence lies in what it does better than others in its industry. For example, IKEAs competitive essence is rooted in the Scandinavian home products retailers ability to be a low-cost innovator, procurer and manufacturer of welldesigned offerings for the masses. People across the entire international organization use IKEAs competitive essence to make operational choices that support the companys strategic priorities and core value proposition. To illustrate, designers source and engineer products to achieve a desired price point and to deliver stylish yet affordable and functional products to customers5. Of course, internationalization widens the array of operational choices available to execute on your competitive essence. Some companies have tried to manage this complexity by establishing guiding principles about where and how capabilities can be shared across geographies, what should be outsourced or who will make which decisions. Many have also relied on a longstanding practice to achieve global efficiency: standardizing and centralizing backoffice operations while managing customer-facing activities locally. But todays realities challenge such simplistic rules. development of emerging economies has built new talent pools in diverse locations, offering retailers fresh options for sourcing talent. But with these options come challenges, such as complex decisions about where a company will perform certain activities, who will perform them and how those employees will be managed. Add to this the complexity of operating across multiple channels and business segments with a variety of brands and formats, and you quickly see both the challenges and the opportunities of designing operational synergies across these dimensions. Competitive essence becomes increasingly important as a compass to guide the choices and trade-offs that are necessary to design operations in this complex environment. The right choices can enhance a retailers competitive essence and thus improve its customer relevance and efficiency. Surprisingly, such choices are often counterintuitive. Take global sourcing. Many international retailers, including Walmart and Ahold, are working to centralize and standardize their global sourcing functions. Yet we found one European retailer that decided to keep its sourcing decentralized to leverage local negotiations and supplier storage and delivery in select markets. This approach is better aligned with the companys entrepreneurial culture and has enabled it to reap the benefits of just-in-time inventory. While counter-intuitive, the approach helps drive better on-shelf availability a key component of this retailers competitive essence.

Reinforce your competitive essence

Walmarts competitive essence lies in its scale and a supply chain that enables it to deliver a diverse assortment of products to customers at low prices. The company recently reinforced this proposition by committing to cut supply-chain costs by 15 percent within five years, in part by shifting from third-party suppliers to direct purchasing for private-label products and fresh foods. The company has also established four global merchandising centers for hardlines and softlines. These include a center in Mexico City that focuses on emerging markets, and another in the UK that serves Walmarts George private-label apparel brand. The company wants to source fresh food products directly as wellas its ASDA stores in the UK have long done, from continental Europe. Before rolling this idea out internationally, Walmart first piloted it (with apples) in its North American stores6.

Capture synergies across borders, channels and business segments

Retailers now have access to advanced technologies and analytics that enable them to (for example) manage online sales and marketing virtually. Whats more, the rapid

5BusinessWeek,

IKEA: How the Swedish retailer became a global cult brand, November 14, 2005.
6Financial

Times, Walmart aims to cut supply chain costs, January 3, 2010.

Recalibrate your operating model as market and segment priorities evolve

Monitor and adapt to changing conditions
The impulse to internationalize swiftly is understandable. However, an ad hoc approach can lead to operational duplication and confusion, rather than efficiency, particularly if a retailer has entered individual markets opportunistically over a long time without proactively looking for cross-market synergies. Conditions within and between markets change constantlyso retailers must regularly reassess their operating models effectiveness and adjust the model when needed. Some large retailers have migrated towards in-the-box solutions that include standardized templates for systems and processes that can be readily leveraged in new locations. But even these companies need to modify their operations to adapt to new risks and opportunities as they expand into new markets, channels and segments. When markets are diverse and rapidly evolvinglike Chinatimely recalibration becomes critical. Consider Starbucks, which entered several Chinese provinces via joint ventures over the past decade. This strategy rapidly established the retailers presence in China and positioned it to quickly learn what it takes to be locally relevant. Starbucks expects that its sales in China will overtake those in the UK and Japan over the next few years. To achieve operational consistency and efficiency across the wider organization, Starbucks has exercised the option to buy back operations from some of its JV partners7. Similarly, Best Buy acquired a 75 percent interest in Five Star, Chinas third-largest home appliance retailer in 2006. It then opened its first Best Buy store in China in 2007. In 2009, Best Buy converted Five Star into a wholly owned subsidiary by purchasing the remaining 25 percent stake. Best Buy has not yet integrated Five Star, preferring instead to run a dual-brand strategy in China that includes its own stores until it knows more about the countrys many different markets. The company currently balances customer relevance with efficiency by leveraging the strong local Five Star brand and only gradually integrating and sharing select operational practices from their traditional Best Buy big box formatsuch as selling approaches and tailoring the product mix8. different business segments. An operating model that worked well for traditional brick-and-mortar retailing wont likely be right for the e-commerce portion of the business. In addition, customers may prefer a cross-channel operating model. The same holds true for retailers entering new product or service categories that require different value chains than their traditional assortment. We observed that a number of food retailers have had to revisit their entrenched operating models when they expanded into higher margin, shorter lifecycle offerings. Other retailers run their different business segments independently of one another, without looking for crosssegment or cross-market synergies and scale.

Recalibrate after acquisition and organic expansion

As retailers expand their international footprint through acquisition or organic expansion, regular recalibration becomes still more critical, because opportunities for cross-country and cross-business operational efficiencies multiply. Chilean retailer Cencosud has expanded aggressively through acquisition and has systematically recalibrated its operating model. While integrating 10 acquisitions over the last seven years, it reportedly launched more than 50 new projects (for instance, centralization of backoffice functions) to capture crossmarket and cross-organizational synergies9. Other retailers are organically expanding into new business segments (product, service or channel) to increase share of wallet and win new customers around the globe. However, many dont evolve their operating models to best serve these

Plan and organize to support future international growth

Given intense market pressures, retailers are eager to enter new markets and business segments quickly. Speed is important, but so is planningand then executing on the plan with regular recalibration. The Netherlands Ahold and Frances Carrefour offer apt examples. These companies are restructuring their operating models to create an empowered regional layer of decisionmakers. The layer is thin enough to avoid excessive bureaucracy and close enough to markets to support local responsiveness. Yet it has sufficient scale to deliver regional synergies and efficiencies.

7Asia

Times Online, Starbucks soars in China, June 15, 2006. http://www.atimes.com/atimes/ China_Business/HF15Cb06.html.
8Niraj

Dawar and Ramasastry Chandrasekhar, Best Buy Inc. dual branding in China, Harvard Business Review, June 10, 2009.
9Cencosud,

Presentacin Santander-Cancn, January 2010.

Meanwhile, some retailers have incorporated enterprise efficiency into their operational expansion from the start. For example, New Look, a UK-based value fashion retailer, has launched a major multi-year effort to ensure that its global trading platforms and systems will be able to support future international growth.

Foster processes to drive continuous improvement

A companys culture, leadership and people play critical roles in this process of regular recalibration. Retailers that have established formal or informal mechanisms to identify, gather and share ideas from across the organization to drive continuous improvement are ahead of the game. For example, Tesco uses TWISTTesco Week in Store Togetherto generate ideas for improving the business. The company sends thousands of head office managers out to work in a store for a week every year so they 8

can personally experience Tescos products and business processes and gather employees ideas for making them better, simpler or cheaper10. One employee suggested putting bar codes on sandwiches on the front of the package to make them easier to scan. This idea was implemented and has reportedly saved Tesco 500,000 by reducing time spent scanning sandwiches11. TWISTs have not been limited to its home market in the UK; international TWISTs have taken place in several countries including Malaysia, Poland and Hungary12. Carrefour, for its part, is transitioning from a highly decentralized culture to one that proactively disseminates best practices across its organization (see sidebar)13. Employees with key analytical skills are playing a role in this process, by leveraging market, segment and functional data to help the company decide when and how its operating model needs to be recalibrated. Other industries,

such as financial services, have more experience in organizing and deploying international analytics. For example, GE Money has recognized that global analytical talent development and deployment are critical to achieving both customer relevance and operational efficiency (see sidebar)14.

10Sir

Terry Leahy, What innovation means to Tesco, Economic & Social Research Council, March 2006.

Retail, Tesco drives growth through innovation, June 1, 2007. http:// www.talkingretail.com/news/industryannouncements/5174-tesco-drives-growththrough-innovation.html.
12Tesco,

11Talking

Listening and engaging, accessed June 22, 2010. http://www.tesco.com/csr/ downloads/pdf3.pdf.

13Carrefour

analyst presentation, Share best practices and innovations, 2009.

14Accenture

(Jeanne Harris, Elizabeth Craig and Henry Egan), Counting on analytical talent, March 2010.

