International retailing

International retailing

1. International Retailing
Ajith V International Retailing , Term 4 2010

2. International Retailing , Term 4 2010
International Retailing
All the activities involved in selling products and services to final international
consumers for their personal consumption.
Hollander (1970) defined multinational retailers as ‘those firms that are in some way
responsive to the headquarters (HQ) located outside the country, or colony, in which the
retail sales are made’.
Ajith V

3. International Marketing, Term 3 2004

4. what is that retailers actually
internationalise

5. International Retailing , Term 4 2010
Is it management expertise and management systems?.
Innovative forms of trading? Or
unique retail brands?.
Ajith V

6. Dimensions of Retail Internationalization
International Marketing, Term 3 2004

7. Financial investments
The acquisition of shares in a retail company based in one
country by an investing institution (such as a pension fund)
that is based in another market.
Cross-border shopping, which is often motivated by a
consumer’s desire to acquire goods from an adjacent country
that are perhaps scarce or more expensive within the home
market.
For example ,the movement of day-shoppers from the UK to
France in the search of less expensive, good quality wines,
illustrates this invisible form of internationalization in
retailing.
International Marketing, Term 3 2004

8. Retail Know – How
The managerial, which includes concepts, policies and
systems, and the technical, which refers to matters related to
location planning, visual merchandising, as well as buying and
merchandising.
The flow of expertise can be planned or unplanned.
International Marketing, Term 3 2004

9. Transferable retail expertise
Store Formats.
Management Ideas.
Retail Technology.
International Marketing, Term 3 2004

10. Internationalisation of Sourcing
The most common and widespread form of retail
internationalisation
Driven by the globalisation of manufacturer
brands and/or the desire to source cheaper, but
better value products from foreign markets,
retailers are increasingly sourcing goods and
services from markets other than the home
market .
Example : Mark and Spencer.
International Marketing, Term 3 2004

11. LOCAL VS GLOBAL SOURCING
LOCAL
suppliers will be familiar with local tastes and preferences
supporting local industries can help a retailer to integrate into
new market economy
GLOBAL
can help to develop an international outlook
necessary to remain price competitive
enabling technology has made global sourcing more viable
for many
consumers are becoming more ‘international’ in their product
usage
can be difficult to determine exactly where/how product is
made

12. Why Global Sourcing
Cost.
Market Differentiation.
Push and Pull Factor.
International Marketing, Term 3 2004

13. Push vs. pull
Push factors relate to those features of the
home market that serve to make domestic
buying problematic and less viable.
Pull factors are those features of the foreign
market that make sourcing from that market
more attractive.
International Marketing, Term 3 2004

14. International Marketing, Term 3 2004

15. Stages
The first stage involves domestic sourcing, combined with the use of
wholesalers who supply products of foreign origin to the retailer.
 The second stage sees the retailer becomes more proactive in their
international souring involvement in that they commission agents to source
foreign products on their behalf.
 The third stage typically involves the establishment of a foreign buying
office which acts as a link between the buyers based within the home
market head office and the local suppliers in the foreign market.
 The final stage of development involves the creation of a worldwide
network of buying offices that supply information on supplier
opportunities, manage product quality within their precise region and
manage the transportation of products from the supplier to the home
market.
International Marketing, Term 3 2004

16. Internationalisation of
operations
The internationalisation of operations is the most visible
dimensions of retail internationalisation.
The internationalisation of operations can be described
as ‘the operation, by a single firm, of shops or other form
of retail distribution, in more than one country’.
Dawson (1994)
International Marketing, Term 3 2004

17. what is that retailers actually
internationalise

18. The motivations for international
expansion

19. Theories
Eclectic Paradigm proposed by Dunning(1981).
International inducements(Hollander, 1970).
Push and pull of retailer internationalisation.
(Alexander, 1990)
International Marketing, Term 3 2004

20. Eclectic Paradigm
Dunning identified three particular advantages
which encourage foreign market participation.
Ownership-specific advantages.
Internalisation advantages.
Location-specific advantages
International Marketing, Term 3 2004

