International Retailing MKT501C2

1
International Retailing (MKT501C2)

• Week 2 Classifying International Retailers

2
Lecture 2

• Aim
• To provide students with an appreciation of the
  frameworks used to classify international retail
  activity

3
Lecture 2

• Learning Outcomes
• By the end of the lecture, and having studied the
  recommended reading, students should be able to
• describe and critically evaluate the criteria and
  frameworks used to classify international retail
  activity
• identify the fundamental differences which
  distinguish retail strategies used within the
  international environment

4
Why Classify Retailer Internationalisation?

• To help identify
• Motives for internationalisation
• The nature of internationalisation
• The problems facing various types of company

5
Classifying RI

• Present state of knowledge on RI is inadequate as
  a foundation for making generalisations.
• An appropriate approach would be to focus on
  differentiating international cases and
  situations to determine appropriate policies in
  particular circumstances.
• If international retailers are classified by
  certain criteria then basic generalisations could
  be made about companies in the different
  international groups.

6
Major Internationalists

• Mixed ownership
• Domestic leaders
• Experienced
• Recent newcomers
• Most acquisitive

7
Classifying International Retailing Activity

• Merchandise - Food/Non Food
• Sub categories
• Categories becoming blurred
• Wide merchandise in food sector
• Narrow merchandise in non-food sectors
• Differences in expansion patterns and operating
  modes between sectors

8
Activity by Type of Retailer

• Food
• Structurally concentrated home markets
• Localised consumer demand
• Significant scale required market entry costs
• Acquisitions used
• Moves into more distant markets, e.g. Tesco

9
Activity by Type of Retailer

• Fashion Sector
• Global appeal and flexibility of entry strategy
• Franchising the main market entry method used,
  e.g. Benetton and Mango
• Organic growth important, e.g. Marks and Spencer
• Concessions are a less expensive option, e.g.
  Oasis in Germany

10
Classifying International Retailing Activity

• Type of Format - e.g. dept. store, variety store
• Innovative formats filling market gaps
• Difficulty in transporting new format overseas
• New formats emerge over time

11
General Merchandise Companies

• Food Sector
• Tengelmann
• Promodes
• Delhaize le Lion
• Ahold
• Carrefour
• Aldi
• Sainsbury
• Casino

• Germany
• France
• Belgium
• Netherlands
• France
• Germany
• UK
• France

12
International Specialist Retailers

• Franchised Growth
• Benetton
• Stefanel
• Body Shop
• Tie Rack
• Pronuptia
• Mothercare

• Organic Growth
• Laura Ashley
• Hennes Mauritz
• Bally
• Virgin
• The Gap
• Arcadia Group

13
Hollanders Taxonomy of International Retailers

• Dealers in luxury goods
• General merchandise dealers
• Trading companies
• Specialised chains
• Direct selling and automatic vending

14
Criteria For Classifying RI

• Management control and standardisation of the
  marketing mix (Salmon and Tordjman, 1989)
• Geographical presence (Treadgold and Davies,
  1988)
• Geographical presence and time (Treadgold, 1990)
• Geographical presence and entry strategy
  (Treadgold, 1988)

15
Salmon and Tordjmans Classification

• Global
• Multinational
• Investment

16
Treadgold's Four Levels Of RI

• Concentrated Internationalisation
• Dispersed Internationalisation
• Multinational
• Global

17
Treadgold's Typology

• Cautious Internationalists
• Emboldened Internationalists
• Aggressive Internationalists
• World powers

18
Means of Classification

• Company Experience, e.g.
• Years operating overseas
• 'new' international retailers (lt6 yrs)
• 'developing international retailers (6-10 yrs)
• 'experienced international retailers (gt10 yrs)

19
Means of Classification

• Company Experience, e.g.
• Number of countries entered
• 'new' international retailers (lt3 countries)
• 'developing international retailers (3-4
  countries)
• 'experienced international retailers (gt4
  countries)

20
Means of Classification

• Size of International Operations, e.g.
• International sales as a of total sales
• 'experimental' internationalists (international
  ratio lt11)
• 'active' internationalists (11-30)
• 'committed internationalists (gt30)

21
Means of Classification

• Company Size, e.g.
• Sales turnover
• 'small' companies
• 'medium' companies
• 'large' companies

22
Means of Classification

• Entry Mode
• Problematic - companies use more than one entry
  mode
• However, some methods such as franchising entail
  a certain organisational culture and as such a
  clear distinction may be made between those
  companies using franchising and those companies
  not doing so.

23
Key Points

• Classification systems highlight the differences
  which exist in the nature of international retail
  operations.
• They provide an indication of the issues facing
  retailers when moving overseas.
• Retailers should be aware of the strengths and
  weaknesses of the type of operation they plan to
  develop internationally.