Carrefour: Sharing best practices

French retailer Carrefour boasts a workforce of nearly 500,000 (the worlds seventh-largest private sector employer) and more than 15,000 hypermarkets, supermarkets, discount and convenience stores in some 35 countries15. Founded more than 50 years ago, it is the worlds second-largest retail group in terms of revenues. Sheer size, however, is no guarantee of future international success. Accenture research reveals that to internationalize, organizations must promote continuous learning and improvement to capitalize on market opportunities. They must also evolve their operating model as they enhance their presence in key markets or enter new markets. And they must ensure that relevant innovations from headquarters or international locations are disseminated across their entire operations. Early in its globalization journey, Carrefour relied on French expatriates to establish its presence in new markets. This made sense at the time, because the company had a strong pool of experienced store managers. The managers understood the Carrefour hypermarket model and could apply it to international markets, particularly new markets like China, which were unfamiliar with supermarkets16. However, as Carrefours international locations proliferated, executives found that the pioneer model wasnt helping Carrefour attract enough talent or achieve the degree of localization required to succeed in more diverse markets. In the late 1980s, Carrefour became one of the first retailers to set up a corporate management training center, with Institut Marcel Fournier in France as its first center. Carrefour then expanded the effort, creating nine training centers around the world to train and develop store managers locally. However, these centers traditionally focused on the regions they served and did not promote cross-market knowledge sharing17. So, in 2009, Carrefour launched a three-year effort to transform its operating model to disseminate global methods but not global solutions. The initiative has global knowledge sharing as its core objective. Carrefour recognizes that fostering cross-border knowledge sharing will require cultural changes, including new incentives that encourage managers to seek more open sourcing of innovation. As part of the initiative, the company will task dedicated teams in three new competence centers with gathering and disseminating best practices in one of three core business functions (see Figure 5)18. Carrefour has found that smaller and newer markets may be less inhibited when it comes to innovating and piloting new ideas because they do not have entrenched organizations and processes. Take Bulgaria, where Carrefour installed an entrepreneurial team to develop new practices for boosting in-store productivity. The Bulgarian division segmented the store workforce into two teamsone for providing service on the shop floor; the other, for managing stock in the storage room. The division leader coordinated the teams to facilitate product flow and match fluctuations in demand over the course of a day. Workforce productivity improved 30 percent over the norm20.

Figure 5. Carrefours competence centers19

Formats and channels

Product and service ranges

Product flow and supply chain

Hypermarket Supermarket Hyper/Cash Convenience Store Franchise eCommerce

Carrefour brands Fresh Bazaar Methods/Category Management Methods/Purchasing Services

Product flow Logistics In-store productivity Check-out counter productivity

15Carrefour, 16China

2008 sustainability report, April 28, 2009.

Daily, Carrefours expansion in China, August 12, 2008. Document de reference 2009, April 22, 2010.

17Carrefour,

18Carrefour analyst presentation, Share best practices and innovations, 2009. 19Ibid. 20Ibid.

GE Money: Unleashing the power of international analytics

Knowing when to recalibrate can be difficult, but more and more retailers are recognizing that advanced analytical tools and technologies can help. However, many retail executives, like many companies, do not know who is performing their companys analytics or where they reside in the organization. And they dont view their analytical talent as a distinct and valuable workforce. In many retail companies, analytical talent is isolated in functional silos, such as pricing, inventory management or finance. Some of these employees are bored because the company isnt fully using their skills. Others are overworked because theyre scarce. Accenture research suggests that companies looking to build a strong analytical workforce should centralize and coordinate their analytical talent. But a growing number of retailers have expressed interest in a hybrid model. According to this model, top analytical talent is centralized to work on high-priority projects that require advanced analytical skill sets. Meanwhile, lower-level analysts remain aligned to specific functions and get training, support and networking from global or regional Centers of Excellence. This model tries to strike a balance between keeping analysts close to the business and close to each other. While retailing is definitely starting to embrace analytics, it is not as advanced as other industriessuch as financial services in its development and deployment of international analytical talent. Take GE Money, the banking and consumer finance services unit of GE. The unit operates in more than 50 countries. Its offshore analytics centers in Shanghai and Bangalore place their staff on temporary assignments in a variety of business operations roles through a formal job-rotation program. This program has aided retention of analytical talent (in very competitive markets). It has also improved employee engagement by offering analysts new learning opportunities, task variety and a sense that they are making meaningful contributions to the business across the globe21. Analytics promises to drive significant growth and efficiency for retailers. Moreover, it will rise in importance as retailers further penetrate data-rich channels like e-commerce and m-commerce, as evidenced by the advanced analytics capabilities of companies like Amazon and eBay. In particular, predictive analytics may change the game in fashion and food retailing by helping companies anticipate consumer preferences and tailor their offerings accordingly22.

21Jeanne

Harris, Elizabeth Craig and Henry Egan, How successful organizations strategically manage their analytical talent, Strategy & Leadership, 2010, Vol. 38, Issue 3, p. 15-22.

