Canadian retailers closing amid intense competition,
Failure to adapt to market
In fashion, everyone knows that you're only as good as your last season.
But now, you also have to be fast and adaptable, which is something many Canadian retailers like Danier Leather, Laura, Smart SetandJacobhaven't been able to do.
In Canada, many retailers had a "great thing going for years," according to FarlaEfros,the president of HRC Advisory, a retail consulting firm. There wasn't much competition and the economy was stable.
But that all changed with the recession and the onslaught of international competition. An influx offast-fashion brands, combined with an inability to adapt to new styles and a growth in consumer choice, have led to the demise of many mid-price Canadian retailers.
International companies like Zara, H&M and Forever 21 are seen as fast-fashion brands – they're massive and they operate on a ramped-upschedule. This speed allows these big retailers something traditional ones don't have: flexibility. They can get a new popular style onto the market in weeks or even days in some cases.
Traditional retailers just can't keep up.
On top of that, spending habits are changing. Mid-market retailers don't have as much draw because people are gravitating towards the extremes.
One of the main criticisms of Danier was that it didn't try to change until it was too late. It had a lock on the leather jacket market in Canada.
But leather's popularity has grown "astronomically" over the last few years, says FarlaEfros, the president of HRC Advisory, a retail consulting firm. That popularity has brought cheaper alternatives and different styles onto the market.
And Danierwas not particularly popular with the younger crowd, says Ed Strapagiel, a retail industry consultant. Even if they had tried to appeal to younger generations, their traditional image stuck with them.
Efros says that by the time many of these retailers tried to change,it was too late.
"They had already ignored their current consumer base and stopped reinventing," she says
Most shopping in Canada is still done in "brick-and-mortar"stores – only about 10 per cent is done online. But according to Strapagiel and Efros, that percentage grows every year.
Because of this, consumers now have more choice than ever. And many customers expect Amazon-style free shipping, so the retailers have to eat that cost, says Efros.
Strapagiel says online stores, while actually quite challenging and expensive to operate, have become a necessary cost of doing business.
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Consumers now hold the power because online shopping has given them almost infinite choice, says Efros. That power had traditionally been in the hands of the manufacturer or the retailer.
The recession is difficult to ignore – Efros says it's been like the final nail in the coffin, but not the main cause behind these brands' failures.
http://www.cbc.ca/news/business March 13th, 2016
USEFUL TERMS AND EXPRESSIONS
· adaptable – способный к адаптации;легко приспосабливающийся, гибкий
· onslaught – натиск, нашествие
· influx – приток, всплеск
· demise – гибель, закат, потеря занимаемого положения
· mid-price – среднеценовой (диапазон)
· mid-market – среднеценовой сегмент рынка
· operateonaramped-upschedule – работать ускоренными темпами (по принципу быстрой ротации ассортимента)
· spendinghabits – характер расходов/текущих затрат
· to have a lock on something – полностьюконтролировать
· "brick-and-mortar" stores – традиционные торговые точки (в отличие от интернет-магазинов)
TEXT 9
Global competition drives change
Companies in the developed world are increasing their commitment to emerging markets at a faster rate than ever before.
I.
Faced with the prospect of stagflation (a combination of low growth and high inflation) – or worse – in the US, Europe and Japan, companies are plunging into the high-growth economies of Asia, eastern Europe, Latin America, and, increasingly, Africa.
“Emerging markets have inflation issues, environmental questions and social problems, but overall they have better economic growth. In the developed markets you have slow growth and the risk of a new sovereign debt crisis,” says Alain Bokobza, a strategist at SociétéGénérale, the French bank.
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In a study of European multinationals, Morgan Stanley, the investment bank, found that over the past two years, companies have diversified their exposure away from domestic markets more quickly than ever before. European companies now generate just 53 per cent of sales in developed Europe, while the share from emerging markets has leapt from 12 per cent in 1997 to 29 per cent.
US companies are also following this trend, with a host of leading businesses increasing their sales to emerging markets to above 50 per cent, including Avon Products, the cosmetics company, (52 per cent), Tupperware Brands, the food container business, (58 per cent) and tobacco group Philip Morris (68 per cent).
Admittedly, the average company is a long way behind these leaders in their exposure to emerging markets. HSBC, the banking group, estimates that British companies as a whole generate just 13 per cent of revenues from emerging markets. This figure is just 11 per cent and 7 per cent for Japanese and US companies respectively.
