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‘Virtual’ Global Growth

BY Barbara Thau

Demand for American brands around the globe is getting bigger every day. There are currently more than 2 billion prospective global customers, and about 25% of the traffic from U.S. retail sites comes from international shoppers, according to industry experts, with Canada, Australia, the United Kingdom, Russia and Hong Kong currently the top international markets for U.S. retailers.

“Consumers around the world covet iconic American [retail] brands like Macy’s, Neiman Marcus and Saks Fifth Avenue that are just not available in the countries they live,” said Kris Green, chief strategy officer, Borderfree, an e-commerce technology and services company that works with U.S. companies to make sure their e-commerce sites don’t get lost in translation.

In addition to handling the logistics of U.S. retailers global e-commerce operations, Borderfree provides market intelligence on countries worldwide. It also localizes the sites for international consumers so that Crate & Barrel’s Brazilian Web shoppers, for example, are greeted in Portuguese and are shown prices in Euros.

Marketing and merchandising to local tastes and preferences is critical to wooing a global audience. Retailers also need to be aware of country-specific shopping patterns.

“For example, Canadians tend to shop in the evening after work,” Green said, “Australians tend to shop on their lunch hour, and in markets such as the U.K., a ‘free returns’ message will have a positive impact on sales.”

Lane Bryant, the 800-store U.S. women’s plus-sized fashion retailer, started its online global push in 2011 after noticing heavy international traffic at its tourist-frequented New York and Los Angeles stores. The retailer partnered with Borderfree, launching in Canada.

“They have the scale and expertise that we don’t have in shipping to more than 100 countries,” said George Hanson, VP e-commerce, Lane Bryant, a division of Ascena Retail Group, Suffern, N.Y.

The retailer currently sells in more than 100 countries with Canada, the United Kingdom, Australia, Israel and Mexico its biggest markets. Lane Bryant is working with Borderfree to grow its online global revenue by customizing its pricing in top international markets and tailoring its e-commerce marketing efforts, country by country.

“They (Borderfree) can help us understand local marketing practices, introduce us to local advertising agencies, online shopping engines and malls, holidays that matter, and influential bloggers who can help carry the brand message,” Hanson said.

On a category basis, Lane Bryant has already identified intimate apparel as a growth opportunity in global markets.

The plus-sized market is even more under-served overseas than it is in the United States, Hanson added.

Barbara Thau is a New York City-based business writer.

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Top 50 Global Retailers

BY Ray Gaul

Kantar Retail’s Market Insights team recently updated all forecasts on global retail — a highly collaborative process that gains particular momentum the first half of the year as retailers report full-year performance for the prior fiscal period. The updated reports rank retailers by Kantar’s 2013 sales estimates, and include growth projections for the next five years. Highlights from this cycle’s updated Top 50 Global ranking include some key landscape shifts, and point to several important predictions Kantar foresees over the next few years.

Leading the Pack

Competition in the global retail landscape grows fierce, and Kantar continues to see the impact of nontraditional channels making inroads into grocery and other key categories. Top global players are making critical investments and decisions to win.

Retailers headquartered in the United States made a few significant upward moves in 2013, jockeying for position in the Top 10. Wal-Mart Stores still retains the No. 1 spot by a long shot, yet it will be interesting to watch how this retailer’s future growth and sales mix take shape with current investments in global markets, smaller formats, in-store upgrades and its online business.

Costco notably inches upward to the No. 3 spot, ousting U.K.-based Tesco. Costco, a consistently strong performer, is focusing much of its ongoing expansion strategy in the international space. New European markets are on the horizon for this retailer; and while entry into France has been challenging, operations in Spain are set to take off at the end of the year.

Kroger makes the Top 5 this year, moving to the No. 5 spot. Kroger is the only retailer in the Top 10 without an international presence; however, this grocer certainly has the strategy and resources toward expanding its regional reach. Kroger recently announced its acquisition of regional grocer Harris Teeter in a $2.5 billion deal, giving Kroger a 200-plus store count boost in the southeastern region of the United States.

Carrefour holds on to its No. 2 position, and Tesco slips to No. 4. Both retailers pulled out of several international operations over the past year, but each is calibrating its portfolio through diversified formats and new markets. Schwarz Group moves up to the No. 6 spot, as European discounters continue to dominate and evolve.