22Accenture

(Jeanne Harris, Elizabeth Craig and Henry Egan), Counting on analytical talent, March 2010.

10

Leverage dynamic networks

Use new relationships to open up new markets, segments and channels
As power shifts to consumers, cost pressures mount, technology advances and skilled resources become limited, retailers are finding it difficult to drive all value-chain activities on their own. They are discovering that collaborating with new and existing suppliers, customers, employees and competitors in novel ways can help them innovate, connect with customers and drive more profitable growth. We refer to these new strategic and inventive collaborations as dynamic networks. For some retailers, dynamic networks can help change the game. In August 2009, the U.S. home improvement retailer Lowes, for instance, announced a joint venture with Australias Woolworths. The partners are planning to acquire hardware distributor Danks and add it to their emerging home improvement network in Australia. The agreement creates a new business for Woolworths and a new market for Lowes, whose international presence until now has been limited to Canada and Mexico. It also means a better value proposition for Australian customers23. Walmart, meanwhile, is joining forces with Hong Kong-based supply chain management giant Li & Fung to achieve even higher levels of efficiency and competitive advantage (see sidebar)24. focus on and which locations and which partners are optimal for your company. In Asia, Japans Fast Retailings UNIQLO brand has joined with Taobao, Chinas largest Internet retail website, to bring the Japanese companys casual wear to Taobaos 100 million online shoppers. Fast Retailing is also stepping outside its normal category by collaborating with Selfridges to offer a new and exclusive UNIQLO mens collection at this higher-end retailer25. Consider too Alliance-Boots design and sourcing partnership with Mothercare, which makes childrens clothing, and the European personal products retailers reciprocal selling arrangement with Waitrose supermarkets. Both deals enable customers to shop and purchase from the expanded assortment in stores or to order online and pick up their purchases in stores using AllianceBoots Click-and-Collect service26. Other retailers are using mobile technologies and social networking to tap into the power of new networks. Take Best Buys Twelpforce. This service invites customers to communicate with Best Buys 155,000-strong global workforce, including the iconic Geek Squad of technology experts, via Twitter, and exchange opinions and ideas28. Meanwhile, Gaps StyleMixer iPhone app takes customer service to new heights by using mobile and GPS technology to locate the customers nearest store and then offering them exclusive, store-specific offers and discounts29.

Leverage new networks to connect with customers

Retailers must also deploy operating model levers, such as technologies and processes, in new and innovative ways to maximize value from dynamic networks. Witness, for example, how My Starbucks Idea has revolutionized the traditional customer comment box. The web-enabled platform, which lets Starbucks employees and customers generate and test new ideas, has launched dozens of successful innovations. These include the splash stick, which plugs the hole in the beverage containers lid and stops coffee from sloshing out while the customer is on the move27.
23Logistics

Magazine, Woolworths-Lowes acquires Danks, September 7, 2009.

24Forbes,

Billionaire brothers tie up with Walmart, January 29,2010.

25Alibaba,

Taobao partners with UNIQLO to grow Chinas online fashion market, April 23, 2009. http://news.alibaba.com/article/detail/ alibaba/100090874-1-taobao-partners-uniqlogrow-china%2527s.html
26MVI

Make the right network choices

Taking full advantage of dynamic networks requires more than just identifying the right partner(s). Retailers must assess when and where to leverage partners to maximize customer relevance and operational efficiency. This involves deciding which parts of the value chain to

Worldwide, Alliance-Boots to focus on shopper convenience, February 15, 2010.

27Starbucks,

Ideas so far, accessed June 14, 2010. www.mystarbucksidea.force.com.

28Wired

Magazine, Work smarter: Best Buy, April 2010.

29Geeksugar,

Gap style mixer iPhone app hooks you up with discounts, August 27, 2008. http:// www.geeksugar.com/Gap-Style-Mixer-AppGives-You-Discount-When-You-Open-4392584

11

Channel the power of enabling technologies

Some retailers have started using crowd or open sourcing and cloud computing to mine customer insights from new sources or to develop more customer-centric solutions, directly or via alliances with other stakeholders. The Gap, for example, ran a special contest in 2009 designed to tap into the network of freelance iPhone application developers. The initiative invited developers to compete in creating a new application that embodies Gaps style and appeals to customers in an innovative and original way30. Meanwhile, wellknown fashion retailers such as Calvin Klein and Coach are mining the treasure trove of customer data generated by Polyvore.com, whose 1.4 million registered users create their own fashion designs from pictures of

real clothes. By tracking the activities of these influential independent designers, apparel retailers can gain new insights into consumer fashion trends and styles31.

and leadership teams. Many will need to build and deploy specialized processes and communication skills to monitor and manage their network relationships. The rewards promised by dynamic networks far outweigh the risksfor those who manage their networks adroitly. Retailers that prioritize engaging new partners and swiftly implementing required operational changes will have first choice of the strongest strategic partners.

