Think Local, Act Global

Peter N. Child
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Why Think Local, Act Global?
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Replicators
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Woolworths

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McDonalds

Ikea
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Re-inventors
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Think Local
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Drivers of success

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Local understanding

Obsession with customers


Drivers of success
Cook-chill convenience
food in the U.K.
Strong retail brands
Geographic and economic
basis for efficient end-to-
end chill chain
Latent consumer demand
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Supercenters Hard discount
in the U.S. in Western Europe
Space readily and cheaply Urban catchments with
available high population density
Low cost of car travel Low (or low in comparison
Large homes with plenty of with larger format)
space for siting and planning resistance
storage
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Local understanding
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Country Region Catchment Store Segments

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Po de Acar, So Paulo, Brasil
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Local understanding
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Country Region Catchment Store Segments

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Walgreens, Miami
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Local understanding
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Country Region Catchment Store Segments

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Tesco Extra, Slough
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Local understanding
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Country Region Catchment Store Segments

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Waitrose Food & Home, Canary Wharf
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Local understanding?
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Country Region Catchment Store Segments

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Local understanding
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Country Region Catchment Store Segments

Pure price Value hunters Value loyalist Uninvolved

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Demanding Quick quality Pure premium
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All this sounds great,

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but boy is it complicated.
How do you make it work?
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Obsession with customers
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Customer-
Frontline
centric
execution

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culture

Tools and
processes
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Local understanding
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Virtuous circles
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Local
understanding

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(Re-)investment Differentiated
execution

Better
returns
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The condition for success
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X> ?

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a
0
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Act global
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Portfolio momentum

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Back office synergies

Best practice transfer

Organisation, leadership,
values
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Act global?
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The growth

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imperative
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Looking at past performance
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Average index performance*

High

Unrewarded Growth giant

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Revenue
growth GDP growth**
CAGR

Challenged TRS
performer

Low
Low High

TRS performance, annual %

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Growth is important for survival
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U.S. top 100 companies, 19841993

1st business cycle, 1984 1993 2nd business cycle, 1994 - 2003

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Share of companies that went
Revenue growth bankrupt or were acquired**, %
(...) Number of companies

Above GDP growth* (33)

Below GDP growth* (67)

6x
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and for long-term TRS as well
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Average TRS (CAGR), top US 100 companies 19842003, %

TRS growth
2 business cycles
1st business 2nd business
Revenue growth cycle, 198493 cycle, 19942003 1984 - 2003

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(...) Number of companies

Above GDP growth*

(33)

Below GDP growth*

(67)

4%
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Growth drivers
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Large company CAGR 19992004

Portfolio
momentum 4.7% + 0.8%

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+
Total growth M&A driven
trajectory growth 3.7% 9.2%
Portfolio growth
boost from M&A
+
Market share
growth 0.1%
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Portfolio momentum in the industry
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Major grocery retailer CAGR, 19992004

Country 3,5 38%

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Format 4.5 48%

Execution 1.2 14%

All organic 9.2 100%

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Individual company execution
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Revenue CAGR, 19992004

Country 4.3 4.6

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Format 4.3 3.4

Expansion -2.8 9.3

Execution 0.7 -5.2

Organic growth 6.5 12.1

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Back office synergies
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Global sourcing

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Supply chain

Systems
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Best practice transfer
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Commercial insights

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Performance metrics

Techniques, e.g., lean format renewal

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Organisation
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Leadership development

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Culture

Values
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Sorry. Ive had

some time to think
about this, and
what I really meant
to say was Think

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Local, Act Global

Patrick Geddes (18541932)

Think Local, Act Global
Peter N. Child