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What Is International Retailing?. “All activities involved in selling products and services to final international consumers for their personal consumption”. Internationalization of Retailing . Retailers are rapidly expanding internationally in order to: Gain competitive advantage
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What Is International Retailing? “All activities involved in selling products and services to final international consumers for their personal consumption”
Internationalization of Retailing • Retailers are rapidly expanding internationally in order to: • Gain competitive advantage • Increase sales • Increase profits • Improve overall firm performance • As they expand internationally, retailers can take advantage of cost savings and learn from experiences in a way that could further enhance home-country operations.
Top 10 Global Retailers Rank Country Retailers Format Sales of Origin (US $mil.) 1 U.S. Wal-Mart Discount, Hypermarket, Warehouse, 256,329 Supermarket, Supermarket, 2 France Carrefour Cash & Carry, Discount, Superstore, 65,011 Convenience, Specialty, Hypermarket 3 U.S. Home Depot DIY, Specialty 58,247 4 U.S. Kroger Convenience, Discount, Warehouse, 51,760 Specialty, Supermarket, 5 Germany Metro Cash & Carry, Superstore, Specialty, 48,349 Department, DIY, Hypermarket 6 U.S. Target Department, Discount, Superstore 42,722 7 Holland Ahold Cash & Carry, Supermarket, Drug, 40,755 Convenience, Discount, Hypermarket, Specialty 8 U.K. Tesco Convenience, Department, 40,071 Superstore Hypermarket, Supermarket, 9 U.S. Costco Warehouse 37,993 10 U.S. Sears Department, Specialty, E-commerce 35,698 Mail Source:“2004 Global Powers of Retailing,” January 2004, http://www.stores.org/m200global.asp
Countries Have Many, Small Stores Convenience Store Segovia, Spain
Retail Formats (General Merchandise): (1)Specialty Stores • Specialty Stores (narrow product line and wide assortment) • Very popular, especially in developed countries; independent stores often dominant • E.g. florists, Virgin Records
(2)Specialized Markets • Markets that contain specialty stores specializing in a particular product category • Exist worldwide in both developed and developing countries • E.g. Jade market, Hong Kong, Jewelry Market
(3)Department Stores • General Retailers that offer a broad variety of goods and wide assortments • U.S. & Canada losing share to discounters, specialty stores, category killers • European department stores focus on home countries with eye towards European Union • Often include supermarket sections
(4) General Merchandise Discount Stores • Retailers that sell high volumes of merchandise, offer limited service, and charge lower prices, e.g. Wal-Mart, Target, Home Depot, KMart
Retail Formats (Food): (1) Super Stores / Hypermarkets • Hypermarkets Large retailers that combine supermarket, discount, and warehouse retailing principles
Warehouse or Wholesale Clubs • Require members to pay an annual fee; operate in low-overhead, warehouse-type facilities, offer limited lines of brand name and dealer groceries, apparel, appliances, etc. at low prices
Convenience Stores, Kiosks • Small retailers located in residential areas, open longer hours, carry limited lines of high-turnover necessities.
Food Retailers • Convenience Store • Small residential retailers or retail chains consisting of small neighborhood stores. • Open long hours. • Carry limited lines of higher-turnover necessities. • One-stop shopping. Convenience store in Poland—note that Procter & Gamble products (especially their pan-European detergent Ariel) are predominant.
Trends in International Retailing • Both U.S. & European retailers expanding internationally • Consolidation & acquisition among retailers • Television Home ShoppingPopular in North America and Europe, and becoming increasingly popular in Asian markets. • Direct selling firms are most active in the growth markets (in emerging markets, in particular). • Network marketing is growing rapidly, especially in emerging markets. Involves signing up sales representatives to go into business for themselves with minimal start-up capital and sell more “distributorships” and merchandise.
Global Internet Retail Sector Segmentation Category % Market Share Tickets & Travel 29.00% Computers, Electronics & Software 28.70% Household 12.80% CDs, Music and Videos 11.80% Books 8.50% Apparel and Gifts 5.00% Toys & Games 4.20% Other 0.10% Total 100.0% Source:“Global Internet Retail,” Internet Retail Industry Profile: Global, May 2004, 1–17.
Issues in International Retailing • Local regulations – e.g. restrictions on expansion of hypermarkets; operating hours • Taxation – e.g. Taxes higher in Norway than Denmark; Consumers shop on duty free shop on Ferry • Consumer Preferences- e.g. U.S. shop less frequently & buy in bulk; Argentina prefer to shop in small food stores