“Retail doesn’t cross borders”
Globalization has erased international barriers and nowadays most companies think that the best and easiest way to grow is by investing overseas. However, in reality, international success varies widely, and it is not that easy to increase profits by investing abroad. This article shows how difficult it is for retail industry to expand internationally. It provides some surprising findings about the way that the retail industry tends to invest overseas. The main purpose of the article is to underline that retailers tend to go abroad without a good globalization strategy. Rather than focusing on criticizing them, the article explains some possible solutions to correct this trend.
It is not as easy as it seems to go abroad for a retailer due to the barriers that they need to face. Nevertheless, the strategies used to go abroad seem not very appropriated to overcome those barriers. It’s very important to keep in mind that globalization only contributes in the long-term. Most of the retail companies succumbed to the pressure to grow and made the mistake of thinking that the result would come in the short-term. The reality is that the home market stays critical to its performance, no matter what the globalization strategy is, because their strength comes from their own market and therefore, they need to preserve it.
Barriers to entry in foreign markets maybe are the main obstacle that retail companies face. Gaining new local consumers is really difficult and retailers have to offer them something new, different and valuable. Another problem related to consumers is that they are highly oriented. That means that retailers have to please a wide variety of consumers in the same area. In addition, retailers have to respond to the fact that shopping habits vary with each customer.
The fact that grocery retailing is low margin business does not benefit the globalization process either. In order to make high profits in...