Going ‘Glocal’: International Retailing Study · online, mobile and social media strategies for...

Going ‘Glocal’ Executive Summary | 1

retail consulting and industry thought leadership

Going ‘Glocal’: International Retailing Study

Presented by: The Parker Avery Institute the education, training and research unit of The Parker Avery Group


Copyright © 2012 The Parker Avery Group. All rights reserved. be selective.

Introduction As retail executives, we have spent the better part of the last 20 years learning how to source product and flow product from overseas. We’ve talked a lot about China and sourcing. We’ve analyzed India and Africa for markets. We’ve debated the economic conditions of Europe and what it means for our economy. With all that behind us, one thing has become strikingly clear. Retail is more of a global business today than it has ever been before. The world’s leading retailer and brand executives are aggressively pursuing global expansion and redefining process, operating structure and capabilities.

There are three main questions for any retail executive pursuing international growth to consider,

- How do I learn about customers in new markets and best serve them?

- What channels and operating structure make sense in each market?

- How does how we work today need to change to be successful as an international business?

This study will provide you insight to answering those questions.


www.ParkerAvery.com be selective.

“Glocalization” Definition Product or services designed to benefit a local market while at the same time being developed and distributed on a global level.

(source: businessdictionary.com)



KEY FINDINGS How Are Retailers Approaching Global Expansion? 83% of retailers believe international

growth and performance is important to their future success.

59% of these retailers indicate that international expansion is necessary for achieving top line sales. 62% are driven by a desire to increase global market share or key categories (global brand recognition).

72% of retailers believe Asian markets

offer the strongest area of growth for international expansion over the next 3 years. This is followed by Canada and Central & South America with 53% and 50%, respectively.

38% of retailers are using the

eCommerce/Online channel as their primary channel for international growth. 44% are using a mobile channel as an important part of their strategy.

Today’s top three challenges for

international growth are: economic uncertainty (49%), finding the right vendor and partners (48%), and lack of local market knowledge (45%).

71% of retailers are currently investing in understanding local markets and customer preferences. 54% are tailoring their assortments to these local markets.

69% of retailers are investing in their

ability to improve product development and reflect the differences in international markets.

74% have resources in the international

markets they serve. 86% of retailers with annual revenue

under $1 billion focus on partnering with other companies or developing a franchise model to support international growth.

60% of retailers from $1b to $5 billion in

revenue use a website to grow internationally as one of their tactics.

55% of retailers over $5 billion in revenue enter international markets by acquisition or by building stores.

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What Are Retailers Investing in Through 2015? Today, most retailers are investing in

strategic capabilities such as understanding the local market and tailoring assortments to each individual market. As they move into 2013, the focus adjusts to developing talent and improving logistics. For 2014, majority of retailers are budgeting to build more stores and optimize their fulfillment capabilities. Retailers have shown that understanding the local market is a capability that can pay immediate dividends leaving them able to plan for future site construction.

Retailers are highly interested in cultivating enhanced internet, mobile and social media capabilities for e-commerce and customer acquisition. 44% of retailers customize internet sites to each market and country, and 36% are actively using social media and mobile to build brand awareness and drive traffic to other channels.

Additionally, 51% of all retailers are

currently researching and validating new

online, mobile and social media strategies for 2013.

The primary area of international growth for more than 52% of retailers in 2012 is store development. The substantial areas of growth after store development are online, mobile and social media for more than one third of retailers. Catalog is an area that is clearly waning, but it is still viable for slightly more than 16% of retailers.


Which Countries Are Targets for International Expansion?

By a large margin of more than 68%,

Asia is the most common target of international growth for retailers. China has proven itself in past years to be a cost-effective location for manufacturing and has attempted to change the perception that it is only advantageous for importing raw materials and exporting finished goods. It appears that the extensive population of Asia, and related potential buying power, has taken the attention of the retail industry.

Companies with revenues above $100

million are more likely to be seeking expansion into Asia than those with revenues less than $100 million. On the other hand, companies with annual revenues below $100 million are more fragmented in regard to their chosen areas of expansion.

The United States and Canada are still receiving strong interest from foreign retailers while Mexico and the Middle East are becoming less attractive to retailers than in years past.

Central and South America have

overtaken Europe as viable locations for retail presence. More than 47% of retailers are considering international expansion into these countries.

