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Executive Interviews: Interview with Guillermo D'andrea on Emerging Markets
February 2008
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By Dr. Nagendra V Chowdary
Guillermo D'andrea Professor of Business Administration at IAE Business School, Austral University in Buenes Aires, Argentina. He is the Research Director of the Coca-Cola Retailing Research Center, Latin America. 
How is the retail landscape in
Latin America different from Europe,
Asia Pacific and Southeast Asia?
What perceptible differences has your
research observed? Which of these
markets do you think fosters
innovation?
Latin America's mass markets are
predominantly urban with crowded
and anonymous cities plagued with
poverty and insecurity, but where
people are exposed to information
and therefore tend to be more
demanding. This is quite different
from regions where the population is
also spread into rural areas, where
small town people know each other
so that they can prevent crime, and
where tradition prevails over modern
consumption.
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On the other hand,
besides the local products that
characterize each region, fresh produce is a common denominator to
all regions, and independent and
local fairs help keep customers based
on their strong understanding of their
needs.
- Has a nation's culture anything to
do with fostering innovation culture?
Have you noticed consumer-driven
innovation in any of these markets?
Culture reflects in consumption and
its retail. We have observed that
political and socioeconomic
evolution set conditions for the
deployment of initiative that
immediately reflects in innovations in
retail. It's fascinating to witness how
retailers around the world react fast to
changes in society. You have highlighted "consumers'
paradigms" in your research report
(Booz Allen Hamilton and Coca- Cola
Retailing Research Council).What are
these "consumers" paradigms'? How
pronounced are they in Latin
America and the rest of emerging
markets?
In our research we found some myths
and paradigms at the Base of the
Pyramid that retailers managed to
overcome. Myths like "there's little
money there", "poor people have
simple needs", "they always go for the
lowest price", or "in time they'll flock
into modern supermarkets", were
neglected by our research. As already
pointed out, their aggregate value is
significant. Their needs are complex
and quite proper; they value quality
and the guarantee offered by brands,
their problem being their lack of sufficient funds. There were also some
traditional paradigms that were
defeated by retailers' innovation. "Big
ticket items require long sacrifice" was
overcome by retailers' flexible credit.
"Better quality, higher service and
sales assistance, and nice and trendy
stores have to be more expensive"
were prejudices beaten by retailers by
sourcing from less expensive
suppliers, in stores with highly
motivated employees and superior but
standardized efficient design. "Small
stores having limited assortment" was
proved wrong by giving access to
broad ranges of merchandise through
in-store IT catalogues. Can you tell us about the three
unique innovation platforms that you have observed in Latin America?
What lessons do you think other big
retailers in the world have from these
platforms?
These three platforms are all based on
a common denominator giving
access to better products, services or
shopping experience. We called the
first "From Resignation to
Fulfillment": providing access to
products and services, often through
flexible credit assigned to customers
that are neglected by the traditional
financial sector. The second platform
– "From Functional to Emotional" is
based on providing access to more
than just basic products: design,
quality, and broad fresh assortment
are dimensions added in this stage.
Finally, "Access to Choice" enables
access to a broadest range of products
at affordable prices. The main lesson from these retailers
is that innovation occurs when
impossible value propositions are
formulated breaking traditional
paradigms such as quality versus
price. They are based on a strong
understanding of customers' needs,
providing flexible and convenient
credit, expanding the format by
leveraging on alliances with other
retailers, building a sense of mission
and leadership at low cost formats
that conquer the customers' loyalty. How do you see the retail
environment changing in the
emerging markets in the years to
come? What would be the effect of
private labels on the retail landscape?
Retailers will keep innovating,
providing access to better products
and services with proper service at
low-cost formats. Retail organizations
will change in this direction,
to a more participative style giving
room for individual initiative and a
sense of ownership combined with
appropriate rewards. Chains will
grow based on great value and
will enjoy their clients' loyalty as they
help improve the life of the emerging
consumers at the Base of the Pyramid.
1.
ICMR Emerging Market Case Studies
2. ICMR
Case Collection
3.
Case Study Volumes
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The Interview was conducted by Dr. Nagendra V Chowdary, Consulting Editor, Effective
Executive and Dean, IBSCDC, Hyderabad. This Interview was originally published in Effective Executive, IUP, February 2008. Copyright © February 2008, IBSCDC
No part of this publication may be copied, reproduced or distributed, stored in a retrieval
system, used in a spreadsheet, or transmitted in any form or medium electronic,
mechanical, photocopying, recording, or otherwise without the permission of IBSCDC. |
