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Global Retailing and CSR Initiatives Cont..

Saturated domestic markets, fierce competition and restrictive legal environment have relentlessly pushed major retailers into globalization. Sincemid-1990s,most of the economies have welcomed foreign investment, which benefited many retailers. However, deflation, lack of pricing power, global overcapacity, low interest rates, economic stagnation, slump in world tourism and declining consumer confidence became serious concerns for global retailers. With emphasis on technology and cost cutting, a major thrust of retailers continues to be demand-based - finding new markets through globalization efforts. Earlier, 53% of the top 200 retailers operated only in domestic market. But, today, only 44%remain single-country merchants. This globalization trend would only intensify in the years ahead. The benefits of increased sales and greater economies of scale are too large to be ignored.

The global retail industry has traveled a long way to become an industry worth $9 trillion11 in 2004. The top 250 retailers alone accounted for 30%. The world's 10 largest retailers captured 30.1%of top 250 sales . Retail sales, generally driven by where people's ability (disposable income) and willingness (consumer confidence) to buy compliments the fact that expenditure on household consumption worldwide increased. However, negative factors that hold retail sales back involve weakening consumer confidence. As a result of globalization and increased operations, all companies produce negative environmental and social impacts. As companies impact the closed earth system, pushback from the system is inevitable. This pushback can become activist campaigns. As the world's largest retailer Wal-Mart has high environmental and social impacts. Many activist efforts deplored this, including the film Wal-Mart: The High Cost of Low Price. Activist efforts probably were one factor in many companies' decisions to adopt an aggressive sustainability strategy. Such campaigns have driven large improvements in society. Many environmental

and social improvements over the past 50 years were initiated by such efforts. However, firms cannot mitigate many of their impacts mainly because overarching economic and political systems essentially make it impossible to do so².

The environmental sustainability issues offer huge opportunities for companies to develop new products. For example, Wal-Mart unveiled a long-term sustainable environmental strategy that includes using 100% renewable energy, generating zero waste and creating sustainable products. Companies also set short-term goals like reducing energy consumption, water consumption, etc.

The goal is to bring together economic viability, environmental sustainability and social responsibility, integrating these concepts with the company's strategy, operations and culture. CSR addresses how a company manages and improves its social and environmental impacts. This requires consideration of the needs of a wider community of interest, including employees, suppliers and other business partners, governments, local communities, NGOs and general public.

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1]"2006 Global Powers of Retailing", http://www.deloitte.com/dtt/cda/doc/content/dtt_ConsumerBusiness_GlobalPowers_021006.pdf
2]Dixon Frank, "Sustainability and System Change Wal-Mart's Pioneering Strategy", http://www.csrwire.com/pdf/WMT_Sustainability_4-06.pdf, April 18th 2006

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