Shaping the future of Sonae SR

Transcription

1 Shaping the future of Sonae SR Board meeting, Q aisers L autern onsulting Ronja Schlemminger Alexander Brandt Sahana Shanmugarajah Amir Farshi Tabrizi Technical University of aiserslautern

2 MAIN HALLENGE How to grow Sonae SR to a global retail giant?

3 AGENDA urrent Situation Analysis Recommendations Implementation Risks & Mitigation

4 EY ISSUES Sonae SR still not profitable No appropriate IT systems Missing knowledge in new markets Debt from financial crisis Lack in competency to develop brands urrent Situation Analysis Recommendations Implementation Risks & Mitigation

5 OBJETIVES Increasing revenues Gaining foreign market insights Financial feasibility Time of Implementation ompany fit urrent Situation Analysis Recommendations Implementation Risks & Mitigation

6 BUSINESS MODEL ey resources Organic stores Franchise Own logistic system ustomers Retailers ompanies urrent Situation Analysis Recommendations Implementation Risks & Mitigation Different businesses fulfilling different needs ey activities End consumers 2306 Portugal s largest company Acting in six different divisions Working internationally Revenue Streams Turnover Million Euro

7 BUSINESS DIVISIONS Sonae M Sonae SR Sonae RP Sonae IM Sonae Sierra Sonae NOS Food retail Specialized retail Retail properties Shopping centres Investment management Telecommunications Six different divisions in different fields: huge company urrent Situation Analysis Recommendations Implementation Risks & Mitigation

8 BUSINESS DIVISIONS Sonae M Sonae SR Sonae RP Sonae IM Sonae Sierra Sonae NOS Food retail Specialized retail Retail properties Shopping centres Investment management Telecommunications Six different divisions in different fields: huge company urrent Situation Analysis Recommendations Implementation Risks & Mitigation

9 Sonae SR: BRANDS Worten Sport Zone Zippy MO Electronics & home suppliances Sporting clothes & equipment Merchandise for children Fashion store: lothing and footwear Four different brands in different categories and differing success urrent Situation Analysis Recommendations Implementation Risks & Mitigation

10 Sonae SR: BRANDS Worten Sport Zone Zippy MO Huge investments High number of competition Strong but risky business Own brands and big brands such as Nike Increasing demand through healthy trends Own brands, high quality High priced International difficulties High competition Low priced, fashionable Hard to compete with companies such as Zara Only in suburbs urrent Situation Analysis Recommendations Implementation Risks & Mitigation

11 Sonae SR: BRANDS Worten Sport Zone Zippy MO Huge investments High number of competition Strong but risky business Own brands and big brands such as Nike Increasing demand through healthy trends Own brands, high quality High priced International difficulties High competition Low priced, fashionable Hard to compete with companies such as Zara Only in suburbs Sport Zone has the biggest potential in the future (highest demand/ Low competition) urrent Situation Analysis Recommendations Implementation Risks & Mitigation

12 INTERNATIONALISATION TIMELINE WORTEN ZIPPY ZIPPY Mo ZIPPY Spain Saudi Turkey Spain Spain Arabia Malta Sport Zone: Sport Worten & Spain Zone Sport Zone (Franchise) Spain anary Islands urrent Situation Analysis Recommendations Implementation Risks & Mitigation

13 DEVELOPED MARETS SPAIN Geographical & cultural proximity lose for distribution and own supplier system Indicative for success elsewhere in Europe Exit of competitors after economic crisis Huge previous investments Important market which needs to be strengthened urrent Situation Analysis Recommendations Implementation Risks & Mitigation

14 EMERGING MARETS INDIA - TUREY Increasing awareness for fashion and health in these countries Increasing middle and upper class ultural Issues: Lack of local expertise Political Issues Need of partnerships in these countries urrent Situation Analysis Recommendations Implementation Risks & Mitigation

15 ANALYSIS OVERVIEW Strengths Big company Management experience Strong logistic system nowledge of Portugese market Diversity in business model Weaknesses Diversity of business model Lack of local knowledge Lack of IT competency Lack of marketing competency Opportunities Emerging markets India Middle East Rising awareness for health issues (sports) Threats Lot of competitors Financial crisis urrent Situation Analysis Recommendations Implementation Risks & Mitigation

16 MAIN HALLENGE How to grow Sonae SR to a global retail giant?

17 REOMMENDATIONS 1. Organic growth 2. Joint-Venture 3. Franchising urrent Situation Analysis Recommendations Implementation Risks & Mitigation

18 REOMMENDATIONS 1. Organic growth + - Highest amount of control Biggest market insights High margin High initial investments High running costs Slow growth urrent Situation Analysis Recommendations Implementation Risks & Mitigation

19 REOMMENDATIONS 2. Joint-Venture + - Access to market information Lower investments Fast growth possible with strong partners High dependency on partner Semi-capital-light Less control of operation urrent Situation Analysis Recommendations Implementation Risks & Mitigation

20 REOMMENDATIONS 3. Franchising + - High control of marketing activities Low investment Fast growth possible Need of market knowledge Low control of operations urrent Situation Analysis Recommendations Implementation Risks & Mitigation

21 REOMMENDATIONS Developed Markets Emerging markets urrent Situation Analysis Recommendations Implementation Risks & Mitigation

