The world is shrinking – communications and transportation make it possible to go most anywhere at a moment’s notice. Add to that the longer-term trends – such as shifts in the population, migration to other countries, the opening of new markets, and changing environmental factors – and the cumulative effect on consumers in both developed and developing markets is profound. That was the overriding theme for Nielsen’s Spotlight on Global Retailing, where more than 100 attendees worldwide discussed the obstacles as well as opportunities with retailer experts this past June in London and New York.

Increasing integration
Globalization is happening at an extreme pace, and retailing is no exception. Some of the largest retailers in the world have shown that growth can come from expanding outside their original borders. Retailers such as Wal-Mart, Carrefour, Metro, Aldi, and Tesco are becoming as familiar with Oxford England as they are with Oxford Ohio. The Spotlight session was designed to give a perspective on the trends that are occurring around the world as well as how some of the global players are working within today’s changing retail and consumer environment.

Predicting progress
A look at future trends in the coming decades indicate that there will be drastic shifts in population between different markets, and some developing markets will continue to boom, driving a need for retailing and consumer goods. There is a great deal of room to grow, even for some markets that are considered smaller than the BRIC (Brazil, Russia, India and China) global giants. Despite the fact that overall population growth is slowing and many developed markets are aging, there is also a booming new middle class who represent a large opportunity worldwide as they become more influential consumers.

North America
The graying of North America will certainly continue, and younger households – as well as those with higher proportions of children – will become more demographically ethnic over time. Pets are the new children for many households, which is demonstrated by the growth of the pet market compared to the children’s toy market. In addition, large and dominant retailers in the U.S. will have the natural challenge of sustaining their growth of years past, as well as being ready to react to new retailer competition from Europe and perhaps even Asia.

Europe
Europe will show similar age trends as North America, although deep-discount stores are now focusing their marketing savvy more toward the concept of quality and value rather than just price. Over the last few years, the growth of this format has taken many retailers by surprise and triggered a clear need for response strategies to capitalize on the growth trend. In this region, as well as the others, price has become “table stakes”, where all but the most upscale and unique retailers need to focus on keeping prices low. By analyzing shopper attitudes and behavior, shoppers have shown that they find loyalty cards and promotions far less important than attributes such as ‘quality’ and ‘fresh products’, as well as ‘value for the money’.

Asia Pacific
If one word were to describe the Asia Pacific region it would be – BIG. From New Zealand and Australia to Japan and China there are a plethora of cultures, lifestyles and diverse consumers. In some markets, such as China, potential growth is almost unfathomable. Consider this: a city in the interior of China, Wuhan, boasts a population of more than 7 million in a province of 60 million people. In terms of scale, this is as big as Great Britain! Global retailers entering these markets are finding opportunity, but are also encountering very strong local retailers that provide as much if not more of an enjoyable shopping experience based on their knowledge of the Chinese consumer. While competition in China is fierce, consumer product growth is robust.

North East and South East Europe
Many markets are either very small or very large and under-developed, highlighting a need for building infrastructure such as roads and distribution networks. Russia is one market that stands out due to its immense size. Defined by geography and 11 unique time zones, the population is scattered, leading to fragmented markets outside of major cities. Although breaking the competition barrier in this country is difficult, and local politics can be thorny, consumers are gaining in spending power and would benefit from outside competition. Retailers should look to build up activities at the individual store level to reflect the different tastes, ways of living, entertaining and spending power of the Russian consumer.

Store brand step up
Retailers everywhere are becoming more skilled in using information to market their store brands more aggressively. The growing presence of hard discounters such as Aldi and Lidl in Europe are a contributing factor to private label growth. As hard discounters continue to grow and gain share, so does private label overall.

Retailers wanting to enliven their private label offerings should look to products with a fresh appeal – literally. According to a December 2006 Nielsen Executive News Report, What’s Hot around the Globe, of the 20 private label categories studied, nine of the top ten were fresh. And three categories were some of the fastest-growing overall.

As store brands continue to represent a challenge and an opportunity for manufacturers – especially in markets where a few retailers comprise a large share of market, those who differentiate themselves based on market conditions, consumer preference and shopping behavior will flourish and grow.