International Retailing

International Retailing

The management of retail operations in markets which are

different from each other in their regulation, economic
development, social conditions, cultural environment and retail
structures.

The process of a retailer transferring its retail operations,

concept,
management expertise, technology and for buying functions
across national borders

Push Factors
Saturation in home markets or over-competition
Strict planning policies on store development
Economic recession and limited growth in consumer
spending
Declining or ageing population
High operating costs (labour, rents, taxation)
Reactive
Shareholder pressure to maintain profit growth
Inability to find any further competitive advantages in
home market

Pull Factors

Under development of market and weak competition

Favourable operating costs
Proactive
Economic changes-strong economic growth & standard of living
Demographics/Psychographics changes
Geographical spread of trading risks
Opportunity to innovate

Factors
Operations; Expansion of retailers operation into a foreign market-may or may not be
similar to home market.
Concepts; May introduce new retail concepts into markets eg Hypermarkets by Carrefour
Management expertise; Includes internationalisation of skills & techniques used in mgt eg.
formation of alliances to achieve economies of scale in buying, dev of pvt
labels,operational synergies.
Technology; IT in areas like finance, personnel,logistics etc to achieve efficiency & cost
saving
Buying; Sourcing has had huge impact on internationalisation.

International Retailer Strategies

Sectoral Expansion; Expansion into new formats, retail sectors or outside

retail

New Markets; Stay with the core offer and transfer this to new markets

Combined Strategy; Move away from core offer and also internationalise.

International Retail Structure

Traditional
Modern
E-tailing

International Retail Development

Geographical presence

Stage3
Ambition
Stage2
Caution
Stage1
Reluctance

Time

Market Entry Method

Acquisition
Joint venture
Organic growth
Shareholding
Franchise

Market Entry Methods

Market Entry
Method

Example Of
Advantages

Example of
Disadvantages

Retail Example

Acquisition

Fast substantial market

presence

High cost and risk

Tescos acquisition
Of Kmart in Europe

Joint Venture

Each brings own skills

e.g. market knowledge
and format experience

Need suitable partner

Carrefour JV with PT in
Indonesia

Organic Growth

Incremental process, can

learn and adapt as you go

Slow growth, delay before

returns against
investment

Aldis growth in the UK

Since 1989

Shareholding

Reduce risk, can learn

about company from the
inside and decide if to
invest further

Culture clash between

Teams of management

JS shareholding of Shaw's
in USA in 1984 leading to
full acquisitions

Franchise

Very fast and low cost way

to roll out stores

Limited control, need

suitable franchise

Toys R Us in Indonesia

Factors Determining Market Entry Strategy

Retail sector
Market condition/level of competition
Company size
Management culture and philosophy
Degree of control
Time scale
Capital available

Barriers
FDI restrictions
Minimum capital requirement
JV/local incorporation
Local sourcing requirement
Restriction on geographical location and zoning regulation
Limitation on size and number of retail outlet

Barriers
Restriction on shop opening/closing selling
Restriction on pricing advantages, promoting and selling of products
Supply chain /infrastructure