Lisa Gardner
There is an electrifying synergy between consumer product companies and corporate real estate services. As consumer product companies expand their portfolios through global acquisitions to meet revenue objectives, real estate professionals can play a huge part in their growth strategies?if we broaden our ideas and sharpen our focus.
According to an article in the most recent Harvard Business Review, ?This year more than 20 percent of Heinz?s revenue will come from emerging markets such as China, India, Indonesia, Russia, and Brazil, versus less than 5 percent a few years ago.? Heinz, the ketchup my kids love dearly, is taking advantage of the opportunity to build a competitive strategy around developing economies.
So what does this mean for corporate real estate services and transactional management? It means a huge opportunity to guide consumer product companies through consolidation and cost-saving strategies relating to real estate, and allowing real estate to play a significant part in revenue growth. In other words, help them see how to ?let real estate work for you.?
Heinz has acquired products worldwide since 1999 and has plans to continue with an acquisition strategy through the next decade. According to the HBR, the CEO of Heinz, Bill Johnson, developed a long-term emerging market strategy, with an emphasis on what he calls the Three A?s. These relate to what the strategic focus should be for their corporate real estate initiatives as well.
??The first A stands for applicability. For Heinz, it makes sure the product suits the local culture. For corporate real estate services, we would analyze market rate structures, the most obvious, but also analyze the physical and socio-economic conditions for facility adaptability/flexibility and employee retention. We would also analyze current facilities, which do not service a direct competitive product, for a shared work space, a very popular transactional strategy internationally. The cost savings are realized more immediately.
? The second A stands for availability. Heinz ensures selling channels are relevant to the local population. While Americans shop in grocery stores, Indonesians shop primarily in tiny corner stores or open-air markets. How can we create these channels for Heinz if they are not readily available locally? Does Heinz fund the ?tiny corner store or open air market facility? to meet shopping tradition?
??The third A stands for affordability. Heinz has realized condiments are a luxury buy in some emerging markets and not a necessity. How does the company change its packaging, ingredients, and delivered product to meet needed value? Pre-mix recipes, size and packaging have been analyzed and priced to fit consumer economic conditions.
Corporate real estate services continue to play a huge part in participating in cost reduction discussions and consolidations. As a real estate professional sits down with the executive team, the cost-reduction strategy relates to more than the real estate silo, but the reduction in cost translates to product innovation and affordable packaging.
With Heinz?s experience in mind, let?s think ?broad and wide? as we continue to create and implement new real estate strategies and solutions for our clients, both nationally and abroad.
Lisa Gardner, a former executive with both PepsiCo and J.C. Penney, heads up consulting and strategy development for OMS Strategic Advisors. Contact her at lisa.gardner@omsstrategicadvisors.com.
Source: http://realpoints.dmagazine.com/2011/10/lisa-gardner-ketchup-and-real-estate/
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