STORES Magazine - October 2008 - (Page 94)

CONSIDER THIS / POINT OF VIEW Technology Strategy Crucial to Global Expansion BY VERLIN P. YOUD As retailers face increasing competition and margin pressures at home, strategies for globalization and market diversification have become attractive vehicles for continuing top-line growth and extending brands and consumer offerings. In the past, globalization strategies included the need to build economies of scale for cost benefits; today’s new globalization strategies are targeted at providing products and services to defined customer segments. There was a time when looking beyond one’s own borders to explore growth opportunities may have been daunting, requiring a plan for dozens, if not hundreds, of stores in a country. However, large and small retailers are increasingly recognizing that opening a handful of stores 10,000 miles away can now be accomplished with a risk profile similar to opening a store in a new city. So why not take the chance? Often, it is a lack of the required technology infrastructure that is holding retailers back. Verlin Youd is senior vice president, global trading industries for SAP AG. more profitable growth in key micro-verticals like hypermarkets, consumer electronics, fashion apparel, pharmaceuticals, department stores and books. Delicate balancing act Retailers still face the classic retail business challenges: Providing the best shopper experience; delivering merchandise and services at the right place and price; establishing efficient supply chains and motivating employees. However, current economic factors (rising fuel prices, reduced disposable income) are having significant impact on retailers’ bottom lines. To mitigate risk, some retailers in the United States and Europe are seeking a broader revenue footprint outside their own backyards, even though these home regions may have enough geography or market potential. Thoughtful and strategic international expansion can help a retailer mitigate risk by balancing profits and challenges across a broader market. For those who want to invest in foreign markets (including emerging ones), the time to begin is today. Due to relaxed restrictions on direct foreign investment in recent years, there has been an explosion of international entrants into China’s retail market, particularly from North America and Europe. Savvy consumers in this region are reaping the benefits of expanded product and service offerings and are developing an increasing desire for Western brands. This movement is making China one of the most dynamic marketplaces in the world. Understanding this market, as well as those in Brazil, Russia, Eastern Europe, India and parts of Southeast Asia, can drive adventurous retailers to 94 STORES / OCTOBER 2008 Groundwork for success Before embarking on any expansion plan, however, the wise retailer will lay the groundwork with strategies designed to achieve success and profitability as quickly as possible. These include: • Offering a differentiated product or service that will be of value to the new market’s customer set • Determining the most effective business infrastructure for that local market – joint venture, franchise or wholly owned subsidiary • Ensuring access to the skills and expertise in that country or region to bring the product or offering to that market • Implementing an effective and efficient extended eco-system of service providers that offer support in the areas of site selection, assortment optimization, consumer insights, inventory financing, marketing and competitive expertise – as well as assistance in tackling cultural or infrastructure issues like language, currency, taxation and regulatory mandates • Having the right IT systems embedded into the business to enable business operations, along with greater innovation and more rapid response to changing business conditions. As retailers plot growth strategies, their blueprint for growth must include a strategy that fits the company’s capabilities and objectives, focuses on execution and aligns IT with a solid business strategy. Linking business strategy with an execution plan that has a unified business process platform to align employees, customers, partners and suppliers in an environment of collaboration and trust helps retailers of all sizes accelerate innovation, become more agile and better able to execute company strategy while maintaining corporate compliance on a global scale. These qualities are all essential to spurring and maintaining growth and building relationships with customers, not just for a short time, but for a lifetime – and not only in your own backyard, but on new frontiers. WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - October 2008

STORES Magazine - October 2008 Contents Executive Editor's Page President's Page Force of a Different Collar What Shoppers Think Bagging the Competition 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Favorite 50 Sticky Strategies for Retention Concept2Watch Kiosks Online Business Intelligence RFID NRFtech Wrap-up E-Commerce Credit Warehouse Systems Logistics Selling Tools Supply Chain LOEB Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - October 2008

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