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International markets roundtable: Retailers' continental drift

With overseas expansion at the top of many to-do lists, fashion industry leaders shared advice.

A fashion business’s first steps into a foreign market can be daunting, with numerous potential hazards to dodge. Is it best to wholesale, launch a local website or jump straight into bricks-and-mortar retailing? How do you overcome ever-changing exchange rates? And how can you sensitively navigate different countries’ cultures and preferences?

These are just some of the questions that dominate the minds of retailers and brands seeking to capitalise on international markets.

At a roundtable breakfast on June 3, sponsored by Sage Pay, Drapers brought together fashion businesses large and small - including House of Fraser, shirtmaker Hawes & Curtis, fashion and lifestyle retailer Joy and footwear independent Tower London - to discuss their experiences, successes and trepidations regarding expansion. Each means of entry into international territories has its own benefits, but for many British retailers the first move is made online.

Alex Barbier, digital director at men’s footwear brand Oliver Sweeney, explained: “The reason is the cost if you want to test the market. Why do you decide to go to France? Because you see potential there as you are already selling there, but you don’t want to risk opening a store because it’s too costly. If it doesn’t work you can pull the plug and it’s cost you next to nothing.”

But Tower London head of ecommerce Rink Bindra said the retailer - which is keen to launch local-language transactional websites - is also “toying with the idea of going into Europe with a pop-up store concept” because “bricks and mortar is really important for the ecommerce side of things - it’s like the complete circle”.

People drop out of website sales at the checkout due to delivery options, he said, while some want to touch and feel products before purchasing online, or to return items in stores.

Wholesaling offers brands the chance to quickly gain momentum abroad. With international equating to about 80% of Joy’s wholesaling business and its products sold in more than 200 stores in Belgium alone, creative director Maureen O’Brien revealed she is now in talks with potential franchise partners to expand into countries such as Norway and the UAE. “They come to us from [trade] shows or because we have a big presence with wholesale, so if we are in the right shops people automatically start contacting us.”

Despite having differing reasons for wanting to expand abroad - including boosting revenues, brand building and showrooming - and different means of doing this, the consensus was that to succeed, retailers and brands must tailor their offering to the local market. “It’s about thinking globally but acting locally,” said Bindra.

For most, this starts with stock selection. O’Brien explained this meant being conscious of local lifestyles, such as not trying to sell too many maxi dresses in Holland, where people often ride bicycles. Antony Comyns, head of ecommerce at Hawes & Curtis, which has one overseas store in Cologne and a dedicated German website, said it is modifying the style and fit of its shirts to accommodate taller, slimmer German men.

Having a local website and enabling shoppers to use their own currency can also boost a retailer’s chances abroad. Bindra suggested local websites could mean “revenues will be higher” for the independent retailer but the “translation of websites has to be dead on”. For this reason he is still holding off creating a German-language site until he can ensure it’s perfect.

Sage Pay direct sales manager Dusty Miller agreed and warned: “You can spend a lot of money on driving customers to your site, but if they have a bad experience it can be a waste of the investment you’ve made. So it’s really important not to just Google Translate things, and to get your payment systems lined up as well so the experience can be really tailored to your customer.”

But Comyns cautioned that in Hawes & Curtis’s experience, launching local websites does change perceptions of the brand in those countries. “You don’t necessarily see a massive uplift but you see a change, because the psyche is completely different,” he said. “If I’m sitting in Germany and I’m buying off a British site in English and in pounds I probably have a different view on my buying pattern and think I’m getting something pretty special that’s not open to the German market necessarily.

“The moment you actually translate then you are local and then everything has to change. You have to make sure that you’re acting as though you are sitting right in that country, so you have to back it up with German speakers, you have to sell in their currency and abide by the ways they would normally want to purchase. Also you have all those people that you had as existing customers who felt pretty special buying in pounds, and now they aren’t.”

Womenswear retailer East had a similar experience when it changed the currency options for overseas shoppers. Chief executive Suzi Spink explained: “Last year we started taking euros and dollars and we were expecting to see more of an uplift because people can now pay in their local currency, but actually I think it’s quite complicated because there are people out there who had pound accounts that they wanted to pay with, for whatever reason, and we have removed that choice from them because their IP address pushes them onto the euro or dollar site.

“I think before they thought it was their special little thing that they knew about and now they are probably starting to think ‘well hang on a minute, now they are becoming more widely available and you can pay in euros’ when actually they don’t want to, they want to put it on their British credit card.”

Pricing is another tricky area for fashion companies to get right. Spink said the potential for exchange rates to fluctuate needed to be built into pricing structures. “You have to set [exchange rates] in advance for your business to operate, but how do you work it out? Currently we set an exchange rate for the season and build in a bit of a buffer.”

The Cambridge Satchel Company head of trade and brand development Max Karie added: “You’ve got to have your margin and your international architecture and it takes time to get it right. Look at your true cost price and the margin you are prepared to take on it, apply from your customers’ perspective what it will cost them to buy it from another country and it takes a lot of jiggling around.”

Comyns posed the question of whether businesses can charge more for items in overseas markets, and if so how much by, when people now “have so much exposure to what’s going on”.

Spink responded that East’s majority stakeholder Fabindia has an overseas website that converts prices into dollars, which also makes the items more expensive. “Where international customers cannot easily go direct to the retailer they are often prepared to pay more to buy a desirable product,” she said.

But Sage Pay’s Miller warned offering different prices could mean “you can cannibalise your own sales”.

“When the euro was really strong you found people would be better off ordering in the UK and getting it shipped than they were on a dedicated German site,” he said.

Discounting can also be a problem. Douglas Hood, owner of brand management consultancy Outside Looking In, noted that the UK does not have a defined Sales period so they can come at different times to those on the continent, which can upset stockists if Selfridges, for example, is offering the same products at half the price.

Another hurdle can be the cost of delivery and returns, especially in Germany where shoppers tend to buy in bulk but have a higher return rate. Comyns said Hawes & Curtis sends returned goods back to its Cologne store, but if shoppers in Austria have used the German website, the cost of bringing products back “is extortionate”.

Tower London, however, has adopted a consolidated returns system so all returned items are sent to a centralised holding location and shipped back to the UK twice a week.

Despite such complications, British brands remain highly sought after abroad and many are poised to capitalise on this demand.

The Cambridge Satchel Company’s Karie said Asian and US markets still “look to Europe for cachet”, so if a brand has a prominent British store and a strong Italian presence, international expansion will be easier.

“Your profile is everything,” he added. Hood tempered this, however, and warned that European markets remain protective of their own retailers and there can be a “great resistance” to UK brands that are not well known across Europe.

But he said if brands are stocked in UK retail powerhouses such as Selfridges, Harrods and Harvey Nichols they are quickly understood to be international. “If you’re in the right store invariably it lifts you up.”

Karie added: “Fashion has become so overclogged, what are we doing, what are we selling? If we’ve got something special we should sell it.”

Attendees

Those attending were: Alex Barbier, digital director, Oliver Sweeney; Charlotte Berry, international marketing manager, House of Fraser; Rink Bindra, head of ecommerce, Tower London; Antony Comyns, head of ecommerce, Hawes & Curtis; Tianni Hingston, Sage Pay; Douglas Hood, owner, Outside Looking In; Max Karie, head of trade and brand development, The Cambridge Satchel Company; James Knowles, features and special reports editor, Drapers; Dusty Miller, Sage Pay;
Eric Musgrave, editor, Drapers; Maureen O’Brien, creative director, Joy; Suzi Spink, chief executive, East; and Kat Spybey, associate editor, Drapers

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