22 EVALUATION DEVELOPED MARETS Increase revenue Gaining market insight Financial feasability Time of implementation ompany fit Organic O Joint- Venture + O O O O Franchise O + urrent Situation Analysis Recommendations Implementation Risks & Mitigation

23 EVALUATION EMERGING MARETS Increase revenue Gaining market insight Financial feasability Time of implementation ompany fit Organic O Joint- Venture + O Franchise + + O - - urrent Situation Analysis Recommendations Implementation Risks & Mitigation

24 IMPLEMENTATION Developed markets Emerging markets urrent Situation Analysis Recommendations Implementation Risks & Mitigation

25 IMPLEMENTATION Developed markets Franchising Emerging markets Joint Ventures urrent Situation Analysis Recommendations Implementation Risks & Mitigation

26 IMPLEMENTATION Developed markets Franchising Emerging markets Joint Ventures urrent Situation Analysis Recommendations Implementation Risks & Mitigation

27 IMPLEMENTATION Developed markets Emerging markets Establish franchising model nowledge of current markets Sonae sets / suggests: Franchising Products Prices Design of stores urrent Situation Analysis Recommendations Implementation Risks & Mitigation

28 IMPLEMENTATION Developed markets Emerging markets Worten: Big potential but extreme competition Products Lowest risk at sport clothing and equipment Better position than decathlon Focus on sport zone! urrent Situation Analysis Recommendations Implementation Risks & Mitigation

29 IMPLEMENTATION Developed markets Emerging markets Locations Flagship stores in 4-5 biggest cities of each country (existing markets) Stores in middle-sized cities ontrolled growth Gaining experience evaluation after 1 year Best practices Optimal responses to individual / local market needs urrent Situation Analysis Recommendations Implementation Risks & Mitigation

30 IMPLEMENTATION Developed markets Emerging markets Building up own team Advertisement Work on marketing concept for new stores Online marketing TV urrent Situation Analysis Recommendations Implementation Risks & Mitigation

31 IMPLEMENTATION Developed markets Franchising Emerging markets Joint Ventures urrent Situation Analysis Recommendations Implementation Risks & Mitigation

32 IMPLEMENTATION Markets Year 1 Year 2 Year 3 Year 4 Year 5 India Middle East hina BRI states South America urrent Situation Analysis Recommendations Implementation Risks & Mitigation

33 IMPLEMENTATION Developed markets Emerging markets Need for partnerships! urrent Situation Analysis Recommendations Implementation Risks & Mitigation

34 IMPLEMENTATION Developed markets Emerging markets haracteristics of Joint Ventures: Software development Local expertise (legacy, trends etc.) Marketing competencies (local) Sonae SR Partner Strong logistics Strong purchasing Ability to develop and implement new capital-light business models urrent Situation Analysis Recommendations Implementation Risks & Mitigation

35 IMPLEMENTATION Developed markets Emerging markets Search for potential partners Evaluation of partners (previous mentioned criteria) Negotiation Running of Joint Venture Software development urrent Situation Analysis Recommendations Implementation Risks & Mitigation Local knowledge (legacy, trends etc.) Marketing competencies (local)

36 IMPLEMENTATION Developed markets Emerging markets Potential partner for Prio-1-country India (short term): TATA Group India: Family business Similar mentality Giant in India (and Asia in general) Great local international experience and expertise Highly skilled urrent Situation Analysis Recommendations Implementation Risks & Mitigation

37 IMPLEMENTATION Products in India & Middle East: Focus on sport zone Price range: Low priced own brands High priced brands like Nike, Adidas, Asics, Lacoste etc. Online retail Option for the future, but depending on infrastructure urrent Situation Analysis Recommendations Implementation Risks & Mitigation

38 IMPLEMENTATION Developed markets Franchising Emerging markets Joint Ventures urrent Situation Analysis Recommendations Implementation Risks & Mitigation

39 FINANIALS Revenues in 1H15 of total SR onsumer Electronics Sports Goods 18% 14% Fashion 68% 104 Million Euros revenue by Sport Zone urrent Situation Analysis Recommendations Implementation Risks & Mitigation

40 FINANIALS Number of stores in 2015 Sport Zone Portugal Spain India Aim for 2016 Sport Zone Portugal Spain India Middle East urrent Situation Analysis Recommendations Implementation Risks & Mitigation

41 FINANIALS New Stores: Portugal & Spain: 9 India: 11 Total Investment: 22,3 Million Euros (Stores) 2 Million Euros (Negotiations) Average Investment: 1,5 Million Euros / store 0,8 Million Euros / store Stores make an average revenue of 2 Million Euros and are profitable after two years Expected revenue increase: 20 Million Euros urrent Situation Analysis Recommendations Implementation Risks & Mitigation

42 low Impact on organisation high RISS 1. Political issues II. 2. Selection of partners I. III. 3. Further economic crisis low Probability high urrent Situation Analysis Recommendations Implementation Risks & Mitigation

43 low Impact on organisation high MITIGATION 1. Political issues Diversified portfolio II. 2. Selection of partners Building processes and gaining knowledge I. III. 3. Further economic crisis ontinues evaluations and adjustments low Probability high urrent Situation Analysis Recommendations Implementation Risks & Mitigation

44 Thank you for your attention!