Page 34 - May #172

MARK FAITHFULL

Following the

Money

Mark Faithfull crunches the numbers as he looks at
analysis and expansion that reflects changing markets.

Mexico could be big winner in shift
to nearshoring

Major brands and retailers across the US and Europe are looking to
bring manufacturing closer to home amid the ongoing global supply chain
crisis, with Mexico in pole position to gain from a pivot in strategy.
US toymaker Mattel has become the latest company to move its supply
chain nearer after it announced mid-March that it had invested $50M, to
expand its plant in Monterrey in the northern Mexican state of Nuevo
Leon. At 2.25 million square feet and employing nearly 3,500 workers, it
has become the company’s largest manufacturing site, overtaking other
hubs in China, Vietnam and Malaysia. Mattel closed two of its factories
in Asia in 2019 and more recently shut a plant in Canada and another in
Mexico ahead of expansion of the mega-factory. Toys ‘R’ Us embarks on “unrivalled” expansion
Mattel – which plans to double investment at Monterrey - is just the
latest to adopt a strategy dubbed ‘nearshoring’, where manufacturing is Toys ‘R’ Us is back - having signalled its intentions and ambitions with the
established much closer to the end consumer market. Mattel plans to recent opening of a huge flagship store at American Dream mall - but the
double its investment in the plant over the next five years, due to the US toy retailer is promising to open a huge raft of stores worldwide this
plant’s proximity to the company’s Dallas-Fort Worth distribution centre, year, having also tied up a deal with US department store group Macy’s.
According to Yehuda Shmidman, Founder, Chairman and CEO of WHP
its second largest in the US. Global - the new parent company of Toys ‘R’ Us - the retailer has “a crystal
clear mission: to bring the brand back to the consumers that loved it,” and
7-Eleven owner brings in former he told delegates at World Retail Congress in Rome that this will be based
Uber director around a fast-paced store roll-out in Asia, Europe and North America.
The bullish ambitions are in sharp contrast to when Toys ‘R’ Us filed for
Responding to pressure from activist investors, Japanese retailer Seven & Chapter 11 bankruptcy protection in 2018. Bankruptcy followed years of
I Holdings Co is to push ahead with structural reforms and has nominated a decline and losses, burdening the retailer with billions of dollars in debt
former Uber Technologies executive to join its board of directors. from a private equity buyout and lost market share to rivals.
The move reflects the company’s desire to reorganise its business, which Despite its collapse, in 2021 brand management firm WHP Global
could even involve selling its struggling department store groups to focus purchased a controlling stake in Toys ‘R’ Us and before Christmas, Toys ‘R’
on its convenience store chain, especially 7-Eleven operations in the US. Us relaunched physically with the opening of a 20,000sq ft flagship store at
The company has confirmed that Elizabeth Miin Meyerdirk, a founding the American Dream mall and followed this with a partnership with Macy’s,
member of Uber Eats, will join as a new outside director - pending approval which will see Toys ‘R’ Us open concessions in more than 400 department
from shareholders - at a 26 May annual meeting. Seven & I is to revamp stores across the US.
the board to ensure a majority of the directors come from outside the Shmidman said that the brand was pursuing “unrivalled international
company, bringing in management skills to help steer growth outside Japan. growth”, going from 900 to 1,300 outlets by the end of 2022.
US-based activist fund ValueAct Capital, which holds a stake of 4.4 per “We are going to add 50 per cent to our store footprint this year with
cent in the business, has for months been urging the company to shake up new openings across the world, from China to the UK. I don’t know any
the board and sell off underperforming assets, claiming that Seven & I could other retailer which is pursuing that kind of expansion in this day and age,”
more than double its share price by focusing on its convenience stores. he said.

American Dream Mall, New Jersey, US

50 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2018