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EBR
24,2 Identifying the characteristics
of small specialist international
retailers
106
Karise Hutchinson and Barry Quinn
Department of Business, Retail and Financial Services,
Ulster Business School, Coleraine, UK
Abstract
Purpose – The purpose of this paper is to examine the internationalisation process of small,
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specialist retailers with the aim of identifying the key characteristics that define this specific category
of international retailer.
Design/methodology/approach – Qualitative case studies of nine UK-based small international
retailers, coupled with interviews with government and consultancy organisations, form the empirical
basis of the work.
Findings – Findings highlight five characteristics of small specialist international retailers:
possession of a strong company brand image/identity with luxury/middle market appeal; niche
strategy; dual strategy of expansion; ownership characteristics defined either by the founder or parent
company; and vertical integration from manufacturing to retailing.
Practical implications – With the increasing internationalisation of retail operations, the specialist
sector comprises a significant number of retailers operating in international markets or contemplating
the move into the international marketplace. The findings of the current work highlight the key factors
that characterise those small specialist firms that operate outside their domestic market.
Originality/value – The paper identifies the key characteristics that define a significant category of
international retailer, hitherto unexplored in the literature.
Keywords Small enterprises, Retailing, Niche marketing, International business, International retailing,
Specialist, Small firm
Paper type Research paper
Introduction
The international retailing literature categorises retailers in various ways including
operational approach (Hollander, 1970); geographical dispersion and operational cost
and control (Treadgold, 1988); strategy (Salmon and Tordjman, 1989); market position
of retail offer and format (Dawson, 1994); and merchandise/product sector (Burt, 1995).
As Alexander (1997) states, no classification exists that is universally acceptable in the
international retail literature. In great part this is because “multinational retailers vary
considerably in size, role, functions, ownership, control, history and objectives”
(Hollander, 1970, p. 14).
As a result some retail organisational types receive far more research attention than
other organisational types. Although, the past decade bears witness to a growth in
research that examines international fashion retailing (Moore, 1998; Doherty, 2000;
European Business Review Moore et al., 2000) rather than large format food retailing, larger retailers and larger
Vol. 24 No. 2, 2012
pp. 106-119 formats tend to dominate the agenda.
q Emerald Group Publishing Limited Likewise, in terms of the broader international small- and medium-sized enterprises
0955-534X
DOI 10.1108/09555341211203982 (SME) literature, research tends to focus on manufacturing company activities,
with the internationalisation of smaller retailers being largely neglected in this body of Specialist
work. That said some researchers from the SME field do emphasise the need to international
examine international activity on an industry-by-industry basis (Chadee and Mattsson,
1998; Antoncic and Hisrich, 2000). retailers
The current work therefore aims to address these gaps in the literature and identify
the characteristics that define the small specialist international retailer. That is, identify
the characteristics that facilitate the development of an international capability by small 107
specialist retailers. By investigating the international activity of these companies,
this work aims to contribute to both the SME and international retailing domains by
providing insights into a category of international retailer that is increasingly
significant yet remains under researched.
Literature review
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deciding on the move to the international marketplace, specialty retailers must ensure
that there is a compatible match between the company’s unique store environment,
merchandise and the characteristic lifestyle patterns of a distinctive group of target
consumers (Michman and Mazze, 2001). Such retailers often use lifestyle graphics and
high quality store environments to make tangible the aspiration that their products
might help their customers to achieve (Birtwistle and Freathy, 1998; Kent, 2003).
Third, the image advantages of the retailer are the attributes which exist in the mind of
the consumer, representing a composite picture about the status and personality of the
company (Simpson and Thorpe, 1996). Williams’ (1991) work reveals that the majority of
international retailers in his survey believe that a strong market image, prestige and
esteem are very important in establishing foreign expansion, a factor management regard
as their most valuable asset. For example, some retailers may feel their international
appeal and unique image stems from the Britishness of their offering (Alexander, 1988;
Moore, 1995; Wigley and Moore, 2007). Consumer perceptions of store attributes and their
differentiation are very important for retailers expanding into foreign markets (Burt and
Carralero-Encinas, 2000). However, international retailers need to present a consistent
and uniform corporate image throughout all their stores in order to maintain a strong
position in the overseas market.
