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Brenda Sternquist teaches international retail at Michigan State University. She serves as an occasional consultant to MRA and a judge for the Michigan Retailer of the Year awards.
Sternquist has traveled extensively, studying retail operations in Asia, South America, India, Europe and Africa, with a focus on China and Asia.
Michigan Retailer asked Professor Sternquist to share her insights on retail, based on her international travels.
Michigan Retailer: What perspective
can Michigan retailers gain by learning about retail outside of the U.S.?
Sternquist: Americans tend to believe that they have
the best of everything and do things better than any other country.
But a good business owner ought to discover and apply best practices wherever
they come from. If retailers in another country are innovating, retailers
here should be paying attention.
 Many
Americans don’t realize that some of the world’s most successful
retailers today are based in other countries.
France’s Carrefour—the world’s second largest retail
group after Wal-Mart—has stores in South America, North Africa and
Asia as well as Europe. It’s the world leader in hypermarkets (stores
that combine general merchandise and groceries).
The United Kingdom has the best grocery stores and supermarkets in the
world. Its huge chain, Tesco—third in size behind Wal-Mart and Carrefour—has
more store floor space outside the U.K. than it does in it.
At the same time, I think the U.S. has by far the healthiest system with
respect to its independent retailers and free markets. It may be rough,
but the competition results in strength.
Learn from the best, wherever you find it.
Michigan Retailer: What can U.S. retailers and businesses learn from their counterparts in other countries?
Sternquist: The main lesson I bring home from my trips is not to compete on price. Low prices are vastly overrated in the U.S.
In countries where government regulations mean there is very little price variance, retailers are forced to differentiate in other ways, and the successful ones do. Unique merchandise, the right product mix and superior customer service are more important to a retailer’s success.
Compared to other countries, there is far too much sameness among U.S. stores. Especially among larger chains and mall stores, one store looks and acts much like another.
Michigan Retailer: In what ways are customers in other parts of the world different from U.S. customers? And how does customer service in other countries compare to ours?
Sternquist: In China, shopping is widely considered an enjoyable pastime, like a form of recreation. When a couple goes on a date in China, one of the more common things they will do is go shopping together.
Americans are also often surprised to see retail stores in Europe closed for several weeks a year, so that all its employees can take their state-guaranteed vacation time—or closed from noon until 2 p.m. for a long lunch break. But European customers are accustomed to it.
As for customer service, stores in Japan offer what I call “pseudo-service”—plenty of employees ready to assist you, but the service or assistance they provide is narrow.
If you present them with any issue or question they don’t deal with regularly, they are unlikely to be helpful, although very polite. The employees do not seem empowered to do what it takes to give a customer good service.
In many countries, retail is closer to the days before self-service, when a salesperson presented items for the shopper to consider. In India, salespeople actually seem to be guarding the merchandise from the customers, because the salesperson is responsible for anything that’s damaged on the sales floor.
Michigan Retailer: China and its
economy are often the subject of news reports, but the focus is on manufacturing.
What is retail like in China?
Sternquist: Until recently, China’s communist government
ran the industry entirely, so that most stores were state-owned, with
fixed prices and very little variance allowed. No outside direct investment
was allowed in China until 1991.
For a while after 1991, there was a mix of state-run shops and free-market
retailers, who were permitted only in special zones.
 Today,
most stores in China are free-market businesses, and that has made the
retail picture in China blurrier and more complex, which is why it’s
so interesting to study.
Despite the presence of free-market stores, the government is still communist,
which means that if it wants to change how it regulates the industry,
it can do so quickly.
By the way, in India, which is a democracy, there is still no direct outside
investment allowed. So as Wal-Mart goes into India, it is as a wholesale
operation.
Michigan Retailer: India’s
economy is booming as well. What is retail like there?
Sternquist: The presence of a democracy in India actually
makes change there slower than in China. Indian retail is mostly made
up of so-called unorganized businesses, what we might call independently
owned mom-and-pop stores, but these small retailers are powerful at the
polls.
Small retailers have effectively resisted government-led attempts to organize
the sector and make way for bigger chains. Overall, however, this isn’t
good for their retail industry. Retailers there are not forced to compete
as fiercely as they do here or in other free-market environments, which
hurts the industry and the consumer.
And the ways some Indian retailers find to compete are not wise either.
There’s a lot of buying and selling “off-receipt” there,
to avoid paying sales tax.
Michigan Retailer: Compared to U.S. stores, what
retail category is most different in other countries?
Sternquist: Convenience stores are seeing great innovation
in other countries. By contrast, the product mix in most U.S. convenience
stores is completely out of date.
In Japan, convenience stores offer fax and copy services, and customers
can also pay local utility bills. They have added convenient services
to the mix.
British-based retail giant Tesco is opening a line of stores called Fresh
& Easy in the western U.S., and I think it will revolutionize convenience
food shopping here. Fresh & Easy might be better described as a small-format
grocery store (about one-third the size of the average U.S. supermarket),
with convenience and freshness as the primary features.
The first Fresh & Easy stores opened in November and December 2007,
so it’s too early to say if they are successful. But Tesco is clearly
offering something new and is poised for expansion.
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