MVI takes a look at what causes retail markets to modernize and the different paths that markets take as modern trade (chain retail) evolves.We also highlight the triggers and rates of change as the market shifts from largely traditional trade to modern trade dominated. In particular, we describe how certain markets modernize as a result of foreign-owned, global players entering, while other markets have developed primarily due to local players accelerating modern trade growth.

Lastly, we will discuss the core capabilities successful retailers will need in developing markets. The growth of modern trade operators - whether global or local - will depend on their ability to leverage relevant capabilities while adapting to market conditions and changing consumer tastes.

For decades, sultans of standardization, like Wal-Mart and McDonald's, have ruled the consumer markets. But their formula of rigorous consistency is now reaching a point of diminishing returns. Communities have grown more diverse-in ethnicity, wealth, lifestyle and values. Many areas are saturated with big boxes, and consumers are rebelling against cookie-cutter stores that threaten the uniqueness of their neighborhoods. Attempts to build new chain stores often face fierce resistance. More of the same has been tapped out as a strategy. In response, smart retailers and consumer goods companies are starting to customize their offerings to local markets, rolling out different types of stores, products, pricing, marketing and even customer service strategies.

Some of them have regained the confidence in their brands and their pricing power and a result, many of them have begun to raise prices (straddling many product categories) by 5% to 20%. The official justification for doing so is that inflation has lead to increases in the cost of various inputs though the reality could be a belief that with the upsurge in incomes, consumer demand is higher and that could support these price hikes.

Brands are increasingly developing direct relationships with consumers. While this was once the purview primarily of luxury brands, today we find brands of all shapes and sizes are relying more on direct channels to reach their core customers. We see this across almost every category today, from apparel and accessories to electronics, toys, food and personal care. The increasingly rapid pace of change at retail creates both challenges and opportunities for consumer brands.

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