In terms of niche advantages, Salmon and Tordjman (1989) attribute the international
success of global retailers to the originality of the retail concept or niche. A retailer develops
a niche strategy when the company focuses on a particular market segment and customer
(Michman and Mazze, 2001) and carves out a narrow position in the marketplace that offers
a high potential for success and profits and then specialises in meeting the needs of that
segment (Salmon and Tordjman, 1989). This type of retailer should present a product
selection, atmosphere, personnel, and price range that fits the consumer psychographic
and demographic profile (Simpson and Thorpe, 1996). In a rapidly evolving global retail
market, focused retail concepts are a particularly important means by which to address
consumer demand and to adapt rapidly to new opportunities (Alexander and Quinn, 2001).
SME internationalisation
In view of the fact that this paper seeks to identify the characteristics of small specialist
international retailers, this research takes the broader literature specific to SME
internationalisation into account. The current work notes, however, that the
manufacturing sector dominates this literature and therefore neglects, by-and-large,
the specifics of international retailing. Nevertheless, such research does provide useful Specialist
insights that are worthy of note. international
The international SME literature highlights the key characteristics of these small and
medium-sized companies, with studies arguing that smaller businesses are not smaller retailers
versions of big businesses (Shuman and Seeger, 1986). They differ from larger companies in
terms of particular managerial, financial and operating characteristics. Indeed, factors such
as limited financial and managerial resources, personal objectives of owners/managers, 109
and informal central planning and control systems indicate that the international strategies
and structures of SMEs may differ from those of larger firms (Baird et al., 1994). Larger
firms, on the other hand, are inherently more complex in their organisation and structure;
divided into more specialist departments with many layers of management, the
decision-making process in large firms is often more complex (McAuley, 2001). This is not
to argue that small firms are simple versions of larger firms but, according to McAuley
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(2001), SMEs also exhibit complex attitudes, behaviour and decision-making, depending on
the personality of the owner-manager, where the responsibility for decision-making resides.
Papadopoulos (1987) discusses firm characteristics unique to international SMEs in
comparison to larger firms, in terms of weaknesses and strengths. He argues that
inherent weaknesses of SMEs include lack of ability to grow and gain expertise in the
domestic market before expanding internationally and the difficulty in finding foreign
markets. However, the instinctive strengths of the SME in international markets bring
about success in many cases. In a study by Voss et al. (1998), SMEs are found to have a
customer orientated response which focuses on new products; their competitive
advantage coming from speed, responsiveness and closeness to customers. Some
SMEs concentrate in sectors that allow them to capitalise upon their special strengths
and operate as a niche marketer. According to Merrilees and Tiessen (1999), SMEs can
successfully serve a narrowly defined segment and compete with their larger
counterparts in the international market. These findings, however, relate primarily to
the manufacturing sector, and do not address the particularities of the retail sector.
Summary
International retail research primarily focuses on the internationalisation of the larger
retailer and retail format. Consequently, knowledge of the characteristics of the small
specialist international retailer does not go beyond studies based on one specialist sector
that is fashion retailing, which fails to consider explicitly the small firm. In turn, in the
international SME literature, various defining characteristics are evident but these
findings are manufacturing sector specific. While informative, these findings are not
generalisable within the retail context. Indeed Dawson (1994) and others warn of the
dangers of directly applying research on the manufacturing sector directly to the retail
sector because of the differences between these specific areas of international business.
In order, therefore, to identify the characteristics that can define the key characteristics of
the small specialist international retailer, this paper proposes to examine the
internationalisation activity of specialist retail firms in their specific context, while
triangulating findings via relevant government and industry organisations.
Methodology
Historically, research in the domain of international retailing has been predominantly
quantitative in nature, employing survey methods (Alexander, 1990). More recent studies,
EBR however, increasingly recognise of the value of qualitative techniques, in particular, the
24,2 case study method (Doherty, 2000, 2007; Doherty and Alexander, 2004, 2006; Moore and
Birtwistle, 2004). The SME literature argues that positivistic research does not yield a rich
understanding of small firm activity (Fillis, 2001). Given the paucity of research on the
small specialist international retailer, this study is exploratory in nature and adopts an
interpretive research paradigm, employing qualitative techniques and a case study
110 design. Such an approach is in line with approaches taken in the international SME
literature (Coviello et al., 1998; Westhead et al., 2002) and extant international retailing
research studies which examine emerging research issues requiring in-depth
investigation (Doherty, 2000, 2007; Moore and Birtwistle, 2004; Hutchinson et al., 2007).
The importance of SME internationalisation from the perspective of policy-makers
and government organisations is given emphasis in the work of Fischer and Reuber
(2003), Spence and Crick (2003) and Terzioski (2003). In recognition of the value of a
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macro-level viewpoint on this study, in addition to the case study research with retail
companies, qualitative interviews with government and consultancy organisations
provide an analysis of the international activity of small specialist retailers from the
perspective of the wider UK industry.
A purposeful sampling design was used in the selection of case companies, thus
allowing for the selection of “information-rich” cases (Patton, 2002). An initial
investigation was conducted using the Retail Rankings (2001) and the internet, which
provided information on relevant firms according to retail sector, management
structure, UK stores, and presence overseas. This process initially identified 18 potential
companies relevant for this research. That is, all retailers originated in the UK market
with Head Office locations in the UK; operated in at least one international market
outside the UK; and had, at the time of investigation, sales turnover less than £24 million
(definition of SME according to European Commission, 2000).
The final sample of companies consisted of nine small specialist retailers at different
stages of international development and operating in different sectors of the industry.
As illustrated in Table I, three broad patterns of international activity is displayed
according to company age and experience overseas: “early” internationalists who
expanded overseas in first eight years of business (i.e. companies D and G),
“intermediate” internationalists who expanded overseas in the first 20 years of business
(i.e. companies B, C, F and I), and “late” internationalists who expanded overseas after a
significant time of establishment in the domestic market (i.e. companies A, E and H).
These companies also operated in a number of retail sectors:
D 5.7 22 21 13 17 £
E 6.5 14 135 12 10 U
H 8.2 3 166 10 2 U
F 10.8 4 25 2 2 £
I 11.5 32 47 32 3 £
Table I. G 12 16 11 5 10 £
Domestic and A 18 20 150 60 29 U
international profile C 22.3 34 36 25 30 U
of case companies B 24 10 36 25 21 U
.
clothing and accessories (companies A, B, I); Specialist
.
health and beauty (companies C, D, E); international
.
sports and leisure (companies H); and retailers
.
giftware (companies F and G).
While in qualitative case study research there are no precise guidelines to the number 111
of cases to include in a study, there are several recommendations (Eisenhardt, 1989;
Lincoln and Guba, 1985). Eisenhardt (1989) recommends between four to ten cases.
For the purpose of this study, nine case studies offering the right balance between
breadth and depth of experience form the basis of the case study analysis (see Table I
for more details on companies).
In order to provide a macro-level perspective of international activity by small
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location of brand identity in an original lifestyle concept is also a key stimulant for
expansion in key foreign markets. Findings show that the brand identity of almost all
these firms is linked to the product, image and market appeal of the company.
Government and consultancy organisations emphasise the role of branding in the
establishment of successful retail operations in international markets. In terms of high
quality/luxury retailers, the interviews show that a strong innovative brand is a
necessary requirement. One informant notes, that for those retailers seeking to expand
through in-store concessions: “Department stores [. . .] are looking for a brand that has
made a name for itself because of its innovation”.
Niche strategy
Findings highlight the importance of niche market opportunities overseas both in the
luxury and middle market. Company informants identify the strategies of the case
companies as single-product, single-client and single-theme, as illustrated in Table II.
Several industry experts, both from government and private perspectives, highlight
the importance of niche opportunities for smaller retailers moving into international
markets. The Department of Trade and Industry Report concurs, noting, “there is also
some merit in focusing on small specialist niche markets, which represent particular
attributes of the UK”.
For instance, company H positions their product and brand internationally as
ultimate luxury at the top end of the market. In the middle section of the market,
companies D and I focus on particular market segments and customers with recognizable
The case companies’ choice of retail owned stores and in-store concessions as market
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entry methods is the result of a desire to control and protect the company brand or identity
in international markets. For example, the Managing Director of company C explains that
retail stores are important in terms of how the merchandise and the brand are presented,
as retail stores “give you a greater degree of control of what the brand represents”.
Furthermore, several companies specifically note the operation of flagship stores,
primarily in capital city locations, as an important marketing tool, as well as a control and
support strategy to reinforce the luxury and high quality image of their international
brand. As the Market Manager of company B stated, flagship stores are “prototypes of
the corporate (company B) image in its entirety”.
In like manner, companies A, B and F also operate a strategy of wholesaling overseas in
order to sustain the retail side of business in the UK, noting the high risk and resource
commitment involved in overseas expansion. For example, the International Director of
Company A explains: “In order to create the volume that’s required to make things
economically viable you have to have wholesale business unless you’re a very big retailer”.
For other case companies, wholesale or distribution arrangements alongside other
methods enable them to access a vast number of international markets. company C, for
instance, operates a distribution strategy augmented by a wholesale business, which,
according to the company’s Managing Director allows the company “to carry the brand
through a greater number of doors”.
Case firms note that the lack of organisational and financial resources influence the
choice of entry mode strategy. At the same time, government organisations highlight
small retailers’ desire to control internationalisation via owned stores. As company B
explained:
A lot of UK clothing designers are actually only designers in the UK and will actually open
their own stores in overseas markets, particularly in the capital cities like Milan and Paris.
Dimensions of ownership. This study highlights two distinct types of management:
(1) internal management by entrepreneur and/or founder; or
(2) external management by a parent corporation (Table I).
For companies C, D, F, G, and I the uniqueness of the retail concept is grounded in the
vision and values of the entrepreneur and founder of the firm. The Marketing Manager
of company F explains: “[. . .] (the founder) as an individual is completely original. And
that is really seen throughout the business”.
EBR For companies A, B, C, E, and H, a recent change in ownership affects management
24,2 decision-making and, in turn, internationalisation strategy. The acquisition of funds,
knowledge and networks from the parent company promotes internationalisation. For
example: “The parent company is very strong, supportive and very keen on strategy
and development. There is no doubt that the ownership and income makes life a lot
easier” (Respondent, company C).
114 While industry organisations do not note the external management of a parent
organisation as significant, they do emphasise the management vision and experience
as a key aspect of retail internationalisation by small specialist retail firms. As one
government informant explains:
With the smaller retailer, the power and control in decision-making nearly always lies with
one person [. . .]. It is amazing how even little personal details can dictate quite important
strategic decisions.
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Discussion
In view of the case and industry evidence, this paper concludes that such sectors of the
industry present specialist retailers with the opportunity to fill gaps in international
retailing (Feigenbaum, 1993). It is argued that a number of characteristics
have been found to categorise small specialist retail internationalisation. These include:
.
strong brand image/company identity;
.
niche strategy;
.
dual strategy of expansion;
.
company ownership; and
.
vertical integration from manufacturing to retailing.
The possession of a strong company brand image or identity is the first dimension that
identifies small specialist international retailers and is both a key impetus for
expansion and the platform from which these retailers develop competitive advantage
in international markets. In view of existing studies which conclude that brand image Specialist
is a key characteristic of international fashion and luxury retailing (Laulajainen, 1992; international
Fernie et al., 1997; Burt and Carralero-Encinas, 2000; Moore et al., 2000; Moore and
Birtwistle, 2004; Wigley et al., 2005), this study likewise concludes that a strong brand retailers
image or company identity is a key feature of the small specialist international retailer.
Niche strategy, linked to brand image, is the second dimension that identifies small
specialist international retailers. In particular, existing research points out that the 115
luxury or exclusive appeal of focused merchandise distinguishes SMEs from larger
competitors (Spannagel, 1993). The distinct appeal of small specialist international
retailers targeting the luxury or middle market consumer and following a niche market
approach reflects a marketing differentiation strategy. For such retailers, a niche
strategy focusing on a particular market segment (and targeting the luxury or middle
market consumer), that allows them to adapt rapidly to new opportunities in foreign
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Conclusions
Overall, the findings of this paper and, in particular, the categorisation of small specialist
international retailers, makes an important theoretical contribution to existing
EBR knowledge in the field of retail internationalisation, that neglects to empirically examine
24,2 or classify such factors specifically. Furthermore, existing research in the field of SME
internationalisation focuses predominantly on the manufacturing sector. The current
work provides new empirical evidence of international activity by small specialist
retailers operating in the luxury and middle market sectors of the industry.
The research highlights five characteristics and provides a guide to those small
116 specialist firms considering the move into the international marketplace. The majority
of the case companies have operated internationally for over a decade. Their
experiences can inform other firms of the characteristics smaller international retail
operations require for survival in the specialist sector.
As the current study focuses on nine small specialist retailers and eight industry
organisations based in the UK the findings do not claim generalisability. Rather, the
paper argues that the in-depth case approach of this work facilitates the construction of
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Further reading
Kauffman, S. (1995), At Home in the Universe, Viking, London.
1. Helen Christmann, Andrew Alexander, Steve Wood. 2016. Exploring brand identity and entrepreneurship
as drivers of small specialist retailer internationalisation: a German case study. The International Review
of Retail, Distribution and Consumer Research 26:2, 137-153. [CrossRef]
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