Accenture Globalization Index. July 2013

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1 Accenture Globalization Index July 01

2 Introduction Message from Chris Donnelly Accenture Retail Industry Managing Director This quarter our Globalization Index shines a light on two trends; the growing appeal of smaller format stores and the increasing number of international moves by emerging market based retailers. The latest data shows an increase in the number of market entries, and it is the grocers leading the way with an emphasis on small formats, ecommerce sites, and even temporary stores. These routes avoid the heavy capital investment and the risk of a large and partially redundant store network. We believe the growing number of emerging market based retailers expanding internationally suggests both a growing confidence amongst those retailers and, potentially, the early warning signs of saturation in some emerging markets. Message from Lindsay Cowan Chief Knowledge Officer at Planet Retail Planet Retail is delighted to support Accenture in the continuing Globalization Index Quarterly Review. Worldwide, the retail landscape continues to evolve at a rapid pace amid social, economic and technological change, which are influencing retailers investment decisions both at home and abroad. I am therefore pleased that Planet Retail is able to offer their global retail intelligence to facilitate the continued Accenture analysis of market entries. In the three publications to date, the Accenture Globalisation Index has identified a number of topical, thought-provoking core trends within the retail arena. These core trends are the ones which we will see driving both imminent and future global strategies for successful retailers. We are grateful to our colleagues at Planet Retail for helping make this Globalization Index possible. Copyright 01 Accenture All rights reserved.

3 The Accenture Globalization Index What does the Index measure? Accenture and PlanetRetail have identified a universe of almost 500* of the largest grocery and non grocery retailers globally and has tracked their entries in new territories. 5 Period of Analysis: 16 January April 01 There were 5 market entries. This is up on the previous quarter of 17 entries but still below the first Index when 4 market entries were recorded. Each market entry is tracked in terms of: Source Country Target Country Entry Format Entry Vehicle Company s home nation Note: * see methodology for more details Countries they entered Format or channel with which they entered Entry vehicle they used Copyright 01 Accenture All rights reserved.

4 Market Entries for Q1 01 Home Market Target Market Target Market Region US Brazil South America US Hawaii North America US Canada North America UK China Asia UK Thailand Asia UK Hungary Central & Eastern Europe UK Malaysia Asia UK Morocco Africa UK UK France Western Europe (Paris) The Western Europe Netherlands Portugal Columbia South America Portugal Spain (Canary Islands) Western Europe Japan Philippines Asia Expansion Direction Vehicle Acquisition Ecommerce Ecommerce Ecommerce Joint Venture Home Market Indonesia South Africa Target Market South Africa Turkey Target Market Region Africa Central & Eastern Europe Spain Canada North America UAE India South Asia Thailand Denmark Western Europe France Denmark Western Europe France France Western Europe Germany Italy Western Europe Germany UK Western Europe Sweden Chile South America Sweden Qatar Middle East Turkey Egypt Middle East Expansion Direction > > > > > Vehicle Acquisition Copyright 01 Accenture All rights reserved. 4

5 Source and Destination of Market Entry One-fifth of all market entries in Q1 01 were made by retailers based in emerging markets - compared to 0% in Q4 01 and 1% in Q 01. Over the three quarters, seven of the nine market entries by emerging market based retailers have been made into emerging markets. Source and destination of market entry From to This is a trend that we expect to see growing strongly because the two prerequisites for international expansion are falling into place: Firstly, it is often driven by growing saturation in the home market and the emerging markets are becoming more competitive. Secondly, it is dependent on the retailer having the capital and talent resources to make the investment in researching and entering the new market and many emerging market retailers are reaching this state. From To From To From to Q1 01 Q4 01 Q Source: Accenture Globalization Index Copyright 01 Accenture All rights reserved. 5

6 Market Retailers on the Move Thai retailer Central Retail Corp. entered Denmark by acquiring department store Illum. South African homewares retailer opened its first store in Turkey. Turkish hard discounter opened its first store in Egypt. Russian supermarket opened its first store in US Chilean supermarket opened its first store in Peru Source: Accenture Globalization Index S African supermarket opened its first store in Democratic Rep Of Congo Indonesian Convenience retailer opened its first store in South Africa. EMKE Group opened a shopping mall in India. Indonesian grocery retailer launched its online shopping platform in its home market. Copyright 01 Accenture All rights reserved. 6

