New York -- The growing appeal of smaller format stores and the increasing number of international moves by emerging market retailers are two of the key trends revealed in the Accenture Globalization Index, Quarter One 2013.
“Retailers are rethinking their investment in opening large stores in new markets, especially when they already have too much space in their home market. Instead, retailers are choosing to enter new markets with smaller format and temporary stores (pop-ups) to gauge consumer interest in the brand and the potential success of a permanent store presence,” said Chris Donnelly, global managing director, Accenture Research.
The report analyzes Planet Retail data for nearly 500 of the largest global retailers and examines their entry into new markets. It found that global expansion increased in the first quarter (January 16 - April 15, 2013) as retailers entered 25 new markets. This is up from the previous quarter’s (October 16, 2012 - January 15, 2013) 17 market entries. But is well below the 43 new market entries during the period of July 15 - October 15, 2012.
In other first quarter highlights:
- Grocery retailers led the way for global expansion with 11 market entries in the fitsr quarter, compared to only four market entries in the previous quarter. Apparel retailers’ global growth remained flat with five recorded market entries in the quarter. Department stores had three market entries. “Grocers are leading the way with an emphasis on small formats, e-commerce sites and even temporary stores,” the report stated. “These routes avoid the heavy capital investment and the risk of a large and partially redundant store network.”
- Twenty percent of all market entries in the quarter were made by retailers based in emerging markets compared to 0% in fourth quarter 2012 and 12% in third quarter 2012. Over the three quarters, seven of the nine market entries by emerging market-based retailers have been made into other emerging market countries.
- U.K. retailers launched the highest number of overseas expansions in– seven out of a global total of 25. U.S. retailers followed with three. In the previous quarter, those positions were switched with the U.S. launching seven and the U.K. with four.
- Expansion into the U.S. halted. There were no market entries by large foreign retailers in the United States from Jan. 16 to April 15, 2013.