21. Ownership-specific advantages
Ownership-specific advantages provide a firm
with competitive advantage within a market
because of their possession of certain tangible
and intangible assets, such as unique products,
company size or trademark protection, which
are, at least for a period of time, exclusive or
specific to the firm possessing them.
The desire to maximise the ownership-specific
advantages, then encourages the firm to use
them itself rather than to sell or lease them.
International Marketing, Term 3 2004

22. Internationalisation Advantages
The internalisation advantages are ultimately
concerned with protecting against or exploiting
market failure, and necessitate the extension of
the firm’s activities through organic growth and
vertical integration, rather than through the
externalising of these assets through contracts
with independent firms.
International Marketing, Term 3 2004

23. Location-specific advantages
Location specific advantages related with the
specific location. ( Cheap labour, import control)
International Marketing, Term 3 2004

24.  Ownership and internationalisation advantages
are related to location specific advanatges.
International Marketing, Term 3 2004

25. Extension of theory to Foreign
investment
Dunning makes no direct reference to retailers’
foreign investment.
Dawson (1994) and Pellegrini (1992) have
considered the applicability of the theory to the
foreign direct investment of retailers, analysing
in particular the three advantage categories
within the context of retailing.
International Marketing, Term 3 2004

26. Dawson (1994) suggested that the ownership advantages of
retailers can be readily found in their products, brands and refined
sales methods (such as that undertaken by Benetton), but these
advantages can be readily obtained through indirect financial
agreements in the form of licensing and franchising.
International Marketing, Term 3 2004

27. Pellegrini (1992) maintained that while ownership-specific
advantages are often linked to product differentiation, these
advantages do not justify, in themselves, the decision to invest
abroad when products can be so easily and profitably exported.
Location-specific advantages, such as relatively lower fixed and
variable costs, may justify why a product ought to be produced
within another country; Pellegrini argued that this does not account
for why the retailer should be directly involved in the retailing of that
product given that there are many examples of retailers enjoying
locational advantages through franchising and licensing, thus
avoiding direct investment and other associated costs.
International Marketing, Term 3 2004

28. International inducements
Hollander (1970) provided a comprehensive account of the
motivations underlying a retailer’s decision to internationalise.
Inadvertent internationalisation, which occurs as the result of
political events, such as the annexation of a region after military
action.
 Non-commercial motives, such as those associated with the
advancement of social, ethical, personal or political beliefs.
 Commercial motives derived from the desire to exploit the
opportunities available within a stable and economically attractive
foreign market.
International Marketing, Term 3 2004

29. Push and pull of retailer
internationalisation
Alexander (1997) noted that push and pull
factors have emerged as an important method
for interpreting retailers’ motives for expanding
into foreign markets.
Growth, Environmental Factors
International Marketing, Term 3 2004

30. Direction of International
Expansion

31. Direction
Geographical and Cultural Proximity.
Evolutionary pattern of international
development
(JohansonandVahlne, 1977;Weidersheim-
Paul et al., 1978; Cavusgil, 1982).
International Marketing, Term 3 2004

32. Evolutionary pattern typically entails an initial
entry into markets perceived to be
geographically and culturally similar to the
domestic market in terms of language, political
and trading systems, as well as social mores
and traditions. As companies increase in their
international trading experience, confidence
encourages them to extend into foreign market
previously perceived to be impenetrable and
remote (Cavusgil, 1980; Welch and
Weidersheim-Paul, 1980).
International Marketing, Term 3 2004

33. Psychic distance
Psychic distance is predicated on the belief that
a firm’s inexperience in foreign market exchange
will encourage them to initially export to, and
establish operations within, markets perceived
to be psychologically proximate to the home
market.
International Marketing, Term 3 2004

34. Treadgold Stages
Reluctance
 Caution
 Ambition
‘The first stage begins with the admission of a lack of opportunity within
the home market. As a result, foreign market entry is a reluctant
requirement for corporate growth. At the second stage, the cautious retailer
enters culturally and geographically close foreign markets. Experiential
learning encourages the retailer to become more ambitious in their
international aspirations, and their market choice is then based on the
nature and extent of opportunities within the foreign market, rather than for
reasons of cultural and geographical safety.’
International Marketing, Term 3 2004