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 RankCountryRetailers Format Sales of Origin (US $mil.) 1U.S. Wal-Mart Discount, Hypermarket, Warehouse, 256,329 Supermarket, Supermarket, 2France Carrefour Cash & Carry, Discount, Superstore, 65,011 Convenience, Specialty, Hypermarket 3U.S. Home Depot DIY, Specialty 58,247 4U.S. Kroger Convenience, Discount, Warehouse, 51,760 Specialty, Supermarket, 5Germany Metro Cash & Carry, Superstore, Specialty, 48,349 Department, DIY, Hypermarket 6U.S. Target Department, Discount, Superstore 42,722 7Holland Ahold Cash & Carry, Supermarket, Drug, 40,755 Convenience, Discount, Hypermarket, Specialty 8U.K. Tesco Convenience, Department, 40,071 Superstore Hypermarket, Supermarket, 9U.S. Costco Warehouse 37,993 10U.S. Sears Department, Specialty, E-commerce 35,698 Mail Source : “2004 Global Powers of Retailing,” January 2004,

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

Specialty Store in Portugal Mall jn00

Specialty Stores Portugal jn00

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Specialty Food Store Germany

Lisbon Fish Market jn00

(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

Silk Market, Beijing ap00

Specialized Market Sukienice Krakow jl02

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Specialized Market La Boca Argentina

(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

El Corte Ingles Department Store in Madrid, Spain ju00

Department Store Germany ju02

Department Store Germany ju00

Mall, Frederikstad, Norway ju01

Mall Buenos Aires may02

Queen Street Mall, Brisbane Australia – Happy Jack’s

Shopping Mall, Canberra, Australia

(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

Shopping Mall, Canberra, Australia

Retail Formats (Food): (1) Super Stores / Hypermarkets Hypermarkets Large retailers that combine supermarket, discount, and warehouse retailing principles

Hypermarket Santiago Chile

Hypermarket Santiago

Hypermarket Santiago Chile

Brands Supermarket Australia

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.

Kiosk Lima, Peru

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Trends in International Retailing Both U.S. & European retailers expanding internationally Consolidation & acquisition among retailers Television Home Shopping Popular 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

Kolding, Denmark 3 p.m. Saturday

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