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International expansion Posts
A great time to Export – but do your homework first
June 1st, 2009
As we have been told many times now, it’s a great time to export, especially if a UK (and increasingly a US) company, as these businesses can take full advantage of weak currencies to leverage against competitors.
But it isn’t all plain sailing. You must do your homework before you start.
I was really interested to see an article in this weekend’s Sunday Times about Ben Sherman, the iconic UK streetwear brand and their recent foray into Europe. I was particularly interested as this is a sector I have real knowledge – I just couldn’t believe that they hadn’t researched their markets first.
It seems that the new International Sales Director decided that what worked in the UK would work around the world too. They set up a new distributor in France, advised them what they should be selling based on UK sell-through, and told them to get on with it.
Nobody ordered anything – the orders were just not coming through. After some serious head-scratching, they hit on the reason – in France no-body wants zip-fly jeans – men prefered button-fly in France – but it was too late – the damage was done.
LESSON NUMBER ONE – don’t try to export the same thing to everyone at the same time. Learn one market, do it properly, adapt if needed and then move onto the next.
Make sure you have a tailored approach for each country. There are many pitfalls if new to exporting – for example, offering a distributor exclusivity for a particular country only to discover that in reality his distribution is very limited. Also don’t rush out to appoint the first person who comes along just because they are ‘lovely and charming’ (DON’T appoint those you meet by chance at a trade fair – go and visit them and find out more before you commit).
So Plan, Plan and Plan – adjust and adapt. Think Global – Act Local. If you do your homework, international markets can become pivotal to future success.
Perfect Storm brewing in Eurozone
May 23rd, 2009
Anatole Koletsky writes in Monday’s Times about a perfect economic storm brewing. As someone who is very much involved in international business growth, it’s vital to have an ear to the ground as to what is happening economically worldwide. It’s an uncertain time for all of us but those businesses looking to expand internationally need to be careful of one thing – that their ladder is leaning on the right wall before they climb it.
Here’s the basis of Koletsky’s ‘perfect storm’.
Firstly, he argues that Germany is facing an unprecedented economic decline. Last Friday the EU Commission issued data showing that Germany had suffered the worst economic collapse of any industrialised nation since 1945. The German economy has seen a fall over the past 4 quarters which has been acellerating, now showing an annual drop of 6.9% (US is 2.6%, UK, 4.2%). What it shows is that the credit crunch has been far more damaging to Germany and many of its continental partners than in the US and UK. Germany’s export-led economy is struggling to find a market in the current climate.
The second aspect of the ‘perfect storm’ is that certain Eastern European countries have borrowed far too much – up to 20% of their national incomes each year. These have been fuelled by bank loans taken out by consumers, businesses and governments in Euros or Swiss Francs in Austria, Sweden, Italy and Greece. Eastern European countries such as Latvia, Estonia, Hungary and Estonia are already teetering on the brink so if their currencies collapse there will be a tsunami of bankrupties from homeowners and businesses.
The third component of the economic hurricane is the Euro itself. In the first 10 years of the Euro’s existence it provided the stimulus for economic growth in countries such as Denmark, Ireland, Spain, Portugal and Greece. But these countries also ran up massive budget deficits and housing / mortgage booms far in excess of those seen in the US or UK. This growth fuelled exports of luxury cars and consumer goods from Germany and so the wheel turned.
What has happened in the past few months is that the Euro has turned from being a saviour to a threat to these economies. The US and UK have ’sovereign currencies’ (as do many others such as Switzerland, Australia and New Zealand), where we can effectivey ‘print money’ to get out of debt – in extreme cases. Countries in the Eurozone cannot do this.
The risk now is that each of these 3 aspects converge and create a sequence of events could lead to the collapse of much of the Eastern European economy, effective bankruptcy of countries such as Ireland, Greece and Spain, and a plunging economic output across the Eurozone.
Of course this may not happen, but one thing is for sure – where there are signs of economic recovery in the UK, US and other parts of the world, Europe may have a long way to go before coming out of this mess.
German perfection. Tickets please!
May 20th, 2009
This week I was in Germany on a business trip.
Everything there runs like clockwork – the timetable says the train from Berlin will arrive at 11.42 and guess what? Yes – it magically arrives at 11.42 as the station clock ticks over to the exact time, spotlessly clean, with smiling (English speaking) staff handing out fresh hot coffee and snacks.
I lived in Germany for 18 months and so I am not surpised – it’s what I have come to expect from this country of perfection. But it always knocks visitors for six.
But can we compare our two nations from a business point of view? Germany, the number one export nation in the world, with high quality brands that are the envy of countless millions. The UK, a world leader in creativity and retailing, and up until recently, financial services in a less formal environment.
To me, Germany stands for precision and perfection. When I worked in Munich at a famous department store in the 80’s, we all had to arrive by 7.15am for breakfast, then had a daily training session until the store opened. Everything was planned to last last degree. All very serious.
Then at 5.30pm they all went mad, emptying out into the nearest Bierkeller, only to repeat the excercise the next morning.
In the UK we are far less orderly, (we still pile out to the Pub after work though) but that doesn’t make us any less capable of doing the job well. We have flexibility on our side, and an ability to see problems and their solutions in a far wider context than those I have worked with in Germany.
Which makes me realise that in Europe we have such a big melting pot of cultural dynamics and these have to be fully understood when doing business there. Try suggesting to an Italian or Spanish customer that you are happy with a sandwich over lunch ….
