Going abroad: 7 realities retailers should know before global expansion
Many American retailers, facing slumping sales, discount pressures, and market saturation at home, are turning to expansions in Latin America, Europe, and Asia to build up their business. Technology is making that more possible than ever, especially when it comes to swift and easy communications.
But there are many challenges that can take companies by surprise when they wander far from home. Here are seven things retailers should be aware of before taking the big leap.
1. Operate globally, act locally
Before opening stores or e-commerce to shoppers outside the U.S., retailers should do their homework. There are often customs and laws that a retailer must or should follow. Sometimes that means running company slogans or logos past marketing experts who know the local ways well.
When Ford Motor Co., for example, wanted an ad campaign for Europe that emphasized the sturdy build of its cars, it came up with “Every car has a high-quality body.” In Belgium though, it read “Every car has a high-quality corpse.”
The words, phrases, symbols, and designs that are carefully crafted for the good of a retailer’s brand are essential, and should be protected. In the United States, using an element of a brand proffers trademark protection (although anyone interested in protection will also register it with the U.S. Patent and Trademark Office). In many foreign countries, however, first-to-file beats first-to-use.
This recently happened to, of all companies, Apple. The company cannot use the name “iWatch” for its much anticipated wearable because an Irish software company previously trademarked the name before the device’s big reveal. So it behooves companies even considering a presence or product in a country to register trademarks well before their global launch.
In some areas of the world, bribing officials is an accepted practice to obtain building permits and licensing and close business deals. It’s not exactly copasetic from the perspective of the U.S. government, however, as Wal-Mart Stores Inc. and its Mexican division, Walmart de México, has found. The retailer’s bribery scandal is ongoing and includes investigative press reports, government inquiries on both sides of the border, and criminal court proceedings that have cost the retailer dearly.
There are grey areas, however. In some countries, “gifts” are expected during business negotiations. The U.S. Department of Justice has a guide — including case studies — on how to comply with the Foreign Corrupt Practices Act of 1977, which outlaws the kind of activity that has Wal-Mart Stores in so much hot water, while still keeping up with business gift customs.
4. Data protection policy
There’s an argument to be made that retailers in the U.S. must move more swiftly and forcefully to get ahead of the data hacks that have put their systems and their customers’ information at risk.
In any case, there are much tighter rules and higher expectations of data security in some countries, particularly in Europe, where data protection is an extension of privacy rules related to human identity and civil liberties. Rules and regulations vary in each country, too.
Getting the language right is not just about branding and messaging. As e-commerce grows, a retailer may have a presence in some countries where it has no brick-and-mortar stores, and will have to adjust their website to local languages.
While many global consumers expect to find English as the only language on retail sites, it turns out that retailers that localize their sites by providing information and logistics like shipping in local languages increase their conversion rates significantly.
While it seems intuitive, this can be tricky because a retailer has to try to maintain its own tone while balancing that with what can get lost in translation.
6. Logistical realities
Currency fluctuations, webs of import-export regulations and taxes, and other legally logistical nightmares can take a greater toll than a retailer might anticipate. That goes for e-commerce, too.
7. It goes both ways
The state of global retail efforts is especially intriguing because, just as American retailers look overseas to capture new growth, foreign retailers are looking to the U.S.
“This is a country of shopaholics,” Faith Hope Consolo, chairman of the retail group at Douglas Elliman, which has consulted Australian, New Zealand, and Canadian retailers about coming into the U.S., told the New York Times. “It’s a fickle market here — the consumer always wants something new.”