From Bazaar to Big Box, Retail Grows Up and Out

Even makers of the world’s most iconic consumer brands rely upon local channel partnerships.  If you’re charged with mapping channel expansion, and eyeing new frontiers such as Brazil, Russian, India, China — the BRIC — or the Middle East and North Africa (MENA), you may feel as if you’ve hit a “bric wall” in the search for reputable retailers with whom to partner.

Local partnerships are always valuable, and often mandatory. Indeed, it’s in such countries that retail has been dominated until recently by the aptly named “unorganized retail” channel. Unorganized, yet powerful, they’ve held the key to premium shelf space and brand awareness.

Trading companies who’ve established a regional base are gatekeepers to your success in retail. Influential in property development, transport and logistics, wholesale brokerage, and finance, they have naturally branched into retail to complete the distribution food chain. So, you can bet they will not yield market share to the invading big boxes, mega-malls, and hypermarkets from the US and Europe.  When faced with sink or swim, shrewd traders everywhere are usually apt to swim, at a Michael Phelps pace, to secure regional dominance.  As a result, they remain influential, local, visible, motivated, and innovative. And, as you might imagine, they’ve embraced the concept of mall-centric retail experiences, to enable retail tourism. Their hard-to-find local retailers are growing up and out, occupying places in shiny new mega-malls.

As you prepare your launch in the prosperous Gulf Countries, for instance, get to know Jacky Panjabi. Jacky is founder and managing director of Jacky’s Electronics, an influential retail and trading group in fast-growth, premium retail sectors found from Hong Kong to the United Arab Emirates.  Or make friends with the Al-Futtaim Group, a UAE-based trading company who convey such global brands as Marks & Spencer, Lexus, and Toys-R-Us.

This means that you will spend less time plying through the souks, bazaars, and markets to find small, yet reputable and popular stores to help you gain a foothold in these interesting new markets.   That’s not to say you world travelers still can’t immerse yourself in the sights, sounds and smells of open-air markets and trade with local retailers.  Once, while meandering the souks of Nazareth, the aroma from open barrels in a dark, cool spice warehouse stopped me in my tracks and led me by the nose in for more. If cameras only had a smell-o-rama setting… Talk about effective brand placement. But I digress, because that’s not the same type of shopping experience I’m writing about here.

Rather, it’s the every day trips to buy a microwave, flat screen, shoes, or wall paint by residents who live and work in these countries. And, since retail therapy is here to stay as part of vacationing, it’s also the emergence of mega-malls that hook tour buses in such places as Dubai. You know what else I find interesting about this particular retail setting?  It’s the added influence of foreign service workers — their buying power, day in and day out, after the tourist flies out.  

Filipino expatriates who live and work in Gulf locales have no ties to the traditional, “unorganized retail” storefronts in the old markets. As newcomers, they seek a more generic, anonymous shopping experience, such as that offered by big box retailers and hypermarkets. They, along with tourists, are the Preferred Customer that regional merchants have in mind as they make the shift from a neighborhood storefront — Unorganized Retail — to a master-planned retail environment.  

And all this makes the job of vaulting that wall and finding trusted, innovative channel partners in these not-so-new frontiers much easier.

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