Retail Internationalization Is Much More Than the Opening of Stores Abroad

Subject: Strategy
Pages: 2
Words: 431
Reading time:
2 min

Retail internationalization is one of the complex issues in retail strategy primarily due to the previously localized nature of retailing. The accelerating rate of internalization in the retail sector has attracted increased attention by scholars and business practitioners who have sought to understand what retail internationalization entails. The process of retail internalization is a transfer of a company’s concepts and management functions across borders. Retail internationalization deals with the transfer of retail management processes, technology, business operations, and other retail operated activities in the international markets.

In the past, retail continued to be a predominantly domestic market activity. Indeed, international retailing was still unpopular to the majority of retailers in the economy. However, due to the globalization of markets and changing consumer needs in the modern economy, retailing is no longer a country-specific phenomenon. Rather, it is influenced by numerous opportunities and risks prevailing in the modern market. In the last few decades, retail internalization has been on the rise especially due to increasing worldwide demand as well as growing markets. The increasing opportunities presented by global markets as a result of retail internalization encourage companies to seek multi-format strategies such as supermarkets, hypermarkets, discount stores to venture into international markets. Retail internalization strategy is widely used in clothing, fashion, food, and grocery industries especially in Europe and America.

Retail internalization leads to the emergence of four types of retailers; cautious internationalists, emboldened internationalists, aggressive internationalists, and world powers. Also, retail expansion often takes the form of global formula-standardized strategies worldwide, multinational formula strategies adapted to the local tastes and lifestyles as well as investment and acquisition in the host countries. Retail internalization is associated with numerous benefits. Retailers seek international expansion due to saturation and competition prevalent in the domestic market. Foreign markets provide retailers with particular cost advantages and market opportunities otherwise unavailable in the home country. Further, through retail internationalization firms can take advantage of a wide range of products, processes, or business methods from which it derives a competitive advantage to take advantage of the global market.

The internationalization of retail firms is a complex process that requires extensive strategic planning and careful implementation to derive benefits. Retail firms have to come up with the most appropriate market entry mode that meets both the consumer’s and company’s needs. The market entry mode may take the form of exporting, foreign direct investment, collaborative ventures, licensing, franchising, among other contractual strategies. Retailers seek to reap maximum benefits from a chosen market entry by conducting extensive research and brand management in the foreign market to assess the effectiveness of the strategy.