From oxcart to Wal-Mart: 4 keys to reaching Emerging Market consumers, McKinsey,Retail & Consumer Goods-Strategy & Analysis

To get products to customers in emerging markets, global manufacturers need strategies for navigating both the traditional and the modern retail landscapes.

four keys to reaching emerging-market consumers article, multinational manufacturers must deal with both modern and traditional sales outlets, Retail & Consumer Goods

In This Article

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):

  • predominantly traditional markets, such as India, Nigeria, and Indonesia, where small proprietors account for 98 percent, 97 percent, and 85 percent of the market, respectively
  • 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 prevail but are being rapidly elbowed aside by modern retailers; in Turkey, for example, their share of sales has shot up to 46 percent in 2011, from 26 percent in 2005

To read more…visit McKinsey Quaterly website…

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