International Retailing
Dana-Nicoleta Lascu
Chapter 12
Copyright Atomic Dog Publishing, 2008
Chapter Objectives
•
Provide an overview and description of the general
merchandise retailing category and offer examples
and illustrations.
•
Provide an overview and description of the food
retailing category and offer examples and
illustrations.
•
Provide an overview and description of the nonstore
retailing category and offer examples and
illustrations.
•
Address issues related to international legislation
and taxation and retailing practices around the
world.
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International Retailing Defined
International retailing is defined as all the activities
involved in selling products and services to final
international consumers for their personal
consumption.
It involves operations of international retailers
beyond home-country borders, along with
operations of local retailers in different countries
worldwide.
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Internationalization of Retailing
• Retailers are rapidly expanding internationally in order
to:
• gain competitive advantage.
• increase sales.
• increase profits.
• improve overall firm performance.
• As they expand internationally, retailers can take
advantage of cost savings and learn from experiences
in a way that could further enhance home-country
operations.
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Top 10 Global Retailers
Rank
Country
of Origin
Retailers
Format
Sales (US$
millions)
1
U.S.
Wal-Mart
Discount, Hyper/Supermarket, Superstore,
Warehouse
312,427
2
France
Carrefour Cash & Carry, Convenience, Discount,
Hyper/supermarket, Specialty,
92,778
3
U.S.
Home
Depot
DIY, Specialty
81,511
4
Germany
Metro
Cash & Carry, Department, DIY,
Hypermarket, Specialty, Superstore
69,134
5
U.K.
Tesco
Convenience, Department Hypermarket,
Supermarket, Superstore
68,866
6
U.S.
Kroger
Convenience, Discount, Specialty,
Supermarket, Warehouse
60,553
7
U.S.
Target
Department, Discount, Superstore
52,620
8
U.S.
Costco
Warehouse
51,862
9
U.S.
Sears
Department, Specialty, Mail, E-commerce
49,124
10
Germany
Schwartz
Discount, Hypermarket,
Supercenter/Superstore
45,891
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Source: “2007 Global Powers of Retailing,” January 2007, www.stores.org.
Retail Formats: Specialty
• Specialty Stores
 Retailers offering a narrow product line and
wide assortment.
 Examples:
- Virgin Records (music products)
- Mango (youth fashion)
• Specialized Markets
• Markets that house stores specializing in a
particular product category.
- Jade market, Hong Kong
- Covered bazaar, Istanbul
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Retail Formats: Department Stores
• Offer a broad variety of goods and wide assortments.
• Developments:
 U.S. and Canada – recent substantial losses.
 Europe – expansion of national chains throughout the
European Union.
 Asia – on the decline.
Galeries Lafayette is a popular
French department store
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Retail Formats: General Merchandise
Discount Stores

Characteristics:




Sell high volumes of merchandise
Offer limited service
Charge lower prices
Types:
- All-purpose – offer wide variety of merchandise and
limited depth. Example: Wal-Mart.
- Category specialists (category killers) – carry a
narrow variety of merchandise and offer a wide
assortment. Example: Home Depot, Toys R Us.
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Retail Formats: Off-Price Retailers


Characteristics:
 Sell brand name and designer merchandise at
below regular retail prices.
 Overruns, irregular products, previous seasons’
products.
Examples:
- Factory outlet stores.
- Close-out retailers (broad, inconsistent
assortments). Increasingly popular
internationally.
- Single-price retailers (all products for the same
price).
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Retail Formats: Catalog Showrooms
• Catalog Showrooms



Offer high-turnover, brand name goods at
discount prices.
Internationally, however, goods sold through
this venue tend not to be brand name, but,
rather, goods that have not sold the previous
season through the catalog.
Example: IKEA is probably the most successful
of these store formats internationally.
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International Food Retailers
• Conventional Supermarkets


•
Self-service retailers with annual sales higher than $2
million and less than 20,000 square feet of store space.
Conventional supermarkets abound worldwide.
Superstores


