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Deloitte - Retail_RetailGlobalExpansion_021610

Deloitte - Retail_RetailGlobalExpansion_021610 - Retail...

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Retail Global Expansion The journey starts at home
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2 In the current economic climate, new expansion targets may suddenly be within reach, which could help position a retailer to rebound more quickly, gain a foothold in a growing market, or capture the coming upturn. Retailers who are able to seize the marketplace opportunities inherent in difficult economic times are investing in global expansion as a path to long-term growth. U.S. retailers’ early global retail expansion efforts were often unsuccessful. Their efforts were sometimes greeted with skepticism by foreign shoppers. Many early expanders met limited success and ultimately decided to disengage. However, successful retailers have invested time and money into understanding local markets by adapting their strategies and tweaking their product offering and communications to gain share in foreign markets. The process will likely take some time, but global markets will become increasingly crucial as the growth prospects transition from western markets to new, emerging areas. Retailers looking to move into new overseas markets must first fully understand their own goals, capabilities, and resources and how these areas translate in a global marketplace. With today’s volatile market, it may be difficult for retailers to see the silver lining. However, despite a struggling economy and cautious consumers in the U.S. and abroad, global expansion opportunities do exist for those willing to move now. While there is no “one-size- fits-all” path to expansion, finding one’s way should always start at home. Find a way to keep growing – any place, any time In almost every market, retailers are facing the constant pressure to expand. Wall Street rewards growth and potential. Shareholders have high expectations for retailers to find ways to maintain same store sales growth while continuing to open new locations. To grow in their current markets, retailers are trying to find incremental sales without cannibalizing existing store sales—a challenge, particularly in a difficult economy. Retailers also face stiff competition from new international players entering their home markets. An increase in competition for a shrinking share of the consumer’s wallet is not a story that sells on Wall Street. Most retailers eventually reach domestic market saturation and eventually begin hearing the siren song of international expansion. Though this expansion is more daunting in today’s economic environment, now is the time to consider positioning for global growth. Doing so may enable retailers to rebound more quickly and profitably as economies recover, placing them in a commanding position in new emerging markets. For many retailers, there are two key reasons to invest now in a global expansion strategy as opposed to waiting for economic conditions to measurably improve. First, better deals are available now. Some companies are floundering. Certain foreign retail sectors are currently quite weak. These trends create opportunities for acquisition, partnering, or consolidation. This weakness
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