Revisiting retail globalization
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Revisiting retail globalization


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The study explains that surviving retailers will need to seek new arenas for expanding. To achieve rapid growth, successful retailers will be wise to seek out new territories.



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Published 01 May 2010
Reads 281
Language English
Revisiting retail globalizationA Deloitte Research Global Retail StudyDeloitte Research – Revisiting retail globalization13
Revisiting retail globalizationIn the year 1298, the Venetian navy was defeated in Of course, weve been down this road before.  Indeed, battle by the navy of Genoa.  One of the Venetian Deloitte itself wrote about the imminent globalization commanders committed suicide in disgrace.  He is long of retailing several years ago.  And while many forgotten.  Another surrendered calmly and lived to retailers have taken their stores on the road, the write about his experience and much else.  His name industry remains far less global than many comparable was Marco Polo.  The importance of Polo was his ability consumer-oriented businesses.  Think about the to observe and learn from experience  the experience leading companies in consumer products, hospitality, of defeat, and especially the experience of entirely alien food service, telecommunications, and entertainment.  cultures.  These industries are far more global than retailing, with the leading players achieving a much higher share of This is a lesson of importance to retailers interested revenue and pro ts from outside their home markets in being global companies.  For if we know anything than is true of retailing.about this topic, it is that much is to be learned from failure and much is to be learned from observing the What went wrong? unfamiliar.  Plenty of retailers have failed in globalizing, Why have so many retailers failed to go, much less and many have succeeded.  In the spirit of Marco succeed, outside their home markets?  The answer Polo, this essay offers some lessons learned from both is that retailing is a uniquely complicated business.  experiences.  It is the industry that maintains the closest and most personal relationship with consumers, often Why think about this now?intersecting their lives on a weekly and even daily basis. At a time when the global economy faces Thus, achieving a successful personal relationship is far unprecedented uncertainty, when U.S. retail sales are more challenging when doing it in an alien culture.  In falling, when Europes economy is on the verge of addition, successful global retailing entails undertaking recession, and when the big emerging markets are a wide range of tasks.  These include managing showing signs of signi cant slowdown and  nancial diverse human resources who must engage in risk, now does not seem the best time to discuss retail personal interaction with customers, managing foreign globalization.  human resources from afar, managing complex and differing supply chains, managing relationships with Yet, whatever economic doldrums retailers  nd thousands of suppliers and other vendors in multiple themselves in, the reality is that economic growth business and regulatory environments, meeting the will eventually return and surviving retailers will need requirements of multiple regulatory regimes, and all to seek new arenas for expanding.  Home markets the while understanding the changing needs of diverse for developed country retailers are going to be slow consumers.  Clearly, this is not easy.  growing, saturated, and prone to excessive regulatory interference. To achieve rapid growth, successful retailers will be wise to seek out new territories. What better time to think about the dawn than when things are darkest? Deloitte Research  Revisiting retail globalization1
2So why bother? Find a competitive advantageRetailers go global for a number of reasons.  European If there is no rule for choosing a strategy, then what retailers are more prone to globalization than is a retailer to do?  The answer is to  gure out what American retailers because they often face restrictions the retailer might bring to the market that would on development in their home markets.  French enable it to beat the competition.  This can vary hypermarkets come to mind.  Due to regulations, they greatly and depends on the nature of the competitive cannot easily open new stores in their home market.  environment.  In an emerging market that lacks much Consequently, they principally seek growth in other modern retailing, simply bringing modern supply chain markets.  This is why the lions share of global retailers management and merchandising as well as large are based in Europe. nancial resources might be suf cient.  In a more sophisticated market, competitive advantage can come Some retailers invest globally in order to latch on to about by offering a well known global brand, a unique fast growing consumer markets, especially when their format, a higher level of customer service, a more home markets are stagnant.  Germany and Japan come entertaining and informative customer experience, or a to mind.  Retailers expand globally in order to leverage more ef cient supply chain that enables low pricing.  their existing assets: global purchasing relationships, a global supply chain, a unique product, a unique format, or a well known brand. Finally some retailers globalize because foreign markets offer them low hanging fruit. That is, foreign retailers can bring leading edge practices to relatively unsophisticated markets. In doing so, they might blow away the competition (or at least that is their hope). Indeed, despite the challenges mentioned earlier, some retailers have actually been successful in doing this. What have global retailers done right? Choose a strategy — and then executeIt is not suffi cient to decide to enter a promising market. There must be a strategy and it must make sense in the context of the market chosen. This is not a simple task and there is no scientifi c method for determining the appropriate strategy. Some pundits suggest that the strategy must be geared towards the unique qualities of the market. That is, they say it is most important to adapt. Others, however, argue that a retailer must bring to a new market the strengths it possesses at home. In other words, rather than adapt the retailer to the market, introduce a new idea to the market. Yet there are plenty of examples of success and failure for each strategy. In other words, there appears to be no good rule of thumb. Still, one rule does seem to apply. Whatever the strategy, the devil is in the execution. Deloitte Research – Revisiting retail globalization