Emergence of International Retailing

The growth of international retailing business has been a field of study by the academic researchers for the past four decades. Various academicians like Alexander and Kacker have been trying to understand the factors that led to the development of internationalisation of retail business since 1990s. By international retailing we are referring to both the two major categories of international grocery retailing as well as fashion retailing segments.

One school of thought has established the factors that have encouraged the companies to look at foreign shores for expansion of their business. The factors identified include Unique Ownership advantages where in proven brand, specific and unique style as well as factors like trademark ownership on fashion design and brands etc can push the Company to make use of the situation and extend its business into new markets {in the absence of new and increased opportunities in domestic market} and thereby gain from increased business activity. Alternatively location specific advantages in terms of attractiveness of the foreign markets as well as supplier base is said to induce the retailers to consider setting up international operations.

Yet another group has studied the development of international retail wherein European Companies made their entry into American markets and built successful businesses. Accordingly it has been said that a host of pull and push factors have lead to the internationalisation of retailing. The lack of growth in the domestic market and the new opportunities in growing markets abroad pushed the European especially British firms establishing operations in American markets. The domestic market in Europe being under Government control and regulation did not provide sufficient opportunity for growth while the American socio-economic climate was conducive for phenomenal growth in the retail sector.

Despite several viewpoints being put forth by the researchers, the growth of the major international retailers like Wal-Mart, Carrefour, Ahold and Tesco seem to point out to the fact that the internationalisation of business was a part of strategic initiatives taken by the Companies and not necessarily a turn of events that pushed them to look abroad for their business survival.

Internationalisation of retailing business is not as easy to set up when compared to the other kinds of businesses. Internationalisation of operations which is the most important aspect of the business is faced with several challenges in terms of local socio economic environment coupled with political and lifestyle as well as cultural environments in the foreign markets. The international retailers have had to understand the local dynamics and respond to the challenges in a bid to be successful. Therefore it may also be said that internationalisation of retailing grew with experience and the process of internationalisation evolved over a few decades.

International retailers in the initial stages have chosen to expand and set up business in the foreign markets which are geographically closer and in the neighbourhood. Over the period of a few years, they have understood the market dynamics and the challenges and accordingly developed market intelligence as well as the processes and operational methods suited for foreign operations. These then have been internalised and helped the Companies develop an international operations strategy and understanding that enabled them to make entries into culturally diverse and geographically distant markets.

With time and experience the Companies gained experience and expertise which gave them the confidence to explore unchartered territories and set up business operations.

Another point to be noted is that the internationalisation of retailing turned out to be the long term and strategic direction that these companies chose to take. Internationalising therefore became a part of the engine that fuelled future direction and growth of business for most of the successful international retailers.