Plus the trains will never arrive on time in the UK however much we try….
Export Markets in the new world order – where will they be?
May 11th, 2009
Driving sales growth for consumer brands internationally is what I do best – I have been doing it for over 10 years. Having worked on every continent with leading retail groups I have seen massive growth surges in newly emerging markets such as the Middle East, China and Russia.
But everything seems to have changed in under a year. Markets such as UAE have fallen off a cliff, whilst Europe seems to be plunging into a long recession, restricted by the straightjacket constraints of a single currency. It didn’t seem that long ago that Germany had emerged from a painful and expensive re-unification with renewed vigour. What about the US?
In the UK we are ideally positioned to lead an export-driven recovery. With Sterling low against the Dollar and Euro, it’s a great time to break out aggressively into new markets. But where?
I believe that Western Europe is still a good market if you have a strong brand and bring value. Retailers are always looking for increased margins, faster sell-through and innovative product, so if these qualities are on offer, the added bonus of a weak Pound will tip the balance. Eastern Europe is looking very precarious financially and so I would hold back here for another few months. Having personally had a lot of success in Poland in the past however, this market may buck the trend so certainly worth exploring – it may come out of recession faster than its neighbours.
Russia, always a difficult and high risk market at the best of times, is worth looking at again – there have been strong surges on the markets in recent weeks and consumer confidence is rising. I would also proactively look at the US – the signs are that it may come out of this mess faster than we thought, so now is the time to back in there and leverage the Sterling/Dollar advantage.
The UAE, especially Dubai, has had a very bad recession and may take time to sort itself out. Until consumers start re-visiting the region as a tourist destination, it won’t pick up much. However, don’t discard the region – Kuwait and the Gulf States are less affected, as is Abu Dhabi and KSA.
I would put real effort into building business in China and India. These are the markets of tomorrow, as we have been told many times – there’s a lot of talk about China becoming a consumer market in its own right, and when this happens the tables will be turned. It will be a massive opportunity for those who have a market presence.
And finally, the one place that everyone seems to either ignore or forget – Australia. It may be a small market (relatively speaking, at a population of almost 19 million), but it has managed to weather the storm better than most. Plus, as I have seen time and time again, if you are prepared to jump on a plane and fly across the world, there’s a great market waiting for you when you get there. And the weather’s great.
Don’t ignore it!
Is ecommerce the way out of recession?
April 1st, 2009
In the UK, we are digital addicts.
Whilst we have ony 20% of the US’s population – our ecommerce market is 60% of the size of theirs. It’s the largest online market in Europe. 70% of Brits are now online – a very high percentage internationally – and online sales account for 17p in every Pound spent in the UK.
‘Ecommerce is the Noah’s Ark of retail in the recession. People naturally turn online when they want value, and those etailers that provide it will secure a place on the Ark to better times. Those that don’t will not be able to get on’, commented Jamie Muray, founder and CEO of Glassesdirect.com.
This wave of success is being driven by some smart individuals, mainly London based, and often women (able to excel outside of corporate stereotypes) who are focussing almost exclusively on innovation and creativity. From these, significant profits are now being made, and there is little or no discussion about recession. In fact the attitude amongst these entrepreneurs is to find new market opportunties in the chaos.
Take for example moo.com, which at first glance would look like a small London based printing business. They have skillfully expoited the web to sell abroad to increase profits and economies of scale. They now export to over 30 markets globally and the website is translated into 6 languages.
Or what would be seen as a traditional online ‘off-licence’, Laithwaites.co.uk is now shipping wine across the globe and is doing strong business in viticultural markets such as France, Australia, the US and Germany.
Peter Fitzgerald, from Google UK recently commented ‘Ecommerce will not be the only road out of recession for the UK but it will be one of the main ones’
Napoleon said we were a nation of shop-keepers. Well now we are now fast becoming a nation of e-tailers.
Do your research before going International – Tesco got it wrong
February 23rd, 2009
Yesterday’s Sunday Times ran an article which began ‘Tesco admits: we got it wrong in the US’.
Tesco. The one company that doesn’t make mistakes. The company that drove a customer loyalty program to beat all others, boasting that it knew every minutae of millions of shoppers’ habits in the UK. It knew its customers buying patterns so well that it could market product at the right time of the day and in the right part of the store.
So what went wrong in the US? It seems that they didn’t take enough time to find out about their customers in this new market. Maybe they just thought they could apply the same models again.
But that’s the key with International growth – it’s an old cliche but it really is a question of ‘Think Global, Act Local’. Make sure you get to know your target markets passionately.
So what went wrong with Tesco?
It seems that their US operation, Fresh and Easy got its early market research wrong. Marketing Director, Simon Uwins said ‘we went into people’s houses, talked to them about food and food shopping. We went into kitchens and poked around pantries’. This was all before the launch of 113 stores on the West Coast.
Unfortunately, he now admits, they didn’t go into the garage where they would have found huge chest freezers full of stockpiled meat bought on special offer. In the US, it seems, consumers are driven by the weekly ’special offer flyers’ so common in US food retailing. Tesco missed this and didnt realise the market was so driven on price and tactical manoeuvering – they have suffered and now have put the full roll out of 200 stores on hold for 6 months.
So the lesson is simple – make sure that every new market is researched fully. It doesn’t naturally follow that the same format will work in all.