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Vol 1, Issue 04, Nov 2019
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Business Strategy
‘Auchan: Successfully Traversing the Russian Retail Landscape?” talks about the journey of the French retail giant, the Auchan Retail Group, in Russia. The case starts out by mentioning Auchan’s market entry strategies in 2002 and the retail formats it adopted in the following years, which led to its emergence as the second largest retailer in Russia within a decade. The case then documents the perils faced by Auchan as a result of the Ukrainian conflict of 2014 that altered diplomatic relations between the European Union and Russia. The case mentions how the changing retail landscape of Russia also created hurdles for Auchan’s growth. Later, it describes in detail the measures taken by Auchan to bring about a transformation in its business in order to improve its prospects. The case ends with questions about the future of Auchan in Russia and the road it needs to take to remain a force to reckon with in the Russian retail landscape.
Auchan: Successfully Traversing the Russian Retail Landscape?
India-based online classifieds portal Quikr adopted an expansion strategy through acquisitions to fulfil its plans of becoming a sector leader. Founded as a classifieds platform, Quikr had identified five business segments – Cars, Homes, Jobs, Automobiles, and Real Estate – for its verticalization push. The company had focused on these segments in order to explore new sources of revenue and users. Over the years, Quikr had expanded inorganically by acquiring several companies. However, Quikr’s acquisition strategy did not work out as well as the company expected. Like many other e-commerce platforms, the company was struggling to monetize its platform and was concentrating on businesses that were losing less money. It faced tough competition from the other players like OLX, which listed refurbished products on its platform. Even after a decade of existence, Quikr’s revenues were only Rs1.99 billion. It needed, therefore, to consolidate its position before thinking of other acquisitions, opined experts.
Quikr’s Inorganic Growth Strategies
The acquisition of Avon Products, Inc (Avon) by its competitor, Brazilian cosmetics and personal care firm Natura&Co (Natura) created the fourth largest beauty company in the world. A lot of synergies were expected from the acquisition as both the companies were known for their direct selling models. At the same time, the companies were expected to face integration challenges due to their diverse cultures and values. Avon had been struggling for years, as there had been a fall in its door-to-door cosmetics sales due to changing consumer tastes, growing demand for online beauty products, and stiff competition from rivals. Natura was also fast expanding its footprint by broadening its exposure to the global market with the acquisition of The Body Shop and Aesop. It remained to be seen whether the acquisition would help in integrating both the companies with their diverse culture and values.
Natura’s Acquisition of Avon Products
In June 2019, France-based multinational retailer Carrefour announced that it would sell 80% of the stake in its China business to one of the largest non-government retailers in China, Suning.com Co., Ltd. (Suning). Carrefour entered China in 1995, when the Chinese Government had partially opened up the retail sector. By 2018, Carrefour was struggling to safeguard its position in China amid severe competition from local players and a tough online market. Its moves into China’s tier-two and tier-three cities did not pay off to the extent it had expected. With the rise of other domestic and international retail giants in China, Carrefour continued to lose market share. Analysts said that Carrefour’s exit proved that retail in China remained a tough terrain for top global retailers.
Carrefour’s Retreat from China
Diesel USA ran into problems due to some of the strategies it had adopted in the post-recession US market. Since its launch in 1995, it had been the sole distributor of Diesel products in the US. The global recession had a negative impact on the retail sector and Diesel USA fell victim to it. In an attempt to turn the company around, the management wanted to develop an exclusive presence in high-end locations, for which it executed several long-term, expensive leases and repositioned some of the existing stores in premium locations. The failed strategic decisions implemented by the management compelled Diesel USA to file for Chapter 11 bankruptcy protection on March 5, 2019. In the court filing, the company outlined a three-year restructuring plan, emphasizing profitability of the company by opening stores in cost-effective locations, closing some of the stores, improving the product lines, and associating with social media influencers. It remained to be seen whether the plan would help extricate Diesel USA from the situation in which it found itself.
Diesel USA Bankruptcy: A Restructuring Plan for Survival
Chinese e-commerce giant, Jingdong.com Inc.’s (JD.com) business model was similar to that of US-based e-commerce giant, Amazon.com Inc. (Amazon), where JD.com bought inventory from branded suppliers and operated its own logistics chain. JD.com’s various efforts led to the company gaining a strong foothold in the e-commerce market in China. Even as JD.com was focusing on the lucrative rural Chinese e-commerce market and serving customers globally, its reputation took a beating after the company’s founder and CEO Richard Liu (Liu) was arrested in the US on allegations of rape in August 2018. The Minnesota court cleared Liu of the sexual assault charges due to insufficient evidence in December 2018. Despite several efforts made by JD.com to tackle corporate governance issues at the company and restructure its businesses to win back the trust of investors, analysts felt that it would take some time for JD.com to recover. They wondered whether amidst these challenges, JD.com would be able to combat competition from global e-commerce giants such as Alibaba and other new players such as Pinduoduo who were fighting to win growth and market share in the e-commerce market in China.
JD.com’s Challenges in China and Beyond
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