STORES 2017 BIG Show Daily - January 16, 2017 - 16

2017 MONDAY

16

Cuba
Continued from page 15

CEO Matthew Shay and others, led U.S.
retailers on a fact-finding trip to Cuba in
November 2015.
"Where there are consumers, I always
see the possibilities for retailers," says
Tindell, founder and chairman of The
Container Store. "I do believe that great
possibilities can be created and will exist
in Cuba, in time, but so do great hurdles."

How business gets done
Great possibilities exist in Cuba - but also great hurdles.

Perhaps one of the greatest hurdles
is in how business is currently conducted

in Cuba. Most products are sold through
government stores, and no marketing or
advertising is allowed beyond in-store
displays.
In a 2015 report, PricewaterhouseCoopers said, "the potential for retail
investment is substantial but dependent on
government reforms." Cuba's three leading
retail chains are state-owned and hold the
monopoly for selling foreign products because of a 2014 law banning self-employed
Cubans and small private enterprises from
re-selling imported goods.
Cuban consumers can also purchase
from ration-book stores - governmentsubsidized locations selling staples such
as rice, beans and oil. Street vendors and
home-based shops make up a small portion
of the Cuban retail sector.
Fitzgerald anticipates that opportuni-

"There is a small but
growing segment of
the population ... who
have more disposable
income than the rest
of the population.
They also still have
access to the heavily
subsidized goods and
services provided by
the government."
- Marguerite
Fitzgerald, Boston
Consulting
ties may emerge first for consumer goods
companies, a number of which are already
distributing there, including U.S.-based
Cargill and Tyson Foods and Swiss company Nestlé.
"There are still a lot of things that are
slow to change," she says. "Retail is going to be one of them. It is still centrally
controlled and from everything that we've
heard, there isn't a desire from the Cuban
government to change that in a big way.
They've been changing it on the margins,
allowing small businesses and entrepreneurs to go into that direct-to-consumer
[selling]. In terms of big retailers, I generally think the opportunities are limited."
Retailers must understand that the
embargo remains and will require action
by Congress to remove. And that's not the
only caution.
"It's much too early," says Sadove, the
former chairman of Saks Inc. who now runs
a consulting and investment firm. "The
supply chain needs major changes and
the role of government is still evolving,
especially in the tourist sector."

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Even if geopolitical hurdles are resolved, issues remain.
"The logistics for running a retail
operation in Cuba appear challenging for
See "Cuba" on page 17

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STORES 2017 BIG Show Daily - January 16, 2017

Table of Contents for the Digital Edition of STORES 2017 BIG Show Daily - January 16, 2017
