International shoppers took advantage of
the weak dollar to travel to the United
States to shop for Christmas presents
late last year. At the same time, U.S.
retailers were trying to determine how
best to bring the merchandise to them.
While international expansion is nothing
new for some businesses, there are so
many retailers opening overseas that
it’s becoming hard to keep track.
Globalizing is a smart strategy that has already
paid off handsomely for many companies. For
example, despite soft same-store sales, Wal-Mart
was able to appease analysts due to a strong
showing from the international sector, where net
sales grew 18.8 percent in the fourth quarter of
2007. And just last month, Tiffany & Co.
reported that international sales soared 21
percent while same-store sales rose 6 percent.
The first overseas stop for many retailers has
been London. Fashions at Abercrombie & Fitch,
the first U.S. teen retailer to open in Europe,
have been well-received by shoppers: Its London
store is able to charge twice as much for
merchandise as stateside stores, and company
executives estimate that overseas sales could
account for half their revenue in about a
decade.
It’s no wonder that the company is expanding,
adding four more locations in the U.K. this year
and a Tokyo store in 2009.
Other retailers expanding into London include
Whole Foods, which opened its first location
there last year, and Banana Republic, which
opened a flagship store last month.
Storefronts are only part of the equation,
however. Within the last year, online jeweler
Blue Nile launched websites in the U.K. and
Canada; Timberland also launched a European
website last October. Other online retailers,
like Anthropologie, haven’t made the leap
overseas but are testing the waters by shipping
merchandise overseas and accepting payments in
multiple currencies.
While the U.K. provides a natural transition for
U.S. companies, retailers are expanding
elsewhere, as well. Apple will open its first
store in Australia this summer, Best Buy plans
to open up to eight new stores in Shanghai
within the next year and Dunkin Donuts is
undergoing massive expansion in the UAE.
U.S. retailers aren’t the only ones looking
outside their own borders. U.K. powerhouse Marks
& Spencer expects 20 percent of its sales will
come from overseas locations within five years
and has plans to open 30 new stores in the Czech
Republic and China. International retailers are
also venturing into the States with the opening
of Tesco’s Fresh & Easy concept and a Tommy
Hilfiger flagship store set to open in New York
this November.
Going global isn’t easy: In addition to
potential hurdles with vendors, disparities in
laws and differing customer priorities,
retailers must identify a merchandise mix that
appeals to a new demographic. While the
transition may be a bit easier for online
retailers, these companies face their own
challenges — nuances in language, inventory
control, even the selection of website colors
and fonts. But, as Tiffany and Wal-Mart can
attest, the move can be well worth it.