Target debuts in the Top 10 at No. 10; and while Amazon sits at No. 11, the retailer makes a sizeable jump from its No. 15 spot last year.

Global Penetration

Nearly 80% of the Top 50 Global retailers have operations outside of their home market. Two retailers with headquarters in emerging markets are now full members of the Top 50 — Suning from China and X5 from Russia. Suning, an electronics specialist and appliance retailer, has grown sales through strong organic store growth, but is making key strategic decisions to watch. The retailer is making sizeable investments in its e-commerce business and globalization strategy. Kantar anticipates more Top 50 unseating of the primarily American, Japanese and European retailers over the next half decade.

Looking Forward

Other key predictions for the next few years include:

► 2013 will be the last year that Wal-Mart is under a “half trillion dollars” in annual retail revenue.

► 2013 will also be the last year that Amazon is ranked outside the “Global Top 10.”

► Kantar anticipates that in 2014 both Kroger and Schwarz Group will join the “$100 billion” club. Only five retailers in history have achieved this milestone — the Metro Group is the only retailer that joined the group and then left.

► Wal-Mart and Amazon will contribute to the highest percentage of sales added in the next five years.

Clients can access Kantar’s new ranking reports for the United States, United Kingdom, Europe and Global at kriq.com.

Ray Gaul is VP research and analytics for Kantar Retail.

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C.Mathewson says:
Mar-16-2014 08:33 am

No wonder Wal-Mart is number
No wonder Wal-Mart is number one, aside from being the world's second largest public corporation it is also the biggest private employer in the world. Kudos to the Walton family who still owns over fifty percent of Walmart.

C.Mathewson says:
Mar-16-2014 08:33 am

No wonder Wal-Mart is number one, aside from being the world's second largest public corporation it is also the biggest private employer in the world. Kudos to the Walton family who still owns over fifty percent of Walmart.

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Remaining Relevant

BY Marianne Wilson

It’s easy these days to get caught up in the frenzy as online sales growth outpaces total retail sales growth. But let’s not lose sight of an important fact: The physical store still remains the most crucial brand touchstone for shoppers. It’s also where the overwhelming majority of retailers still rack up their volume. And according to nearly every reputable forecast, that isn’t likely to change anytime soon.

Yes, consumers love using their phones as retail tools. But they love to go out and shop even more, a fact borne out by survey after survey. According to one of the most recent ones, by technology company Synqera, more than two-thirds (67%) of Americans prefer to shop in brick-and-mortar stores than online.

“All the handwringing over the supposed demise of the physical retail store and challenges like showrooming overshadows one important fact: People still love to shop in stores,” the company wrote on its blog.

“Otherwise, why would technology brands like Apple be so aggressive in making their physical retail space an experience, while others like Microsoft and Samsung push pop-up stores?”

It’s not just technology brands. Pure online specialty retailers are also opening stores. There is no mystery why: It’s difficult for online retailers to duplicate the immediacy and real-time experiences that are the hallmarks of the physical store.

“We’ve heard from our members that being able to see and try on products before they buy is still an important part of the shopping experience for them,” said Adam Goldenberg, co-CEO, JustFab. The online subscription retailer recently opened its first store.

But as much as the digital revolution has not killed the physical store, it has certainly upped the ante, putting a premium on things like customization, convenience and store experience. That’s especially true when it comes to reaching out to Gen Y.

A survey by the Urban Land Institute, “Generation Y: Shipping and Entertainment in the Digital Age,” found that, contrary to popular opinion, Gen Y does most of its purchasing in stores. Other studies reached similar conclusions. The NPD Group found that 53% of millennials shop in-store at least once a week, and 81% of their dollars are spent in stores.

There is a caveat, however.

“Gen Y’ers have grown up with information technology, and they are accustomed to stimulation in the form of music, light, color and action,” said Patrick L. Phillips, CEO, Urban Land Institute. “Retailers need to continually change their looks, services and merchandise offerings in order to keep up with this trend-oriented generation.”

His advice resonates pretty much across the board — not just for retailers looking to appeal to millennial shoppers. Technology has conditioned nearly all of us to want better, faster and more memorable customer experiences, and more personalized and consistent ones as well. Physical stores aren’t going away, but they are changing. Those that don’t do so at their own peril.

Marianne Wilson
[email protected]

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