7 Market Entry via Smaller Formats Reducing the Capital Intensity Retailers are rethinking the investment in large estates of large stores in new markets, especially where they have too much space in their home market. As the future balance between online and store based sales in all markets is unknown and the belief that the online penetration in emerging markets could ultimately be higher than in mature markets there is a great reluctance to invest in too much real estate and suffer the same drag on future profitability from unwanted space as in the home market. Instead they are entering new markets with smaller format and temporary stores - pop-ups - to gauge consumer interest and the potential success of a permanent store presence. Small and temporary stores are helpful in building the brand and seamlessly complement an online presence. Planet Retail Small stores are also in tune with consumers increasing desire for convenience - of time and of location. Source: Accenture Globalization Index Copyright 01 Accenture All rights reserved. 7

Small is Beautiful Planet Retail WH Smith UK-based retailer has opened 1 kiosks across the Shanghai underground network and has secured 18 further locations to open in the near future Zalando German

8 Small is Beautiful Planet Retail WH Smith UK-based retailer has opened 1 kiosks across the Shanghai underground network and has secured 18 further locations to open in the near future Zalando German fashion e-commerce specialist has opened its first temporary store in Milan, Italy Aldi Süd German hard discount retailer has opened its first small-sized, convenienceorientated store in London Planet Retail Planet Retail IKEA Swedish furniture retailer opened pop-up shops in London train stations Liverpool Street and Waterloo Source: Accenture Globalization Index Copyright 01 Accenture All rights reserved. 8

9 The Top 5 : Number of Market Entries Who, What, from Where, to Where and How Tesco By Retailer Grocery Sector 11 Marks & Spencer Fashion & Accessories 5 Everyone else 1 Department Store Home Garden & Auto Other Specialty UK US France Germany Source countries 7 Canada Denmark Every other country Target countries 1 Company Owned Stores Website Entry Vehicles 7 1 Portugal M&A Sweden JV 1 Source: Accenture Globalization Index Copyright 01 Accenture All rights reserved. 9

10 Methodology Retailer Universe: Top Retailers by Grocery Sales: Retailers that achieved grocery banner sales in excess of US$ 1.5 billion in 011. Currently 50 retailers. Top Retailers by Non-Food Sales (not already included in the grocer list): Retailers that achieved non-food banner sales in excess of US$ 750 million in 011. Currently 9 retailers. Globalization move definitions: The opening of a new format in a new country (irrespective of whether a company has a different format already trading in that particular country). The opening of a new country specific website (even if the retailer has existing operations in that country). The acquisition of a company in a target market. The creation of a Joint Venture in a target country. The launch of a franchise operation in a target country. Copyright 01 Accenture All rights reserved. 10

11 Contact Details About Accenture Accenture is a global management consulting, technology services and outsourcing company, with 57,000 people serving clients in more than 10 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$ 7.9 billion for the fiscal year ended August 1, 01. Its home page is To learn more about globalization contact: Chris Donnelly Senior Executive London, UK christopher.donnelly@accenture.com Takaaki Haraguchi Senior Executive Tokyo, Japan takaaki.haraguchi@accenture.com David T. Richards Senior Executive Chicago, USA david.t.richards@accenture.com Adrian Bertschinger Senior Executive Johannesburg, S. Africa adrian.bertschinger@accenture.com Copyright 01 Accenture All rights reserved. 11

Foreign Taxes Paid and Foreign Source Income INTECH Global Income Managed Volatility Fund

Foreign Taxes Paid and Foreign Source Income INTECH Global Income Managed Volatility Fund Income INTECH Global Income Managed Volatility Fund Australia 0.0066 0.0375 Austria 0.0045 0.0014 Belgium 0.0461 0.0138 Bermuda 0.0000 0.0059 Canada 0.0919 0.0275 Cayman Islands 0.0000 0.0044 China 0.0000