The Challenges Of Global Expansion - Here's The Top Mistakes Retailers Make

It may seem as though global expansion is a walk in the park for big retail brands. But, consider the fact that most, if not all, big brands that attempt to make their mark in foreign lands have experienced failure in one country or another. Here’s why.

Choosing Short-Term Solutions

Choosing to take your business across borders might seem like the logical choice if you’re looking for growth. However, if you define ‘growth’ as making a quick buck, you’ll have to re-think your strategy. While many entrepreneurs expect short-term returns, going global is a long-term investment, with long-term returns.

The only way to succeed is to make sure your company is prepared for the long haul, which means planning ahead. If you’re thinking of expanding globally, you should have a plan in place before you set up shop in other countries. Each country, and each region within the country for that matter, has its own unique set of consumers, laws and economic climate.  Plan for that by working with a partner like Bradford Jacobs, who will help to go above and beyond basic market research.

Setting the Wrong Priorities

Certain retailers approach new territory with the false assumption that it’s easier to run a successful business in foreign countries than in their home country. This can lead to an overinvestment of time and energy into the development of these markets at the expense of their business at home.

In reality, global expansion is more likely to occur with a strong home base, with experienced managers at the helm who can innovatively steer marketing strategies through the ever-changing tides of the local culture and economy.

Thinking Inside the Box

Many retailers fail because they don’t offer a product that is considered novel by consumers. New brands face tough competition with local retailers that have a loyal support-base. Therefore, products that are valuable in different ways to what was previously offered could be the difference between succeeding or failing.

Emphasizing Synergies Without Considering Local Needs

Synergy means an effective collaboration in which the products offered by two or more parties working together, is worth more than those put forward by either of those parties independently.

It is often the case that the value of synergy is overstated. This is especially true in cases where local companies buy products offered by foreign retail brands, without considering local needs. This means that, for the sake of synergy, retailers end up stocking up on products that are available regardless of whether they are in demand by consumers. This failure to strike a balance between local needs and synergy can lead to failure.  

Bad Timing

Given the considerable capital required to invest in countries abroad, it’s important to take into account the fact that consumers need to be ready for the product that you plan to offer.  But, it’s also possible to miss the opportunity to lay down your business in fertile ground and come into the market too late.

Hiring The Wrong People

Managers are sometimes tempted to pay lower salaries for inexperienced staff. However, having the right staff is one of the most valuable assets in your company in the long run, in all tiers of your business. Take the time and be willing to make the financial investment to get the right people for the job.

Failing to Ask for Advice

Setting up your company overseas can be a particularly expensive business if you rely completely on your own experience to be your ladder of success. There are new and different risks involved in setting up shop overseas; ones that you won’t be familiar with from running a business in your home country. Instead of relying on your own mistakes to teach you valuable lessons, consult the expertise of people who have already made a success of international expansion.

Many large-scale retailers take a clumsy hit-and-miss approach to global expansion that involves high risk decisions. In such instances, a well-considered long-term strategy falls by the wayside when growth is seen as the immediate gain.

To be successful in the global expansion of your business, think big. But don’t only think big in terms of financial return; think about the prepared-ness of your team, the extent of your research and your support system.