A selection of UK brands and retailers met up to compare international strategies and experiences.
With a depressed market at home and a high street that’s oversaturated with choice, UK retailers and brands have fixed their gazes on more buoyant markets overseas. But whether a business has an established international footprint or is just starting its global expansion, different markets vary considerably and are constantly changing, so getting the strategy right is vital.
With this in mind, Drapers hosted an international roundtable at The Savoy in London, in association with concessions firm Hallett Retail and recruitment agency Talisman Fashion, bringing together a selection of
brands and retailers to discuss the challenges and opportunities beyond these shores.
On the issue of overseas markets, John Scott, head of international business development at Debenhams, believes that outside Europe, most markets are doing well. He also thinks that although the Middle East is the department store group’s biggest market beyond the UK, with 26 stores in the region, Asia will be the most important for future growth.
Scott explained: “We’re in Indonesia, Malaysia, the Philippines and Vietnam. I was in Thailand recently and that market has just grown beyond recognition. It is now one of the most advanced in Asia, and that is one part of the world that seems less affected by the economic downturn than anywhere else. Debenhams’ Asia business is going from strength to strength.”
The Cambridge Satchel Company’s head of brand development and wholesale, Max Karie, echoed the potential of Southeast Asia and explained that the accessories brand has done well there due to demand for British fashion brands. However, Karie warned that counterfeiting is a major issue there, calling the region the “epicentre of counterfeit product”.
Attendees also highlighted the potential of India, but warned the market is difficult to operate in, citing challenges such as difficult landlords and high import duties. Indira Thambiah, head of international development at lifestyle retailer Crew Clothing, said fulfilment of deliveries and returns is an issue.
Thambiah explained: “In the Indian market it is a nightmare to return, so people don’t buy very easily. If you’re an etailer, a big part of running a direct business is allowing returns, so it’s really hard. The other thing is distribution - home delivery, for example. There are no postcodes, just directions like ‘hang a left at the mango tree, turn right at the river’, which makes distribution difficult.”
Despite the challenges, attendees were optimistic about India. Geoff van Sonsbeeck, founder and chief executive of maternitywear etailer Isabella Oliver, explained: “India might be one market where some of the main challenges, mainly regulatory and duty, may resolve themselves. Then, all of sudden, it will be a very interesting market.”
Antony Comyns, head of ecommerce at shirt specialist Hawes & Curtis, pinpointed Russia as another place where distribution is difficult, calling its postal system “one of the worst in the world”. Yet this doesn’t discourage Russian shoppers, who are patient with foreign retailers, sometimes waiting up to three months to receive their goods.
Comyns said: “Russian consumers will be patient because they know it’s going through the Russian post. It’s a huge market and they’re quite resourceful. We’ve found websites that carry translations of our whole site, from basket to checkout.”
Scott believes local distribution centres can help with limited domestic infrastructures, explaining: “The future of the big markets for ecommerce has to be local partnerships. You can’t deliver from the UK and expect to crack China, India or Russia, so you need a fulfilment centre within those countries.”
Attendees concurred that choosing the right partnership is vital, with many businesses turning to agents to help find the right partners. Jo Whitfield, retail and international director of George at Asda, said they are useful as the markets can be quite fragmented.
Whitfield explained: “The challenge [in finding the right partner] is understanding how your brand and customers fit within that partner’s portfolio and how they’re able to tap into property, so it’s about using agents to find partners who are the right fit.”
However, Meg Lustman, former managing director at womenswear retailer Warehouse and now a consultant, urged attendees to work with the partners that seek them out. She explained: “The ones that come into your stores and like what you do tend to be the better ones. They seem more committed and spend the time to get to know your brand and what you stand for.”
Attendees also said it is vital to consider the multichannel challenge when selecting a partner for a new market. When the bricks-and-mortar stores and online operation are not run by a single partner, Thambiah said factors such as pricing - in which an online partner may undercut the offline one - can be an issue. She explained that some potential partners can run websites as well as physical stores, so will lobby to take on both in negotiations, while those without digital operations won’t.
Thambiah added: “It’s really important to work out both your international strategy and your multichannel strategy for international before you start those conversations.”
Wendy Hallett, managing director of Hallett Retail, commented that it is key for retailers to adapt their approaches to address the specific challenges and differing retail landscapes of overseas markets.
Hallett explained: “We operate across several routes to market, including wholesale, concessions and online, and can quickly adapt our strategy to suit the market. Many of our initial discussions with international retail partners have started out as wholesale enquiries, but have actually resulted in deals to run concessions, and vice versa.
Understanding the right route to a market is key, but having a flexible model to enter the market in the required fashion is also vital.”
Another factor is how much, if at all, a brand should alter the product for the market. Maurice Bennett, chairman of womenswear retailers Austique, Kookaï UK and Long Tall Sally, said that despite merchandising issues such as customs and duties, his approach is not to change the product.
Bennett added: “To answer suggestions of ‘Can you make it smaller, longer or different colours?’, I say fine - you don’t want the colours or shapes we sell, then don’t buy it. For Long Tall Sally, we’re strong in Germany now. It works, and we do the same product there as in the UK.”
Simon Hutchinson, head of international franchising at young fashion retailer Blue Inc, believes that the key for product selection is not to lose “the DNA of the brand”. He advocated having a degree of flexibility for things such as varying climates, but warned that “changing the range by more than 20% can be damaging”.
Hutchinson said: “If the host brand says you aren’t changing the brand, that really is a stumbling block. So be upfront with the partner and say yes, we can be flexible, up to a point.”
Attendees also highlighted the importance of finding the right talent internally, yet conceded that recruiting for a global team is difficult. Hutchinson said that because more businesses are expanding internationally now, the best talent is highly sought after and in short supply. He also said that having people who understand those markets, particularly merchandisers and field operators, is vital.
He explained: “It’s not just about being a really good retailer - it’s about the cultural fits with those markets, and for those people there has been no development. It’s up to those of us who have actually been in the international markets to start filtering that development down so we can attract more people, because one of the biggest challenges is sustaining that great global growth with them.”
Vicki Morisetti, director of Talisman Fashion, agrees there needs to be more training and development in regards to internationally focused skill sets because that kind of candidate is hard to find, especially as British talent is being poached by overseas retailers. Morisetti said: “You’ve got businesses from places such as Turkey and Australia that are snapping people up in areas including ecommerce, buying and merchandising, and retail operations. Plus, the Brits are quite happy to move around - much more than many other Europeans - so there is a need for development and training new people.”
However, Morisetti also said that those candidates can bring a wealth of knowledge regarding overseas markets back to UK businesses: “Of course, people with a lot of industry experience say they learned about different countries by working in them.”