I had the pleasure of attending many inspiring sessions at NRF’s Big Show about global retail expansion opportunities. What follows is a recap on what I heard across several sessions: “Scaling the Great Wall of China,” “Putting the Chicken before the Egg” and “Changing World of Luxury Shopping.”
The opportunity for retail global expansion today comes as a result of globalization macro trends. What’s different about this outlook in 2015? Globalization has created an appetite for foreign brands worldwide and that’s especially true in China. Head of International eCommerce Business Development for Alibaba Group, Sherri Wu, shared with us that overseas shopping spending in China reached 216 billion RMB in 2013, but will grow to 1 trillion RMB by 2018. That represents a huge opportunity for brands who don’t have a presence in China – physical or digital. Emerging markets such as Brazil and South Korea are also fueling increased consumer spending and are popular targets for expansion from brands in established markets such as the US, UK and Germany. Additional sessions featured at NRF focused on case studies and local insight on the Brazilian market.
Globalization has increased tourism of Chinese consumers and internal luxury consumers. The US consumer market is considered the world’s largest “melting pot” of brands for luxury shopping. Gateway cities such as New York, Las Vegas, San Francisco and Miami, to name a few, are seeing a lot of luxury tourist dollars in their retail stores. These cities often also host secondary residences of this wealthy global consumer segment.
eCommerce-Led Global Expansion Paradigm
Across sessions, ecommerce-led global expansion strategy emerged as the main paradigm.
- Depth of consumer data that comes with ecommerce means brands are more aware of their global demand. Site analytics show global visitor traffic and emerging areas of opportunity
- eCommerce reduces the barriers to entry and costs for brands to dip their toes in the international waters. This means more brands can act on the opportunity than ever before
How does a brand decide where there best opportunity is?
Market size and digital penetration were top deciding factors to evaluate potential opportunity beyond site traffic demand data. Equally important is the complexity of fulfillment, however. Luxury brands also look at per capita luxury spending, as luxury shoppers in some markets have higher proclivities to spend than others.
The eCommerce-Led Localization Journey: Incremental
Alison Conway, global ecommerce director of Belstaff, part of the Labelux group, shared a view into their global ecommerce-led expansion journey, which started with low investment and progressed incrementally towards deeper localization to streamline capital expenses of the effort.
Their localization journey moved through the following phases:
- Delivery – Belstaff first added additional countries to the checkout path. Initially this was limited to the United States and a combined Rest of Europe site serving multiple countries.
- Localized Sites – Local sites followed, adapting the site to the local language and currency.
- Local Content – Country-specific content and marketing was the next phase of investment.
- Product Range Infrastructure – With a stronger foothold in-country and deeper market insight on product performance, Belstaff began to look at region specific product range offerings, sizes, prices, and distribution.
- Physical Stores – Finally, Belstaff opened their own branded physical stores.
Key Learnings from Belstaff’s South Korea Localization Journey
Belstaff also shared key learnings from South Korea, which has topped the list of many brands for market entry – due to its growing market size and tech savvy population. According to eMarketer, South Korea now ranks 7th in the top 10 countries for ecommerce sales.
First efforts for Belstaff’s launch in South Korea targeted female consumers, but they found on the ground that male Korean consumers were actually more aware of the brand. This meant that they suffered high returns from female customers who had confidence issues in the product from an unknown brand. Their marketing strategy needed tweaking.
Belstaff teamed up with a relevant female celebrity to improve brand awareness. To further localize, they have also now adapted their product range in South Korea to focus more on summer items and they have adapted sizing for the country. Finally, Belstaff opened a physical boutique in Korea. Since the opening, they have seen an additional uptick in online traffic as their brand awareness expands.
The key takeaway across multiple sessions for retailers eyeing global expansion in 2015 was the same: keep an open mind. Plan and prepare as you might, customer insights will come after launching locally and they won’t be what you thought.