Looking beyond the UK for retail growth
The stagnating UK economy means that for many retailers and brands, growth will have to come internationally. An event hosted recently by the British Retail Consortium (BRC) outlined the opportunities, and the strategies to employ when considering new markets.
Describing the weak UK economy as a major driver for international expansion, Kevin Rusling, international director at George at Asda, says there is less than 3% growth forecast for the UK over the next few years. In contrast, there is "significantly more" growth predicted in other markets.
However, he emphasises that if your business not healthy in the UK, then it would be unwise to try to internationalise.
When considering new markets, the supermarket retailer considers whether its products will fit into the same market demographic, whether consumers have the same body shape, how much competition there is, and whether George will be able to get retail space in key trading areas.
It also needs to understand the price it would sell at in each particular market, as well as the duties that would impact its price points.
Partnerships and structure
How companies structure their business abroad, and who they choose to partner with, are key components of international success.
Esprit's VP and head of global partnerships, Alex Cara, says that in territories with high potential and high levels of operational synergy, retailers would probably want to operate their own stores. Whereas countries with lower market potential might be better operated through a franchisee.
When looking to franchise, a strong partner is key, says Cara. When it comes to its partners, Esprit considers whether they have access to real estate, are financially stable, and have retail experience, local influence and contacts.
"It's important, when you are trading in the Far East or the Middle East and you're based in Europe, that you can just pick up the phone and resolve an issue and deal with problems over the phone rather than getting on a plane. It's really important that you have that relationship and you invest in it.
A major bone of contention between brand owners and franchisees is deciding who manages the e-commerce side of the business.
While e-commerce is potentially lucrative, it can also create headaches and confusion between the owner and franchisee when consumers buy from the UK site instead of their local one, for example.
Debenhams' international director Francis McAuley believes the franchisee should be able to buy the e-commerce division. Additionally, McAuley explains that if consumers buy online from the retailer's UK operations, they are unable to return their products to its international stores.
Indeed, Rusling says that deciding whether a franchise agreement includes the online operations is one of the key sticking points when it comes to entering new markets.
Rusling notes that there aren't any retailers that operate a franchise agreement or an international operation that they don't wholly own where they are also retailing online. "Because you then get into: 'who is in charge of marketing, who is setting the prices, who manages customer returns?'.
"So for those of us who have already gone international and playing catch-up from that dot-com shift, it is quite complex.
"For those of us who haven't started, take the Australian market, which is three times bigger online than it is for franchise and 50% of those online sales come from non-domiciled companies," Rusling says.
"There are some territories that we will absolutely go in online, rather than through franchise. But you've got to have one strategy, one team leading it."
Environmental campaign group Greenpeace has launched a campaign calling on denim giant Levi Strauss & Co to commit to eliminating certain chemical substances from its garments and manufacturing proces...
Esprit has pledged to eliminate all hazardous chemicals from its textile and clothing supply chain by 2020, joining the Roadmap to Zero initiative launched by a number of leading brands and retailers ...
Supermarket retailer Asda says it has been able to win over market share as it reported slightly higher third-quarter sales....
Hong Kong-based clothing retailer Esprit has seen its share price jump 22% after former chairman Michael Ying has more than doubled his interest in the company....
A group of buyers representing some 20 global brands and retailers is this week visiting Bangladesh as part of a wider regional tour to explore sourcing alternatives to China....
- ANALYSIS: New pricing strategy pays off for Nike
- Bangladesh Accord calls on firms for more funding
- Hanesbrands praises supply chain efficiency
- Africa courts clothing and textile investment
- Source Summit 2014: Quote/unquote
- Wal-Mart US chief resignation little surprise
- Under Armour "bullish" in full-year guidance rise
- Macy’s increases sustainability efforts
- Wal-Mart replaces US division chief
- AAFA urges Senate to modify Bangladesh provisions
- Global market review of denim and jeanswear – forecasts to 2020
- Textile Wholesaling in the UK - Industry Market Research Report
- Myanmar - ISA Country Report
- Plunkett's Apparel & Textiles Industry Almanac 2014: Apparel & Textiles Industry Market Research, Statistics, Trends & Leading Companies
- Management briefing: Sourcing shifts: Changes and challenges