Crossing Borders: Factors That Impact Retail Globalization Strategies

September 23, 2021

Globalization is no magic bullet that will accelerate retail success. However, according to retail market experts, you can’t rule out its role completely. Success in the retail industry depends on several factors that impact the business environment, due to which it’s never been easy for retailers to boost overseas revenues. Also, since most studies analyze cross-industry patterns to find best practices to develop globalization strategies and draw conclusions about succeeding globally, they are often misleading and not very effective in driving retail business success.

Leading global retailers we’ve interacted with have had diverse reasons to enter global markets. Common reasons for global expansion include saturated home markets, a quest for greater economies of scale, investment diversification, portfolio enhancement, regulatory mandates, competitive pressures, and a desire to create new opportunities by expanding their market footprint. Given the complexities that make it difficult to achieve global success, retailers must carefully analyze business environments. Their decision-making processes should consider the unique characteristics of their business environment and the market segment in which they operate.

We’ve helped leading retail and CPG companies venture into new markets and expand their global footprint by helping them create globalization strategies to meet their unique business needs. Contact our market intelligence experts to find out how we can help your organization achieve global success.

Three Roadblocks for Retailers Contemplating Overseas Expansion

Increasing risks and barriers to market entry

Acquiring local businesses hasn’t helped retailers when it comes to market expansion. Even well-established retailers have faced major challenges in mergers and acquisitions. It’s equally difficult for retailers to grow organically because of high costs and rising competition from well-established retailers. In emerging markets, few retail firms have developed extensive networks of stores that have enhanced challenges for other retailers looking to establish their market position. In developing countries, on the other hand, foreign retailers are perceived to be premium players, even though they may not offer the services offered by local players.

globalization strategies

Growing power of local competitors that operate exclusively in home markets

Local retailers operate exclusively in one region, making it easier to understand customer preferences and tailor offerings to meet their specific needs. On the other hand, new market entrants have to respond to large variations in consumer buying behavior across an extensive network of stores, making it challenging to understand shopping patterns and customer preferences. Irrespective of where you are in your market expansion journey, Infiniti Research is well-positioned to help you succeed by offering accurate insights and customized services to address your business challenges – Request a free proposal to know more.

Finding the ideal route-to-market and the perfect market entry strategy

Deciding the market entry method is equally important for retailers to adapt to the local business environment. Though there is no perfect market entry strategy, there are different routes for retailers looking to expand their operations and market footprint beyond the home market, including M&As, joint ventures, franchising, licensing, and wholesale distribution. A number of factors like internal capabilities, investment potential, and market knowledge impact the selection of these market entry methods. Hence, selecting the ideal route to entry requires an in-depth assessment of each option’s organizational and financial impact.

How Retailers Can Improve Their Globalization Strategies

These roadblocks, however, haven’t stopped businesses from expanding their retail market footprint. In retail, the business environment is such that globalization strategies differ for every retailer and must be carefully developed based on several unique challenges that retailers face. Before venturing into a new market, retailers must think through the industry’s unique challenges, understand the financial impact, and analyze the risks and rewards associated with their strategies.

Looking for detailed information on creating effective globalization strategies? Request a free brochure now!

Retailers can enhance their globalization strategies by understanding the following aspects-

The home market is the linchpin of global success

Venturing into new markets is no easy task, especially when you’re targeting a market overseas. Retailers often mistake opportunities outside the home market to be larger, less constraining, and easier to capitalize. This eventually prompts them to focus more on the overseas market segment than what’s happening at home. Notably, both these errors can prove costly, especially in terms of monetary losses.

Several businesses are unaware that strengthening the market position at home will pave the way for new overseas investment opportunities. Even in developed markets, retailers can succeed if they adopt the correct method and carefully analyze the factors that impact globalization strategies, says a retail market expert at Infiniti Research.

Innovation can help break into global markets

Being innovative is crucial for global success, especially if you’re looking to overtake well-established companies. Globalization strategies with a core focus on innovation have proven to drive better results in monetary gains and business expansion opportunities. However, a critical challenge for retailers is to develop comprehensive globalization strategies rooted in the needs of the customer of the future. This requires in-depth research and consumer insights, which can provide a direction for retailers to pursue their business expansion initiatives.

Having worked with leading retailers over the past 17 years, we have a proven track of delivering globalization strategies with experience ranging from market evaluation, route-to-market strategies, and the development of multi-year market expansion plans. Request more info to find out how we can help you achieve your strategic objectives.

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