So you want to sell in Eurasia? Just remember, planting a flag does not guarantee a market will grow. Having traveled for retail research extensively in Europe and Asia, I’ve observed a few key factors that could benefit many retailers. Following are the top three, with examples.
Making it work means working local:
Many merchants make the mistake of relying on U.S.-based management teams to oversee international expansions, and on domestic company data and models. Foreign markets have broadly different shopping patterns, however, and a tailored customer experience is not so easily imported. In South Korea, Walmart ignored (or failed to recognize) the local inclination to purchase smaller packages or the competitive power of established rivals. Its stores did not appeal to shoppers either – customers needed to use ladders to access the upper shelves of its higher-than-average racks, and the exposed pipes in the ceilings were a put-off.
Don’t underestimate the value of price:
Hitting relevant price points requires more than price parity, however; it requires an in-depth understanding of a particular market’s household budget – and what that market is willing to pay for. Also note that what is priced as a steal in one market may be a fortune in another. An 11-ounce bottle of Coca-Cola will cost 22 percent more in France than Germany, for example, while a pair of Nike running shoes is about the same.
Know your products:
Often companies retreat from new markets simply because they fail to understand merchandising basics. The products, formats and brands that excel in the United States, even major products such as Tide, may mean nothing to shoppers in foreign markets.
In 2011, the electronics chain Best Buy closed nine namesake stores in China after five years of misreading customer priorities there. Best Buy opened U.S.-style stores with U.S-type products, including espresso makers, while the Chinese preferred more practical items – more washing machines, fewer sound systems. “We were stupid and arrogant,” David Deno, Best Buy’s former Asia chief, told The Wall Street Journal in 2012.
One way retailers can attract positive consumer attention in new markets is by offering private-label or other products that are exclusive to that chain. However, before doing so retailers should be careful the market has an appetite for these products or services. Test and learn.
(Source: Forbes )