International Retailing – Features and Challenges

International Retailing and branding has been one of the sectors that is seeing exponential growth. With increase in standard of living and disposable income, people in developing countries are getting exposed to international brands.

Rise of internet and multi-media has further provided impetus to the dream of people to aspire for branded consumer goods. Along with the rising awareness and aspirations of the people, the opening up of economies and foreign direct investment opportunities have fuelled the growth of international retailing business.

International Retail business consists of two groups of businesses. The biggest value and volume business happens to be the International Multi brand grocery Retailers like Wal-Mart, Tesco, Metro and Carrefour etc. The second group of international retail business refers to the fashion brands mainly in fashion, luxury brands and personal product category of businesses.

In this topic we aim to explain some of the characteristic features and challenges of the second group of International retail business dealing with fashion and brands. Brands such as Ralph Lauren, Hugo Boss, GAP, Dolce & Gabbana, Gucci, Escada, Armani, Versace, Louis Vuitton and many more are known all over the world and are available at exclusive showrooms in various countries.

In the past two to three decades all these brands have grown to become Global brands, and this has been made possible by their strategic branding, multi product range expansion and innovative merchandising methods.

Though International Retail Companies are Global businesses, the business and products are hugely influenced by the multi cultural and pan country specific product requirements. The product categories largely comprise of fashion clothes, food, gadgets as well as personal and luxury products.

Each country and each market is characterised by different fashion trends and consumer behaviour. While the products are fast moving and have very short shelf life, the local culture and outlook has a large part to play in the localisation of the international brands in domestic markets. These global companies therefore are forced to work on global branding as well as local brand promotion and have international as well as domestic-country specific customer reach programs and marketing as well as promotional methods.

International Retail Companies have several inherent challenges that they face in their line of business.

Product innovation and product mix happen to be the biggest challenges for these companies both at global as well as country specific domestic levels. The survival and growth of the brand is directly dependent upon these challenges.

The global retailers have to be tuned in to the international as well as domestic specific fashion in each of the countries and get their product mix right for each of the markets. Service quality and merchandising methods too, play an important role in the brand visibility and reputation.

Pricing of products is yet another challenge faced by the brands. Developing and emerging markets are highly price sensitive. When the international brands are trying to make an entry into the new markets, they have got to have an entry strategy that takes into account the price sensitivity and profitability as well.

Procurement and Supplier reliability as well as quality marks one of the challenges that these companies face as they happen to source materials and products from several countries.

Quality and reliability as well as in time supplies and logistics is always a challenge that can make or break the business which is highly seasonal in each country.

In the recent years we have seen the emergence of ethical practices playing a vital role in the procurement policies of these international companies. The companies have got to ensure that their sourcing partners do not employ child labour or employ unethical methods in manufacturing the products and as principle buyers these companies are held responsible. Ethical buying has gained global visibility and these companies have had to be watchful to ensure compliance or risk unwanted publicity and public outcry.

International retailing business is high volume business. To be a successful international brand, the Companies have got to adapt the right strategies, be aware of the local cultural as well as political environment in the market and more importantly manage the brand promotion and supply chain perfectly. The challenges faced by the business are several but so are the business opportunities.