Retail Globalization: Navigating the Maze

Over the past decade, a growing number of retailers in developed countries have reduced their dependence on their home markets, where sales have stagnated in recent years, and made expansion into more attractive foreign markets a priority growth strategy.

However, globalization can be risky and require a substantial investment of time, money, and resources. As retailers have moved into unfamiliar and unpredictable territory, many have been unprepared for the unique challenges posed by a different economic, political and cultural environment. Proper due diligence into both the obstacles and the opportunities can help retailers set and achieve realistic goals for increased sales and profitability as they tap into new growth markets.

Every retailer that has expanded into foreign markets or has even thought about it knows only too well – globalization adds layers of complexity to every aspect of doing business, creating greater risk exposure. Merchandising, marketing, store operations, real estate, human resources, reporting requirements, tax policy – all must be reevaluated in light of a new consumer culture, competitive set, or regulatory environment.

In addition, economic uncertainty, political instability, currency fluctuations, and other macro environmental factors or disruptive events beyond the retailer’s control add to the risk of doing business in foreign markets. Before a retailer can decide what role, if any, international expansion will play as part of its overall growth strategy, it is important to evaluate and manage the company’s threshold for risk across these multiple dimensions.

Download the paper to read more.