WRC 2012: Local knowledge key to international growth
The degree to which retailers tailor their offer to local markets emerged as a key theme at the Wold Retail Congress yesterday (19 September) - and it seems there are as many different strategies as there are retailers.
Abercrombie & Fitch, for instance, runs all of its operations from its headquarters in Ohio in the US, with minimal changes from market to market, according to its CFO Jonathan Ramsden.
The teen retailer believes that having a consistent offer around the world is key to its success, with the main difference in the sizing curves implemented across each country.
The company works to leverage the "iconic nature of the brand" when it enters new markets says Ramsden, ensuring that consumers in Tokyo or New York have exactly the same experience in its stores.
This strategy has seen international sales grow to account for some 30% of the total, compared to 10% just four years ago.
Ramsden said the company's approach to market entries is that "if the model doesn't work, move on". That said, to eliminate as many risks as possible it can take two years to set up operations before stepping in to a new country.
Abercrombie & Fitch's strategy is unusual, with the general consensus being for retailers to tailor their offers to the markets they are entering.
Jose Gomez, VP of business development at Spanish fashion retailer Mango, said it "never takes things for granted" when it enters new markets.
He explained the brand will customise the experience for new markets, but not "too much" to ensure it maintains its DNA.
This idea of maintaining your DNA abroad is echoed by Dow Famulak, president of LF Europe. He says that the sourcing group's branded business adapts its offer across markets, but ensures that it understands what is important to the celebrities and brands it works with and stays close to that when it enters new markets.
Henry Stupp, the CEO of Cherokee, which sells licensed products to retailers across the world, including Target Stores, Tesco, emphasises that "bilingualism is not bi-culturalism" and part of its service is to offer its retailers support and tailored local knowledge in the markets they operate in.
One thing that most retailers agree on is that the first steps into a new country have to be good, because any early missteps are hard to come back from.
"Poor localisation results not just in abandoned customers but in vanished customer loyalty, corporate reputations, disengaged distributed channels and a low chance of recovery," said Allyson Stewart-Allen, the chief executive of International Marketing Partners.
She warns retailers against underestimating the importance of applying local knowledge.
Speaking to just-style, she said executives responsible for a market need to spend at least six months living there to ensure they understand the nuances of the local culture.
Stewart-Allen says one of the main mistakes that companies make is assuming that consumers are the same everywhere, and not accounting for variations in taste and needs within a country.
"One assumption they make is that weather or regional differences aren't significant, and they really are," she sais.
Indeed, Dieter Holzer, the CEO of German retailer Tom Tailor, emphasised that there needs to be a culture of support for retailers' international operations - for instance, ensuring that if territories ask for items in different colourways that they receive them.
"You can't wait for countries to grow to give them what they need. If countries don't get what they need, they won't grow," he said.
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