All the world’s a marketplace, and ambitious retail players are taking to new territories at every opportunity – but what’s the best approach?
Perhaps these companies have reached local saturation point, or seen the huge appetite for international brands overseas; either way, with global connectivity on an exponential growth curve, it seems there’s never been a better time to look at the ecommerce and bricks-and-mortar potential of foreign markets.
Yet there’s no one-size-fits-all approach; methods that work well at home may not apply to a new market. Whether you’re looking to establish a fully-owned presence overseas, develop a strategy with a local partner, or sell wholesale through a third-party ecommerce platform, it’s crucial to explore every angle.
Speaking to Retail Connections at RBTE earlier this year, Sarah Pavlou, MD of retail franchise and brand expansion facilitator Kyclo, delivered insights from two retailers currently engaged in overseas expansion.
The first was Beverley Murigneux, International Director of lingerie chain Boux Avenue, who has worked in retail since 1995, and internationally since 2004. The second was Johan Isacson, Head of Business Area Franchise at Finnish-owned fashion chain, Lindex, which operates in 16 markets.
Together, these expansion experts shared their thoughts on four areas retailers need to explore before stepping out into the wider world:
1. Do your homework
Money and political contacts count for a lot, says Johan, but what’s more important is grasping the characteristics of a new market before committing to it.
Balancing customer satisfaction and logistics in a new territory is no simple matter; to do so, it’s crucial to establish whether your brand will work there or not, before ensuring that every party is clear on the role they must play.
Says Johan: “Some partners are very eager to sign a new contract, but if you don’t iron out the details it will go wrong. Do your homework, because the investor won’t help you!”
2. Pick the right people and partners
Beverley encourages anyone looking overseas to engage third-party expertise in the UK to handle processes such as logistics and chain of custody.
“It’s important there’s a good cultural fit with your partners,” she remarks. “It’s a little like getting married – you end up tied to that person, and you have to just pull through the good times and the bad!”
She also warns that the rate of staff turnover can be surprisingly high on overseas projects, and that it’s important to prioritise retention of personnel throughout the process.
“You’ll find that lots of people are looking to jump ship and join a new brand, but you see the biggest problems when that excitement goes away.”
3. Develop a strategy across bricks and clicks
Boux Avenue seeks investment partners for overseas bricks-and-mortar opportunities, while selling through its own ecommerce platform internationally. This means its foreign stores must act as collection points for international sales, and look to be incentivised and rewarded accordingly.
Beverley says that Boux has a strong multichannel ethos, and aims to enable customers to redeem and use gift cards all over the world, wherever their purchases were made. “I don’t want our customers abroad to know they’re buying from a franchise,” she says.
In the case of Lindex, Johan points out that it’s difficult to maintain price transparency when selling in different countries, and that prices – and delivery processes, for that matter – should be localised operations. “We’re looking to create a local ‘lite’ version of our big European website for franchisees,” he explains.
4. Test the water with marketplaces
For those retailers that want to dip a toe in the water before they commit, both Johan and Beverley agree that there are distinct benefits of selling through online marketplaces such as eBay and Amazon.
Sarah explains that some markets have preventative measures that stop foreign traders, and marketplace platforms can offer the best opportunity to reach those consumers.
And what of the damage that marketplace dealings can do to a brand? “Does it really matter, if you don’t have any customers in those markets anyway? It’s about offsetting the benefits of brand building against the risk of damage; but I couldn’t see anything causing much collateral damage in this scenario,” Sarah concludes.