Combination stores (food and drug).
Hypermarkets – combine supermarket, discount, and
warehouse retailing.
International examples: Tesco Extra.
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International Food Retailers (contd.)
•
Warehouse Clubs (Wholesale Clubs)



•
Require members to pay an annual fee.
Operate in low-overhead, warehouse-type facilities.
Offer limited lines of brand-name and dealer-brand
merchandise at a substantial discount.
U.S. clubs are rapidly expanding – among them
are Costco and Sam’s Club.
• International competitors are particularly
aggressive: Metro is expanding worldwide.
Membership requirements are more stringent than
in the U.S., however, membership cards have a
high “pass-along rate.”
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International Food Retailers (contd.)
• Convenience Stores






Small residential retailers or retail chains consisting of
small neighborhood stores.
Open long hours.
One-stop shopping.
Carry limited lines of higher-turnover necessities.
The merchandise mix varies from country to country, as
necessities differ.
In Eastern Europe, many convenience stores are present
under the form of kiosks, and may care scrambled
merchandising ranging from eggs and coffee to whiskey
and vodka.
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Nonstore Retailing
• Internet Retailing



Also known as interactive home shopping or
electronic retailing.
The use of the Internet as a venue for selling
merchandise is practiced both by dot-com
companies, as well as traditional retailers
attempting additional market penetration.
Access to international markets is facilitated by
the Internet.
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Nonstore Retailing (contd.)
• Vending machines



Increasing in popularity.
Technology is facilitating an interactive
consumer experience.
Different formats worldwide (especially popular
in Japan).
Vending machines are
omnipresent in Japan.
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Nonstore Retailing (contd.)
• Television Home Shopping



A venue for selling merchandise to consumers in their
homes using cable channels.
Examples: infomercials and direct response advertising.
Popular in North America and Europe, and becoming
increasingly popular in Asian markets.
• Catalog Retailing and Direct Mail Retailing



Venues for selling merchandise to consumers using
catalogs and other types of direct mail.
It allows for the international expansion of retailers.
Must be adapted to local market needs and practices.
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Nonstore Retailing (contd.)
•
Direct Selling



A retailing venue whereby a salesperson, typically an
independent distributor, contacts a consumer,
demonstrates product use and benefits, takes orders
and delivers the merchandise.
Direct selling firms are most active in the growth
markets of Southeast Asia, Central and Eastern
Europe, and Latin America.
Due to the negative publicity surrounding direct selling
practices, China first banned, but, subsequently
reconsidered allowing direct selling operations, but with
tight regulations.
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Network Marketing
• Variation on direct selling.
• Involves signing up sales representatives to go into
business for themselves with minimal start-up capital
and sell more "distributorships" and merchandise.
• Network marketing is growing rapidly, especially in
emerging markets.
• International examples: Amway, Herbal Life.
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Issues in International Retailing
• Legislation and Regulation
• Local governmental regulations differ from one market to
another.
• Taxation and Cross-Border Shopping
• This practice is common in countries where consumers are
charged lower duties for products they purchase from a
neighboring country.
• Consumers' purchase decisions are driven by tax
differences, rather than by differences in producer prices.
• Cross-border shopping may cause reduced profits for
domestic retailers.
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Issues in International Retailing
(contd.)
• Variation in Retail Practices: A Consumer Perspective
• Retail practices vary from one market to another depending
on culture and market preferences.
• Example: In the U.S. consumers purchase products in bulk
and less frequently. In Japan and Europe, consumers
purchase products in smaller quantities and on a daily
basis.
• Variation in Retail Practices: Salespeople and Management
• Sales service differs from market to market, ranging from
extremely friendly to curt salespeople.
• Some stores can charge an entrance fee for people
shopping there, while other stores require a particular dress
code of their customers.
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Chapter Summary
• Described general merchandise retailing.
• Addressed the food retailing category.
• Discussed the non-store retailing category.
• Addressed issues related to legislation and taxation.
• Provided an overview of retailing practices around
the world.
Copyright Atomic Dog Publishing, 2008
20