The Retailer Spring_09.05_FA
International opportunities can deliver retail success
Sukhjeeven Nat Head of Retail & Wholesale Sector UK Santander Corporate & Commercial
THE MOST SUCCESSFUL BUSINESSES ARE PUTTING DOMESTIC DIFFICULTIES BEHIND THEM AND SEARCHING FOR GROWTH OVERSEAS. UK retailers face tougher challenges than ever and the outlook for 2019 remains mixed. Waning consumer confidence allied with uncertainty over the Brexit process – and its potential impact on supply chains in particular – are no recipe for a positive trading environment. But despite these tricky conditions, many businesses are managing to not just survive but thrive. Santander’s recent Trailblazers study santandercb.co.uk/insight-and-events/ trailblazers shines a spotlight on the characteristics and strategies shared by Britain’s fastest-growing companies across a range of sectors – including retail. A keen eye for opportunity The research shows that these businesses are more likely to grasp opportunities even when faced with potential threats. Take Brexit, for example. The Trailblazers study found that a third (33%) of high-growth firms are focused on the possible benefits offered by the UK’s departure from the European Union, as opposed to just 9% of slower-growth companies. The study reveals, High-growth businesses also demonstrate a stronger culture of leadership and a greater willingness to take risks. They recognise the importance of investment – in technology and innovation as well as in product development and staff – and are engaged in a process of constant renewal to stay ahead of their competitors. Moreover, these trailblazing businesses are poised to seize new growth opportunities wherever they might occur. High-growth companies are far more likely to seek external advice or enter into partnerships with other businesses. A greater proportion of fast-growing firms trade overseas – and the members of this group are also more likely to be pursuing an ambitious strategy of overseas expansion in Europe, despite Brexit concerns, as well as in territories such as the United States and Asia Pacific. Diversify for success The link between international activity and growth has long been clear: businesses that manage to diversify into a number of international markets not only reduce their dependence on the fortunes of a single economy but also give themselves the chance to rapidly expand their customer base, by capturing a global and online consumer. At the same time, they gain valuable new experience and insight that can be used to enhance operations at home and inform future strategies. The potential brand benefits of becoming an established global presence – particularly for businesses in segments such as fashion, health & wellness or lifestyle – is another substantial incentive. Just look at the recent success – and profile boost – that fashion firm Boohoo has had in the wake of its move into the US market, where they experienced a 77% increase in revenue.
Managing a complex but rewarding process Entering a new foreign market brings with it, significant challenges and potential hurdles to overcome, and it’s not surprising that many businesses view international trade with some level of trepidation. Issues ranging from choosing the right route to market, arranging international payments, and dealing with new and unfamiliar regulations and legal systems can add complexity. Businesses need to ensure that the product lines they are planning to sell into a new territory are suitable: research needs to be carried out into local purchasing patterns and buyer behaviour, for example expectations around delivery and after-sales service. Putting in place a reliable, transparent and cost-effective supply chain is also an imperative, given increasing consumer demand for added-value fulfilment services such as next-day delivery and click-and-collect – as well as ethical considerations such as product and process sustainability. Staffing is another major challenge, whether it is to support physical or online sales. Thankfully, the process of internationalising your brands for the first time need not be so daunting. For a start, there is a good deal of assistance and expertise readily available to businesses from banks, for example, public bodies such as the Department for International Trade. Taking part in trade missions to potential target markets can help businesses identify potential problems as well as strike up relationships with new customers and service providers. Picking the right route to market Making the right choice when it comes to a business’s route to market can also help the export process run more smoothly. The rise in recent years of ecommerce – especially in major markets like China and India – gives British retailers a great opportunity to reach many millions of new customers without the expense or effort of a more permanent commitment. This kind of approach could be a precursor to establishing a physical presence in the target country: in sectors such as fashion, for example an omnichannel strategy – with physical stores as well as some form of online provision – is often seen as the most effective way of mitigating the supply-chain risk that comes with a relatively high level of returns. Using an ecommerce platform may not be the only viable option and the most suitable initial approach, which could equally be a concession in a department store or a high-street outlet – will depend on the characteristics of each individual market. For more agile, mid-sized companies in particular, ecommerce provides an excellent opportunity to initially try out a limited number of product lines before quickly expanding or changing strategy as required.
1 Source: https://www.bbc.co.uk/news/business-46874367
8 | spring 2019 | the retailer
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