Africa and New Zealand remain unlikely

locations for international expansion for more than 90% of retailers. However, Africa may be a continent to watch in future years as commercial areas continue to be developed through foreign investment.



How Is Merchandising Impacted by Global Expansion?

Most retailers agree that understanding

local markets and consumer preferences is vital to the success of their international business. As a result, a majority of retailers are customizing product offerings, using local merchants and managing campaigns with a localized calendar in order to relate best to the local market.

To manage glocalized promotions and

campaign calendars, an overwhelming 54% use a localized or regional calendar for each country. This enables retailers to capitalize on local preferences giving the products a level of familiarity which, in turn, makes them more appealing to the local demographic.

The most common approach to

merchandising for 38% of retailers is to establish international assortments by allowing international merchants to determine the assortments. The second most common approach, for 31%, is to use a U.S. assortment as the foundation and customize based on international buyer input. In both systems, assortments are adjusted to meet local demand, which results in higher sales.

In regard to retailer investment in internal

merchandising capabilities over the next three years, retailers will be changing their focus from product development and sourcing in 2012 to customer relationship management (CRM) and vendor management by 2015.

Retailers have the opportunity to increase buying power across countries and markets as a resulting advantage of foreign expansion. 36% of retailers leverage increasing buying power across countries by centralizing buying to the U.S. to maximize domestic buying power. 18% of retailers may not have the international presence required for significant buying power and, as a result, only consolidate buying for basic goods.

To plan for international markets, a majority of retailers build financial plans for all countries off of an existing U.S. plan. This is a more time-efficient approach to financial planning and does not interfere with glocalized campaigns and product assortments.


What Are the Top Challenges Impacting International Expansion?

The main challenge impacting

international expansion is the ability to implement the appropriate systems and tools. More than 59% of retailers are affected by system implementation that does not go as planned or investment in inadequate tools for the application. For some retailers, using a bottom-up approach in planning and implementation can alleviate the overall negative effect.

The second most common challenge for

56.8% of retailers is finding the right alignment with respect to domestic and international processes. This tends to occur in organizations that approach international expansion without a plan for optimizing this relationship. Further, retailers have commented that suitable buy-in from leadership can mitigate this problem.



How Do International Retailers Manage Supply Chains Across Countries? To support international business, 36%

of retailers have a distribution center in each country where sales exist to serve the local needs, and 23% utilize a central facility for each region.

More than 51% maintain separate inventory for each country served. The second most common method of inventory management is regionally pooling inventories that serve several countries. 26% of retailers use this method.

For 49% of retailers, sourcing and sales decisions when considering where products are to be sold are coordinated across multiple groups as the strategies are defined.

More than 69% of retailers utilize a set

of global vendors for all countries. This enables them to leverage relationships to obtain better costs across supply chains.

How Do Most Retailers Operate Their International Business? 56% of retailers staff the international

group with HR and Finance, 51% with Merchandising, and 44% with Logistics.

62% of retailers have separate international merchants for the countries they serve. 47% have separate planning professionals and 53% have separate logistics on these international teams.

26% operate their entire international business from the U.S. headquarters while 18% build a complete retail organization only in our major markets. Therefore, it is cost-effective to implement some foreign-side staff such as HR and merchandising, but it would be cost-prohibitive to duplicate all operations in each country the retailer serves.



Final Word Retailers are pursuing deliberate foreign expansion over the next three to five years. The main targets will be countries within the continent of Asia as well as North, Central and South America, with the exception of Mexico. Overall, glocalization is paramount among retailers in 2013 as they are seeking to understand local markets and customizing infrastructure, assortments and campaigns to match the local needs. This approach leads not only to increased revenues, but also to reduced expenses as retailers are overcoming challenges of system implementation by sharing vendors and sourcing systems.

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The Parker Avery Group The Parker Avery Group is a boutique strategy and management consulting firm that is a trusted advisor to leading retail brands. We combine practical industry experience with proven consulting methodology to deliver measurable results. We specialize in merchandising, supply chain and the omnichannel business model, integrating customer insights and the digital retail experience with strategy and operational improvements. Parker Avery helps clients develop enhanced business strategies, design improved processes and execute global business models. Learn more about us at:

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