TXMI 5250Exam # 4 Study Guide Retailing in UK, Belgium, and Netherlands Brief Intro: European Retailing - Adoption of new technology depends on: o Scale Compares population to retail sales Germany and France are the two most populated countries in Europe so they typically have higher retail sales  UK had highest retail sales in EU on apparel o Concentration  Large retailers use efficient logistic systems Is it fragmented (mom and pops) or concentrated? In EU the concentration is getting higher (big players buying out smaller)  No Italian companies on the top list  In the UK 2/3 of stores are independently owned  CBD are called high streets in UK o Forms of Business Chain stores (10 or more in US) called multiples there; not a lot of chains in the EU o Regulation  Most laws have to do with large scale formats Planning laws: strictest (Belgium, Netherlands and France); more chains creating small stores called hard discounters (700 SKUs) little convenient stores for low process Former Soviet Block States: laws are loose there o Profitability  Needs to foster innovations and development Any item has to stay at full price for 28 days before you can mark it half off; helps mom and pops because they can’t compete with the half off prices - Big 4: France, Germany, Italy, and UK (largest populations and stable governments) The European Union - 28 nations - Bulgaria, Romania, and Croatia recently joined - 28% of all world trade- 500 million population - Over 17 trillion in GDP - Cannot see them as one nation- Green Countries:o Didn’t want to join EU o Iceland, Norway, Switzerland, and Lichtenstein) - Started with EU Coal and Steel community in 1950; was a way to have peace and stability and free trade - 6 countries started it - Gradual process to unification - Single Currency o There is no single currency o Eastern nations still cannot adopt the Euro because they are not stable enough o Germany bailed out Greece because they both use Euro - Common Language o 23 languages o 90% of schools teach English - Turkeyo Has been on the waiting list since 2004o Eurasian Nations  Connects Europe and Asia but is considered an Asian country which is why they don’t want them to join The population is huge which could be an issue because their culture is very different from anyone else in EU (Muslim) o Could end up having more power than Germany which would be a problem o 10 years ago Turkey was not a great place o Why they should join  Entrance way to the black sea and other oil countries surround them and the EU is the number 1 trading partner for Turkey The EU People - The Population Bomb o Demand for budgets, pensionso Can the EU handle the aging population o Europe’s average age is predicted to be 52 in 2050; Poland is the worst o Germany and Italy have 1.3 births per family; government giving cash to parents for having children o In US we have 2.1 births for two reasons  Immigrants have more pregnancies  Teen pregnancy - Corruption o Huge problem - Online o Italy still doesn’t buy online because the whole nation hasn’t gone wireless yet o 2003 to 2014 went from less than 1% to 16% in UK o Sweden ranks number 1 in internet penetration (higher than US)o Pure Play Sell online only (etailing)  Italy and Spain have no pure play retailers PPP Big Mac Index - Euro overvalues US dollar - LB has changed drastically now it is like 0.6 to the dollar United Kingdom - Retail o Retailing is sophisticated; acquisition; sales are high; online more mature than US; promotions and heavy discounts are popular; consumers have changed and are demanding more discounts; they are starting to buy less on apparel now - History o Kelts arrived in 1000 BCo English crown established in 15th century o Parliamentary Monarch is the current ruling They do no have full control at all o Strong since of nationalism but on a country to country basis within - Retail Sector o England  London, Manchester, and Birmingham o Scotland  Glescoo Ireland  Belcast - Language o No official language on Constitution but most speak English - Society o Unofficial caste system o Never ask people where they are from o 2 million Muslims live in UK, many different people live there o A lot of overt discrimination but things are starting to change o People are very private o Meetings typically formal unless everyone is equal; if one person has more power they are the only people that talk; if all people are equal ideas flow freely UK Food Retailing - TESCO o #2 on Global Retailer Index; #1 on food and apparel o Largest employer in UK; 250,000 employees and 1700 stores o Introduced private label food to UK o F&F clothing label o 80% of sales from UK and yet they are #2 in the world (British LOVE this store) o Similar to WalMart but offer hypermarkets and convenient stores- ASDAo Wanted to be like WalMart o Market Spoiler Effect  When one retailer starts to sell goods below cost (like WalMart) o WalMart bought them out and brought them into their format - Sainsbury o International company o #28 - UK Food Oligopoly o Strong private labels o Tesco, ASDA, and Sainsbury own 80% of food o They all care more about the environment o UK consumers want quick convenient daily shopping trips (similar to developing nations) Power and Competition in UK - Private Labels o Consumers tend to want private labels over other brands o Advertised nationally o 45% in Switzerland o Premiumisation  Raising the status of a private label to a competing brand  Better profit margins (20%+) - Retailers have power o Vertical: own the factory making it and can tell them what they want at what price and quality o Horizontal: dictate prices; competition between brands - Working hours o Only 32% work 46 hours a week; in US a lot of people work over 40 hours o Paid vacation  Germans have 30 days paid vacation  US has 12 days  Belgium has 22 days plus holidays UK Apparel Retailers - Department Stores o The oldest types of stores - John Lewis o 26 stores; 40,000 employees - House of Fraser o Only department store to increase sales during the recession; 61 stores; high endo Concessions  Department stores lease out space to another brand within its stores  Ex: Alexander McQueen within House of Fraser- H&F has no power - Lose gatekeeper power (buyers of goods) - 15% lower gross margins than if you sold it yourself - Harrods o #1 tourist destination in London o Has a dress code (no