Key for Successful Overseas Growth?

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LAS VEGAS—In one of the ICSC RECon event's concurrent session, “The Intersection of Global Growth for Retailers: It's Here, There and Everywhere,” Dana L. Telsey, principal and CEO of Telsey Advisory Group, based in New York City, said that when retailers are looking at a growth formula overseas, there are a few key things to keep in mind in order to be successful.

As a brand learns where its customer base is coming from and takes steps to figure out what markets would be good for it to explore, it can look to expand overseas. “You have to look at what level of saturation they have in terms of number of units, in the number of core categories you are opening,” she said. “If you have an identity and awareness and reaching a level where you can't add that many new stores in the US, you can then grow overseas.”

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But she warned that you have to do it right. “Hiring local management is key.”

Smart retailers can go overseas if they have all the pieces together, she explained. But another important factor in being successful is the importance of “continuing to remodel, remerchandise and constantly reinvest all the time to stay on top of the rollercoaster.”

Moderated by Jeffrey Hugh Newman, chair of the real estate department and senior partner of Sills Cummis & Gross P.C. based in Newark, NJ, the panel also consisted of David Zoba, SVP of global real estate of Gap Inc., based out of San Francisco; Wade McDevitt, CEO of the McDevitt Co.; and Peter Sharp, president of Walmart Asia Realty, based in Causeway Bay, Hong Kong.

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When asked about Millennials and their part in retailers' growth overseas, Zoba noted that Millennials are an important part of the customer base here in the US. “They are critically important … Not so much about what they buy, but they are different in how you market to them,” Zoba said.

Overseas, Zoba adds, it is a different group. In China for example, there is a younger group coming through the system, he said.

“The US is still the greatest retail market in the world,” Zoba adds. “You prune your fleet in this country, whereas in a country like China, you have instrumental, raw growth.”

When asked about the high end versus low end consumer, Telsey noted that the high end consumer is still spending. “On the low end, they are more challenged,” she said. With things like payroll taxes going up, for example, “they have to be more careful in where they shop and what they are purchasing.”

The magnet countries for international growth, at least according to Sharp, are China, Mexico, and Brazil. But format diversification is a big way of growing, he explained. “You have to localize your growth to each market you go to.” Sams Club, for example, has different merchandise in China, base on customers.

When talking about lessoned learned, Sharp pointed out that one of the most important things before expanding internationally is to “have a very understandable plan of what you want to do, what you want to become and what the market share needs to be.”

The brands that should be expanding overseas are ones where there is familiarity and a global reach, added Tesley. She points to brands like Victoria Secret, Michael Kors and Kate Space as examples. “The accessories market can move over pretty easily because it doesn't have the sizing issues.”

What helps issues like sizing, Sharp said, is to grow local talent. “Those are the people facing the customer.”

And when looking at the value equation, it shouldn't be on price alone, Sharp said. In China, for example, it is about a “real item” and customers there are looking for trustworthy retailers. “When going into Asia, a lot of the customers are aspiring to buy a genuine product and then they look at the price. