Global retail markets:

Definition: Global retailing is the concept of selling products (i.e., goods and services)
across the geographical boundaries of a country to the consumers available in the
different parts of the world to attain global presence and recognition and to capture the
opportunities prevailing in the potential overseas markets.

The concept of global retailing is widely adopted today by many big brands and
organizations to capture the potential markets in multiple countries.
Some of the well-known examples of the companies operating on a global level are
‘Intel’, ‘Facebook’, ‘Toyota’, ‘IBM’, ‘L’Oreal’, ‘PepsiCo’ and ‘Domino’s’.
Content: Global Retailing

1. Trends
2. Strategies
3. Role of Information Technology
4. Challenges
5. Emergence

Global Retailing Trends

To enter the new markets and avail the business opportunities, the organizations need to
understand the presently prevailing flow of global retailing.
Following are some of the most recent trends of global marketing adopted by business
entities:
 Internationalization: The companies these days are preferring international
markets due to the saturation of the domestic markets and seeking expansion and
economies of scale.
 Improvising Service Offerings: In today’s highly competitive market, global
retailers are also focusing on adding value to the consumer experience by providing
some assistance or services with their products.
 Boutiques: The business organizations are moving towards speciality stores
concentrating on a single product line or category to get global recognition for their
expertise in a particular product or service.
 Mass Merchandizers: Also, some of the large retail organizations are expanding
globally by selling a variety of products or services and having a diversified product
line to target high volume of sales at minimal margin or profit.
 Retail Format Migration: There has been a massive transformation in the
retailing sector due to the emergence of e-commerce. Therefore, it has become a
necessity for companies to adopt e-retailing for creating a global presence.
 Private Brand Expansion: It has become an essential platform for private
companies to introduce their products to consumers spread across the globe and also
to gain global recognition.

STRATEGIC PLANNING PROCESS FOR GLOBAL RETAILING

Global Retailing Strategies

Before entering the global market, the organization needs to plan and decide on a suitable
business model or strategy by adequately analysing the potential market.
Following are four significant plans of action to select from:

1. Organic: The companies planning for global retailing may go with organic
strategy, i.e., to open up their stores in different countries. It is a useful strategy if the
potential market is culturally close and easy to enter.
2. Chain Acquisition: The organizations may purchase an existing company which
has multiple stores in the potential market or country. In this strategy, the
organizations target markets which are complex and difficult to enter but have a close
cultural presence.
3. Franchise: One of the most common strategies of global retailing is franchising
the business model, brand, procedures, copyrights, etc. and establishing the
franchise outlets in different countries. It is a suitable strategy for culturally distant
and accessible to enter markets.
4. Joint Venture: The organization sometimes collaborate with the already existing
companies around the world to enter those markets which posses a high level of
entrance difficulty and culturally distant.

Emergence of Global Retailing

In the present era of globalization, every company is trying to create its footprints in
different countries of the world.
Global retailing has emerged as a profitable opportunity for the large companies which
were earlier operating in the domestic markets. They have now come out of their
traditional business models to gain global recognition.
Trading across the geographical boundaries have gained significance due to increasing
consumer awareness, preference and purchasing power. Also, the barriers of international
trade and policies have been eased out by the government of many countries to promote
global trade practices.

Challenges Facing Global Retailers

In today’s digital market space consumers and businesses interact, sell, and buy beyond
their local borders. With greater access to foreign markets, many U.S companies are
looking to expand overseas and to sell internationally.
Global retail sales, including both in-store and online purchases, surpassed $22 trillion in
2014, according to recent figures from eMarketer. The marketing research firm also
predicts a 5.5 % increase in overall international retail sales to $28.3 trillion by 2018.
These figures come as good news: they present opportunities for growth into
unprecedented markets; yet, such opportunities are not without their own set of
challenges for retailers.
Here, we highlight a number of barriers that can deter businesses from expanding
overseas, and offer tips on navigating them.
 
Global Retail Challenge #1: Cultural Complexities are challenging When Selling
Overseas
It is important to know your customer, their preferences, and values in any market;
but this task is even more complex in foreign markets. People in different countries
place different values and priorities on different products. And some consumers prefer to
buy certain products online, while others choose the the traditional marketplace. For
example, a survey conducted by Pitney Bowes, a global technology company, found that
while people in most foreign markets prefer to buy apparel and footwear in person,
Chinese consumers are more likely to buy these items online.
Understanding where consumers are buying and how much they are willing to
spend is critical. For instance, online retail sales are highest in the U.K, China, Finland,
Norway, South Korea, and Denmark; and are estimated to lead sales into 2018.
Expanding into these countries would likely be most profitable for businesses. Equally
important, businesses need to know how much consumers are willing to pay for each
product, in order to stay competitive in local markets.
Consumers in different countries also prefer different payment methods. In Japan,
for example, over half prefer to make credit card payments when buying online, but in
Germany approximately 70% prefer Direct Debit and Bank Wire Transfer.
Global Retail Challenge #2: Language Barriers and Different Communication
Styles
The inability to communicate with customers is one of one of the biggest barriers to
selling internationally. Translation, however, is not enough. Language differences are
subtle and complex. For example, the literal translation of KFC’s infamous slogan
“Finger-lickin’good” in Chinese is “Eat your fingers off.” Not surprisingly, the company
had a bad start there in the 1980s.
Language preferences extend beyond words. Nuanced details, such as date and time
display preferences matter. Guaranteeing shipping by 5/4/2015, for example, means May
4, 2015 in the U.S., but is April 5, 2015 in the U.K. Not catching this detail would upset
customers in the U.K when their package arrives one month later than they had expected.
Communication preferences for receiving retail promotions in each country are
important. According to the Pitney Bowes survey, over half of international consumers
prefer email, but 25 percent still prefer catalog and direct mail. Interestingly, Asian
consumers prefer text messages and social media.

Global Retail Challenge #3: Shipping Costs, Duties, Taxes, Export Laws
and Regulations
Perhaps one of the most daunting barriers for businesses selling internationally are
shipping costs, duties, taxes, regulations, and export and import laws.
When selling overseas, retailers need to consider the regulations and rules of each
country. Restrictions in some foreign markets can even sometimes seem borderline
ridiculous. Some examples illustrate these frustrating export and import rules to look out
for: Avatar in 3D is banned in China (but, interestingly, the film in 2D is not); and
Scrabble is banned in Romania.
The returns process is also frustrating for businesses. In the same way that retailers
must consider each country’s laws when selling, they must also do the same during the
returns process. Processing returns also involves the documentation and calculation of
shipping costs,border duties and taxes paid to foreign governments of each market.
Businesses must also appease consumers, in addition to figuring out the complex
matrix to these different rules. It is not uncommon to find customers abandoning their
carts after finding out how high cross-border duties, taxes, and international shipping
costs can be.