But there is no doubting which way the winds of change are blowing in sectors open to international development – and international competition. Despite the economic challenges in their home markets, developed world multinationals cannot afford to focus only on their domestic rivals.
This is also far from a one way street. Competitors from the emerging markets are breathing down the necks of established-market companies as never before. With the help of a recovery from the financial crisis that was much stronger than in the developed world, companies based in emerging markets are pushing into global markets at an unprecedented pace.
Emerging-market groups are becoming leaders in key industries. Two of the top five global wireless technology companies are from China – Huawei and ZTE. Mexico’s Cemex is the world’s largest building materials supplier, Brazilian-run Anheuser-Busch InBev is the biggest brewer, and three Indian groups – Wipro, Infosys and TCS – together are the top software exporters.
II.
So how is this global competition changing companies?
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First, businesses are having to respond faster than before. For example, a group with a Europe-wide pay freeze may have to be flexible enough to authorise salary increases to specialists and managers in developing countries, who are still able to jump ship for a better offer. Darryl Green, Asia president for Manpower Group, the recruitment agency, says: “Countries where people move easily – such as India – are seeing executive pay rising rapidly. The sight of [well-paid] expatriate foreign managers inspires local people to ask for more. Employers have to respond.”
Second, chief executives are focusing on a broader range of challenges and opportunities than ever before. With emerging-market companies as well as established multinationals as rivals, there is no time to waste. A case in point today is Africa, where rapid growth in key countries, notably Nigeria, has persuaded many business people that the continent’s time may finally have arrived.
Multinationals are also moving core decision-making units into emerging markets. Microsoft, the US software giant, has its biggest development centre outside the US in China. Cisco Systems, the US computer networking group, has what it calls a second headquarters, Cisco East, in Bangalore, India.
With the internationalisation of operations comes the internationalisation of staff. For many groups this is now established practice. Even Japanese companies, famously conservative about promoting foreign staff, are changing.
And growing numbers of executives with emerging-market roots are making it into the boardroom. Swiss food group Nestlé recently appointed the Mandarin-speaking Wan Ling Martello, a US citizen of Chinese and Filipina origin, as its chief financial officer.
III.
The ultimate aim is to compete more effectively, especially in emerging markets, where the challenges are as great as the opportunities. Multinationals have learnt that price is not the only way of reaching emerging-markets customers. These buyers appreciate quality as much as rich-word clients, sometimes more so because a big purchase – such as a car – involves a much greater proportion of family income.
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By operating in the fast-growing emerging markets, companies are forced to innovate and develop products and processes which may not have existed before in the developed world. Coca-Cola, the US beverages group, launched a juice-based drink in China called Pulpy, which it is now rolling out around the world. General Electric, the US industrial group, pioneered low-cost medical monitors now in demand in developed countries.
Emerging-markets innovation is not new. More than 20 years ago, Hindustan Lever, Unilever’s Indian affiliate, developed mini-sachets to sell soaps to poorer consumers. But what is new is the growing volume of such innovations. In outsourcing, Indian groups headed by TCS and Infosys have revolutionised information management by splitting work done by expensive on-site consultants from that carried out cheaply offshore.
The rivalry between developed-world and emerging-market companies is not a wholly clean fight. Western groups complain of unfair competition, in the allocation of government contracts for example, of a lack of transparency and of intellectual property theft, notably in China.
Emerging-market companies hit back with claims that developed-world markets are often protected by costly entry barriers, such as regulatory requirements. Nor is bribe-paying limited to the developing world.
But these concerns have not slowed the fundamental processes of cooperation and competition between companies, which is likely to continue into the future.
The Financial Times, October 10th, 2011
USEFUL TERMS AND EXPRESSIONS
· sovereigndebtcrisis – кризис государственной задолженности
· exposure – зависимость
· to generate sales – осуществлять продажи
· to generate revenues – получатьдоходы
· tojumpship – сменить работодателя;перейти на другую работу
· decision-making – процесс принятия решений
· core units – основные подразделения
· clean fight – честная борьба
· allocationofcontracts – передача подряда на выполнение работ
· transparency – прозрачность
· intellectualpropertytheft – кража интеллектуальной собственности
· bribe-paying – взяточничество/коррупция
CONSOLIDATION
Exercise №13
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