According to Deloitte’s 2005 report on the retail industry, the “need to go global” is one of the top 10 issues facing retailers. Here are two interesting excerpts…
- Globalization gained further ground in 2003. Currently, these 250 retailers sell in 135 different countries. The average retailer sells in 5.5 countries. This average does not include the six retailers who are truly global in scope, operating in nearly all major countries around the world. In comparison, the 1997 results showed that retailers back then operated in only 4.5 countries, on average.
- International sales have become important to many retailers growth strategies. Published reports noted that Tesco showed a 30 percent growth rate outside of Britain compared to 7 percent at home. Almost 49 percent of its square footage is overseas. Wal-Marts international division saw a 17 percent increase in sales for 2003; the division now represents 18 percent of Wal-Marts total sales.
Despite Wal-Mart’s growing international revenues, the report does question why American retailers have been relatively slow to expand globally. I would agree. The US market is so vast that many companies have only recently awakened to the world outside their borders. Best Buy will soon be dipping its toes in China.
And I would argue that Wal-Mart, for one, should be in 30 markets right now instead of its current nine. There is a real urgency these days to get into these emerging markets early. In retail, there is a first-mover advantage, because you can get the best real estate at the best prices, developing partnerships with the best suppliers and distributors, and, more important, develop relationships with customers. In the long run, Wal-Mart’s slow expansion could hurt, because European retailers, like Germany’s Metro, aren’t sitting still.
The report notes, “European retailers, on the other hand, have been far more adventurous, first gaining multicultural experience across national boundaries within Europe, and then applying the lessons learned by investing globally. Today, a visit to modern shopping areas in emerging markets in Asia, Latin America or Eastern Europe will involve seeing many European retailers, but few Americans.”