A new competitive landscape is emerging in retailing. Restrictive regulations and relative market
saturation in developed countries have led to a growing number of local consolidations-a trend most
likely to continue. At the same time, major players are now seeking additional growth beyond their
borders, looking in particularly to developing countries, where regulatory restraints are less
For retailers, the next challenge will be dealing with either the emergence of new retail business
models or the resurgence of prior ones. These include aggressive discounters, high-end retailers,
players adding value through enhanced service or broadened offers, and retailers choosing to "hang
in there" and strengthen their local market share.
Challenges for Retail and Consumer product (R&C) companies are many in today's business
environment as a confluence of market forces have created an extremely difficult climate.
In mature markets, R&C sector companies are constrained in their ability to grow and maintain profit
margins as a result of a deflationary operating environment, market saturation, slowing population
growth, and more discerning but less loyal consumers. There are also the immediate concerns of
growing competitive pressures, an increase in the number of alternative sales channels, a blurring
of roles between suppliers and retailers, and - particularly for consumer product manufacturers - a
shift in the balance of power to the retailers.
As a consequence, the strategic focus of the sector is moving towards the emerging economies and
expanding consumer markets of Asia, Central and Eastern Europe, China and India. This focus offers
new opportunities for growth through global sourcing, off-shoring and the development of modern
In addition, due to stakeholder demands and the Sarbanes - Oxley legislation, the retail & consumer
industry is also experiencing heightened regulatory pressures. These imply greater accountability and
accuracy in the reporting of financial results under IFRS and US GAAP. Increased levels of corporate
governance and board involvement, with stronger internal control documentation, have created a
greater need for stronger risk management practices across the enterprise.