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Retailers may be renewing their ambitions for international expansion ..

Retailers may be renewing their ambitions for international expansion but they should not forget the basic rules of shopkeeping, writes Ian McGarrigle, director of the World Retail Congress.

We are already two months into the New Year and there appear to be no signs of any "green shoots" of recovery, let alone any hint of how the post-credit crunch era will look. It is increasingly fashionable to blame the media for doom-mongering as well as, quite rightly, criticising the banking sector for the catastrophe that has enveloped the financial system around the world. Consumers are confused and scared, and this is leading to one of the most depressed retail moods many retailers have ever experienced.
Talking to retailers from many different markets, it is particularly striking that what we are experiencing is the first truly global recession. It is affecting the developed world and the emerging markets, many of which have also become heavily dependent on Western retailers sourcing manufactured goods from them.
 
 
 
At the recent World Economic Forum annual meeting in Davos last month, the mood was reported as being very different from other years. This is hardly surprising given what's happened to the world's banking elite, who used to be courted and feted at this get-together of the world's great and good. A Financial Times headline summed up the mood as one of "finger-pointing and flagging spirits".

But if the sombre, reflective mood at Davos suggested that "globalisation" has failed, is this really true for retailing?
In a retail context, retailers will continue to source globally simply because they have to and it is what their customers will demand. The other global context for retailing is the drive towards international expansion. Will that slow down? There will undoubtedly be some who will postpone plans or scale back. However, the overall sense - and here is a positive - is that international expansion will see renewed focus for future growth by many retail groups.

In the UK, the attention is always on the big players such as Tesco, which has forged a successful path internationally. But the real success stories are to be found in the medium-sized businesses such as Mothercare or Monsoon, both of which now trade in 50 or more countries. At a recent dinner in Paris with senior French retailers, the discussion was equally striking for the way that most attendees spoke of their renewed international ambitions.

For many retailers at the present time, the prospect of growth has to be enormously appealing. But where should they focus on when all markets seem equally troubled? The emerging markets have to remain the most attractive for internationally minded retailers.
 
Their economies may have slowed but they are still delivering growth - a rare thing these days.
 
This means that China, India, Russia and Brazil are still very worthy of attention. Despite major challenges, China's Premier, Wen Jiabao, predicted in interviews at Davos that the economy will grow by 8%. From a retailer's point of view, what was even more encouraging was that Wen stated: "We do believe that consumer spending is vital in boosting economic development."

India, equally, is trying to come to terms with slowing growth rates. But for the largest retail players in India, this does not mean a time to scale back their own ambitions. Significantly, Kishore Biyani, founder and CEO of Future Group, told the India Fashion Forum last month that he had no intention of taking his business outside India simply because the scale of the opportunities within the country was so huge. The Indian fashion sector is only just in its infancy, he stated.

But what makes for success when going international? There can be few better case studies of what not to do than the experience of Marks & Spencer in Shanghai. Its troubles there have been played out in the full glare of media coverage with talk of empty shelves, stock shortages and, in many cases, the wrong product. Executive chairman Sir Stuart Rose flew into China earlier this month to see the problems for himself. Straight-talking as ever, he was quoted in the Financial Times admitting that they had made several basic shopkeeping mistakes. "We need to get the A-to-Z of sizing right and we need better market research," he added. "That's what I call basic shopkeeping."

The supply-chain problems are now being tackled, and food stock levels are said to be at 90%. More importantly, Sir Stuart said that the company remained committed to expanding its portfolio in China and to doubling the international share of group revenues.
It reinforces the point that the initial problems faced by any business going into a new market are often no different from any of the basic rules of successful retailing. The initial work that has to be done, of course, is in fully understanding whether the market suits the brand and how much the brand needs to adapt, as well as in finding the right partners on the ground.
In that, Sir Stuart Rose and Kishore Biyani would be in full agreement. In a further comment in his presentation to the IFF, Biyani reinforced the simple but undeniable truth that, in the current economic times, "everyone has to return to the basics". Not bad advice! 

Ian McGarrigle is the director of content for the World Retail Congress and World Retail Awards, which were launched in March 2007.

He has been writing about and publishing for the retail sector for over 20 years.
www.worldretailcongres.com