For the largest retailers, expansion is an imperative imposed by the world’s stock markets, who build present and future values into their share prices. Failure to sustain percentage growth rates would depress those share prices, thereby reducing those retailers’ access to capital.

For Wal-Mart, this growth addiction requires it to add in the area of $20 billion in new sales this year. Tesco, Carrefour, Kroger and other giants also face multi-$billion top-line goals. Rarely can this be accomplished through so-called “organic” growth. As a result, these companies are in constant pursuit of acquisitions, in their home markets and around the world.

Set against these circumstances, retailer globalization may be interpreted as a financial imperative, rather than a high-minded strategy. Multi-national expansion seems unlikely to add cost-saving synergies, due to the operating complexities imposes. While we indulge in thinking globally about these matters, retailers are of necessity acting locally.

Most of the retailer interest in expanding beyond North America comes from large, national chains that feel like they’re reaching saturation here. I do see more interest from smaller chains in sourcing globally–which is an interesting shift, because even 10 years ago, a lot of the smaller retailers were saying that sourcing directly themselves was too complicated, and now some are much more willing to pick that up themselves.

Seems to me the rush to expand globally is limited to the big 4: Wal-Mart, TESCO, Carrefour, and Metro.

“Globalization” cuts both ways. In this case, the question is more about non-U.S. retailers reaching our shores than it is about U.S. retailers expanding internationally.

I’m not sure how “globalization” was defined for the purposes of this study. The assumption in most of the comments is that it means expansion into new markets by the retailer. But my guess is that procurement oriented retailers jump to global sourcing of product when they see the word “globalization.”

In the industries I am familiar with (fashion-oriented home furnishings and textiles), it is the suppliers (at least, the ones that have survived) that have successfully gone global. Most everything that was made in the Southeast USA 20 years ago is now made in Southeast Asia. With the very notable and remarkable exception of IKEA, most retailers develop their store formats and merchandise to fit the new market they are entering when going international. Tesco is developing a completely new format for the U.S. market, and I doubt they are relying on their European sales reps to tell them how to execute their plans. The role of sales representative makes for an interesting discussion. It is still important that they build strong relationships, act as a liaison between the supplier and retailer, and have a thorough understanding of the specific dynamics of their customer. What is evolving is that most retailers now expect the suppliers to run their portion of the business, so this rep now needs to be backed up by a team of… Read more »

In today’s brick and mortar retail environment, globalization is very overrated. It is a great set of buzzwords and concepts, but in the end, people purchase products based upon their personal appeal, including familiarity. This negates the appeal of globalizing a product or retail chain, since you have to differentiate your product mix to appeal to each market’s unique diversity. Retailers who recognize this, and make the appropriate changes, understand that what sells well in Europe may not sell well in Asia or the U.S. They seek to target their markets based upon this segmented differentiation and maximize their appeal through this target market segmentation.

Not all manufacturers lack global insight and not all retailers are looking to expand into global markets. I have done work for some Gillette (now P&G) brand managers that have deep insights into international markets. From a retailer perspective, the issue may be more commoditization than saturation. National chains are finding themselves competing with local manufacturers on price and finding very little opportunity to differentiate themselves on value in the U.S. On the hand, some Asian markets urban population, according to the World Bank development indicators, is growing at more than twice the rate of U.S. urban population. Urban population is synonymous with a higher incidence of processed food and retail purchase, so it’s not surprising that national chains like Wal-Mart are trying to leverage their size and financial strength to enter these rapidly growing markets. As to whether manufacturers can/should help retailers in their global ambitions, not all manufacturers have this ability, but retailers should take advantage of the ones that do. From a manufacturer perspective, helping retailers expand into global markets could be… Read more »

I have not read the report yet but have some experience with globalization practices of both retailers and manufacturers. For the manufacturers, many began the process of globalization many years ago and have a good deal of expertise. Many others became global when Wal-Mart went outside the U.S. borders and have been selling in other countries for years. Certainly they are looking for people who can analyze data and understand consumers. The ability to do those activities for many manufacturers assumes the ability to make the call between global similarities and differences within the confines of the company’s strategy. For the retailers, other than Wal-Mart there is not much, if any, global expansion. However, at least 25% of the food retailers in the U.S. are foreign owned and Tesco has not officially opened any stores here yet. Carrefour, Jumbo, Ita-Yokado, Ajinimoto, Metro, and Wal-Mart are all stores that go beyond their domestic borders. There are many more chains that own stores in other countries without changing local names but they are managing stores outside their… Read more »

The major conclusion of the Dechert-Hampe study seems to be that retailers “…do not want merely to be sold; they want help selling more to their customers.” The globalization issue doesn’t seem to be major. Additionally, the study participants were only 13 retailers compared to 118 manufacturers.

I have not come across a single manufacturer who is aware of consumer trends/preferences and other trends affecting retailing in respective countries who can be of any assistance to the U.S. retailer wishing to go global. These manufacturers are very well informed about what affects their industry from manufacturing point of view. Therefore, I do not think that any retailer can look up to the manufacturers for any worthwhile information so far as globalisation is concerned.

Companies such as P&G, Unilever, etc., are exceptions, because not only they are manufacturers, they are also marketers themselves. For example, Hindustan Lever has impressive insight about consumers as well as retail scene in India. Therefore, my comments above strictly refer to the contract manufacturers.

I’m wondering if retailers shouldn’t be thinking nationalization before thinking globalization. I would think they might want to conquer the U.S. before expanding globally (of course, Wal-Mart and Home Depot may have assumed their conquest was complete).

This looks like an example of misunderstood research. Few, except for the largest retailers, are looking to open stores internationally. Some regional retailers may be exploring Mexico and Canada, but not Europe or Asia. The reason few U.S. retailers are looking internationally is they have yet to achieve store saturation here. I think many retailers are looking globally, but for products to sell, not stores to open.