By Neil Stern, Senior Partner, McMillan Doolittle, LLP

It goes without saying that the retail marketplace has truly become a global one in recent years.

• The apparel industry has been upended by the rise of global fast fashion retailers like Zara (Spain) and H&M (Sweden), not to mention rising entrants like Primark (Ireland).
• The largest (by far) furniture retailer in the world is IKEA and no one has had more success on a global basis.
• German discount food retailers (Aldi and Lidl) are wreaking havoc on European grocery markets and have set their sites on aggressive expansion in the U.S.
• High end luxury has always had a global face and almost any high street in the world has fashion brands like Louis Vuitton, Tiffany, Dior and Gucci with an outsized presence.
• And, of course, U.S. companies have had some success as well, with Apple and Nike as examples of great global brands.

At the same time, retail, particularly mass retail, also remains remarkably local. Size and scale is not simply enough for companies to succeed on a global basis and the failures of some of the biggest companies (Tesco in the U.S., Walmart in South Korea, Target in Canada and Carrefour in India) underscores this fact.

It is also critical to point out that retail has dramatically improved around the world. Global standards are continuing to rise and, in many cases, emerging markets are able to leap frog mature markets because they haven’t invested as heavily in brick and mortar. China has embraced omnichannel retail on a broad scale. Our client in Korea, Emart, is fearless in rapidly creating and prototyping new concepts. We recently participated in the opening of a 1.5 million square foot shopping center with fully a third of the space operated by Emart over more than a dozen different formats! New specialty concepts in the center included Baby Circle, Toy Kingdom, Electromart, Life Container, PK Market, No Brand, Traders, and Maison Ticia, among many others. We know of no U.S. retailer who could move as fast.

Emart’s No Brand store

As markets mature, we will continue to see the cross pollination of retail where the best of retail from around the world will dominate the landscape. It will no longer be enough to be the best in your local market—you must be able to compete on a world stage.

We have studied the winners (and losers) to try and understand the key ingredients to success. We can boil them down into four key principles:

1. Have a clear reason for being: the more the market is mature, the more your brand must be able to differentiate. The key question: what can my concept provide to customers in the market that they are not already getting? Can I offer lower prices? Better assortments? Faster speed to market? A better experience?
2. Listen (really) to the customer and have leadership flexibility. Almost every company says they put customers first. Yet, most of the mistakes we see in international expansion begins (and often ends) with not really adapting to the needs of the local consumer.
3. Partner with Local Leadership & Talent. Almost directly related to the point above is not bringing in enough local talent to either run or partner to run the business. One critical reason why franchising tends to work so well is that it combines global brand expertise with local partners.
4. Execute on great retail. In the end, success is always about execution. Did you get the real estate, marketing, systems, store design and infrastructure right? Where a legacy market can be more accepting of a brand’s quirks or weaknesses, companies often only get one shot at a new market.

If it sounds a bit daunting to succeed, it is. The new realities of the global marketplace mean better competition. Ultimately, this is great for consumers and forces every retailer to up their game.

 

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Neil Z. Stern is a senior partner of McMillan|Doolittle specializing in the area of strategic planning and the development of new retail concepts. During his career at McMillan|Doolittle, Neil has developed strategies and new concepts for a diverse variety of world class clients across the retail industry.  

Neil is also recognized as a key thought leader in the retail arena, serving as editor of Retail Innovations, an annual global overview on the retail trends and is a regular contributor to publications such as Forbes.

Neil has been named one of the 40 Rising Stars in Retailing by Chain Store Age and is the author of two books, Winning At Retail and Greentailing and Other Revolutions in Retailing.  Neil currently serves as Chairman of the Ebeltoft Group, a global alliance of leading retail consultancies.