From Oxcart To Wal Mart Four Keys To Re
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c o n s u m e r
p a c k a g e d
g o o d s
p r a c t i c e
From oxcart to Wal-Mart:
Four keys to reaching emerging-market consumers
Alejandro Diaz, Max Magni, and Felix Poh
To get products to customers in emerging markets, global manufacturers need strategies for navigating both the traditional and the modern retail landscapes.
In emerging markets the world over, multinationals struggling to get their products to consumers confront a bewildering kaleidoscope of strategic and operational challenges. At one extreme, they must grapple with traditional retailers: the chaotic array of shops, kiosks, street vendors, and other small proprietors who seem to offer neighborhood customers a little of everything, whether it be groceries or branded goods, such as beverages, small electronic devices, and personal-care products. At the other, multinationals must deal with modern retailers—global giants, including Carrefour, Tesco, and
Wal-Mart, as well as local leaders, such as CR Vanguard, in China, or
Grupo Pão de Açúcar, in Brazil—that have become a powerful force in the emerging world’s fast-growing cities.
This duality has become more pronounced since we last wrote about reaching consumers in emerging markets, five years ago; our emphasis then was largely on the ubiquitous mom-and-pop shop.1 Today, retail landscapes in emerging markets can be divided into three broad categories (see exhibit, which focuses on grocery sales):
1 See Alejandro Diaz, Jorge A. Lacayo, and Luis Salcedo, “Selling to ‘mom-and-pop’ stores
in emerging markets,” mckinseyquarterly.com, March 2007.
2
• predominantly traditional markets, such as India, Nigeria, and Indonesia, where small proprietors account for 98 percent,
97 percent, and 85 percent of the market, respectively2
• predominantly modern markets, such as China, Mexico, and
South Africa, where modern trade already accounts for more than half of sales
• transitional markets, where small proprietors currently
c o n s u m e r
p a c k a g e d
g o o d s
p r a c t i c e
From oxcart to Wal-Mart:
Four keys to reaching emerging-market consumers
Alejandro Diaz, Max Magni, and Felix Poh
To get products to customers in emerging markets, global manufacturers need strategies for navigating both the traditional and the modern retail landscapes.
In emerging markets the world over, multinationals struggling to get their products to consumers confront a bewildering kaleidoscope of strategic and operational challenges. At one extreme, they must grapple with traditional retailers: the chaotic array of shops, kiosks, street vendors, and other small proprietors who seem to offer neighborhood customers a little of everything, whether it be groceries or branded goods, such as beverages, small electronic devices, and personal-care products. At the other, multinationals must deal with modern retailers—global giants, including Carrefour, Tesco, and
Wal-Mart, as well as local leaders, such as CR Vanguard, in China, or
Grupo Pão de Açúcar, in Brazil—that have become a powerful force in the emerging world’s fast-growing cities.
This duality has become more pronounced since we last wrote about reaching consumers in emerging markets, five years ago; our emphasis then was largely on the ubiquitous mom-and-pop shop.1 Today, retail landscapes in emerging markets can be divided into three broad categories (see exhibit, which focuses on grocery sales):
1 See Alejandro Diaz, Jorge A. Lacayo, and Luis Salcedo, “Selling to ‘mom-and-pop’ stores
in emerging markets,” mckinseyquarterly.com, March 2007.
2
• predominantly traditional markets, such as India, Nigeria, and Indonesia, where small proprietors account for 98 percent,
97 percent, and 85 percent of the market, respectively2
• predominantly modern markets, such as China, Mexico, and
South Africa, where modern trade already accounts for more than half of sales
• transitional markets, where small proprietors currently