International

It’s been another good year for our international business which now spans 13 countries across Asia, Europe and the United States. As customers around the world are feeling the effects of the global economic slowdown we are successfully adjusting our offer in all our markets to help customers who are feeling the pinch.

We’ve long understood that retailing is local. Each team on the ground is able to adjust our offer to each market because customers in China, for example, aren’t the same as those in Poland or South Korea.

So we’ve never tried to run the international business from our office in the UK. In fact, we have very few expats working outside the UK – in South Korea just six out of a team of over 20,000 people. As we face into some strong economic headwinds, it’s more important than ever to stay close to customers and be able to adapt quickly locally as their needs change.

We have people in each of our markets who have a wealth of experience and are able to make the decisions that really matter.

A big part of my job is about making sure we’ve got the right people in each country, sharing experience around the business and empowering people to do the right things for their customers.

Philip Clarke Asia, Europe and IT Director

Board of Directors

Across our markets customers are changing their shopping habits as they are affected to varying degrees by the global economic downturn. In this kind of environment, it is more important than ever to listen to customers and adapt quickly to their changing needs.

Each of our markets is different so it’s up to the individual businesses to adjust their offer locally. Using customer insight allows our experienced teams on the ground to make decisions based on real customer data.

We have spent many years developing our customer insight skills, particularly through dunnhumby, the consumer research company behind our loyalty scheme, Clubcard. Through careful analysis of sales and loyalty card data we can better understand what is important to our customers. This year we have been using this unique insight across most parts of our business so we don’t have to guess what our customers want, we know.

In all our markets it’s helping us select the most important items for price-sensitive or cost-conscious shoppers so we can invest in lowering prices on the most important items to help customers through tough economic times. For example, in Malaysia, we have reviewed our range of staple foods and groceries and as a result we have introduced 27 new products to the basket, which we know are among the most important for customers. We now make sure that we are not beaten on price for these products.

This insight is also helping us to make things simpler for customers to shop in our stores. For example, in Asia we have worked with our leading supplier of baby milk. By reviewing the sales data we discovered that displaying the products by brand rather than by age was important so we are changing the layout on the shelves to make it easier for customers to find the products they want.

Whilst it is important to invest in the shopping trip we are also continuing to invest for future growth. This is a strategy that has served us well in the past; for example we entered Thailand and South Korea during the Asian economic crisis in the 1990s and emerged stronger once the economies started to recover. We are now market leader in Thailand and following our acquisition of 36 hypermarkets in South Korea we are now in a very strong position to challenge for market leadership there as well.

We also announced our entry into the Indian market last year. We are establishing a cash & carry business that will offer a comprehensive range of great value fresh food, grocery and non-food products to small retailers, restaurants, kirana stores and other business owners. We will also provide farmers and other suppliers with a highly efficient route to market. In addition, we have signed an exclusive franchise agreement with Trent, the retail arm of the Tata Group. Trent currently operates four Star Bazaar hypermarkets, with plans to grow to 50 stores over the next five years. We will supply these hypermarkets with products, but also offer our retail expertise and technical capability to support the development of their business.

The overall performance of our international businesses during the year has been strong, particularly against the background of increasingly challenging trading conditions in all of our markets as the effects of the economic downturn on consumers have grown and spread around the world.

We have delivered very good sales and profit growth and our investment returns have held up well. Importantly, we have grown share in all of our markets and in some countries we have made more rapid progress this year by sticking to our strategy as competitors falter. By continuing to focus on doing the right things for customers – lowering prices, introducing more affordable products, offering even stronger promotions – they have rewarded us with good sales and market share growth. By keeping our costs low and pushing on with expansion, we aim to take the opportunity to strengthen further our market positions during the recession.

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