INTERNATIONALRETAILING

Vineet Kumar Yadav

Retailing

Retailing: An important part of many

marketing channels, includes allthe activities involved in sellingproducts and services to theultimate, or final, consumer.

Retail Sales: Sales to final consumers; wholesale

sales are those to other businessesthat in turn resell the product orservice, or use it in running theirown businesses.

International Retailing

Retail internationalization is the transfer of retailoperations outside the home market.

It involves the international transfer of retailconcepts, management skills, technology andeven the buying function.

Factors involved in International Retailing

A careful examination of the definition forinternational retailing reveals certain conceptswhich are key to the process of internationalretailing.

These include:-

Operations, Concepts, Management Expertise,Technology and Buying.

OperationsRetail internationalization is the expansion of aretailer’s operations into a foreign market. The storeformat may or may not be similar to that in thehome market.Identical operations may well trade under a differentbrand than that operated in the domestic market.This decision is largely dependent upon the methodof market entry.For example, in 1999 Wal Mart (the retail giant)bought UK grocery chain ASDA and retained theoriginal ASDA brand.

Concepts

Retail concepts lay emphasis on innovations in theindustry. The self service concept first emerged inCalifornia in 1912.Later, the concept was followed in a number ofinternational markets in the next two decades.Similarly, the convenience store format whichoriginated in USA in 1920s was taken up in Europe inthe 1970s.Now, the focus in on globalization. The retail conceptcurrently by operated by retailers may also becomesuccessful in a foreign market.

Management expertise

The transfer of concepts is linked with theinternationalization of management expertise.This encompassed the internationalization ofskills and techniques used in the management ofthe business.

Technology

Retailers who operate internationally require theuse of technology advances. Use IT in centralmanagement of retail operations has improved itsdecision making in areas such as finance,personnel and logistics.

Technologies such as EPOS (Electronic Point ofSale) are also used at operational levels of retailstores.

Buying

The proportion of consumer expenditure on retailis considerably important. As the populationbecomes more wealthy a greater proportion ofincome is spent on nonessentials. Only a smallpercentage of total spend goes on food andclothing.

Reason for Internationalization of retailing

Hollander proposes five reasons for retailinternalization.

• Inadvertent internationalization,

• Non-commercial motives,

• Commercial objectives,

• Government regulations,

• Capitalizing on existing or potential salesopportunities.

Inadvertent internationalization

Inadvertent internationalization is due to politicalinstability. Sometimes, changes in the demarcationof national borders take place. This may mean aretail company is operating in a different marketalthough its stores have not physically moved.

Changes in Eastern Europe are the examples of thiskind. The US retailer KMart entered Czechoslovakia.Within a year it found itself operating in two districtmarkets, the Czech and Slovak republics.

Non commercial reasons

Non commercial reasons of political, personal,ethical or social responsibility have motivatedretailers to move into foreign markets.

For example, retailers foray into markets forreasons of social and environmentalresponsibility. Notably, the Body Shop’s “tradenot aid” sourcing policy helped developinfrastructures in order to stabilize economics.

Commercial Objectives

It include entering the market which givesretailers competitive edge. Gaining importantmarket knowledge before moving in on a largerscale learning about innovations may be othercommercial objectives of retailinternationalization.

Government regulations

Government regulations influence the choice ofmarket by retailers. It is not a prerequisite tointernationalization.

Retailers prefer the markets with fewer restrictionson their growth. Severe regulations at home pushretailers into the international arena.

Loi Royer in France severely restricted thedevelopment of large out of town stores. As a resultthe French hypermarkets turned to less restrictivemarkets to continue their expansion.

Growth Potential

Retailers seek the best growth potential possible.If they perceive profitable opportunities inoverseas markets, they are likely to capitalize onthem.

Some International Retailer

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