Manage the rewards and risks associated with dynamic networks

Leveraging dynamic networks presents rewards and risks. Some risks are obvious, such as leaks of confidential data during collaborations with multiple partners. To manage the risks, companies must revisit their operational processes and technology systems to ensure they safeguard key data and proprietary IP from misuse. Retail executives should also consider that managing a wider and deeper portfolio of relationships places new demands on their workforce

30Mobile

Commerce Daily, Gap announces winners of iPhone app contest, November 16, 2009.
31The

New Yorker, Fashion Democracy, March 29, 2010.

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Walmart and Li & Fung: Sharing scale and efficiency

Hong Kong-based Li & Fung began operating more than a century ago as a trading house that exported Chinese silks and porcelain. Its now the worlds leading supply chain management company for consumer goods. Its capabilities extend well beyond global sourcing to product design, production and logistics. Small wonder then that Walmart, the worlds largest retailer, has recently elevated Li & Fung from wholesale supplier to strategic partner. Li & Fung will act as a non-exclusive direct buying agent for a portion of Walmarts hardlines and apparel goods32. Historically, Li & Fung created separate divisions to handle each large customer. But it is changing its operating model to support the partnership with Walmart. Li & Fung is creating a separate company called WSG to handle Walmarts business, estimated at US$2 billion of purchasing in 2010 alone33. Li & Fung will likely use the new revenues from increased volume to fund key acquisitions to expand its international scale and footprint. Walmart stands to derive significant benefits as well, including major cost savings and faster speed to market. The retail giant can also expect improved product quality from Li & Fungs extensive supplier network in more than 40 countries, as well as from the Asian companys specialized international supply chain processes, technologies and in-market expertise. WSG will be staffed by global sourcing employees from both companies, which will enable the partners to pool sourcing experience, skills and networks. Li & Fung operates 80 offices worldwide, including a new hub office in Istanbul, Turkey, to help serve Europe, the Mediterranean, the Middle East, North Africa and the former Soviet republics. This scope will help Walmart expand and diversify its sourcing options, as well as mitigate sourcing risk34. The partnership will also enable both companies to get to know each other better as the operating models for WSG, Walmart and Li & Fung evolvethough Walmart retains the option to buy WSG in 201635.

32Store

Brands Decisions, Walmart creates global merchandising centers to streamline sourcing, February 2, 2010.
33Financial

Times, Walmart reveals supply deal with Li & Fung, January

29, 2010.
34Home

Textiles Today, More details emerge on Walmart, Li & Fung deal, January 28, 2010.
35Financial

Times, Walmart reveals supply deal with Li & Fung, January

29, 2010.

13

As markets continue to become more liberalized, built out and interconnected, more and more retailers are turning to internationalization to drive incremental growth. These companies are increasingly pursuing less capital intensive options for international expansion, such as e-commerce, m-commerce and franchises. Technology advances are enabling higher levels of efficiency and more flexible and affordable solutions for retailers international operations. These forces are converging to make capitalizing on international growth an imperative for most retailers. Retailers seeking to go global or expand their international footprint must ask themselves how they will get into the game or win it before theyre outmaneuvered by rivals. The answers lie within their international operating model. By more effectively organizing around their competitive essence, regularly recalibrating their operating model as their markets and business evolve, and strategically leveraging dynamic networks, retailers can drive higher levels of performance in their international operations.
14

Core Project Team

Joshua B. Bellin Ryan Coffey Stephane Girod Amanda M. Hilgers Susan S. Mann Ashley B. Miller Armen Ovanessoff To find out more about how Accenture can help your organization with its international operations, please contact: Janet Hoffman Global Retail Industry Managing Director Dave Richards North America Retail Lead Juan Manuel Rebollo Europe and Latin America Retail Lead Michael Yee Asia Pacific Retail Lead For questions related to the research, please contact: Susan S. Mann Global Retail Industry Program Manager susan.s.mann@accenture.com Armen Ovanessoff Accenture Institute for High Performance armen.ovanessoff@accenture.com

15

About the Accenture Institute for High Performance

The Accenture Institute for High Performance develops and publishes practical insights into critical management issues and global economic trends. Its worldwide team of researchers connects with Accentures consulting, technology and outsourcing leaders to demonstrate, through original, rigorous research and analysis, how organizations become and remain high performers.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 181,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

Copyright 2010 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document makes reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.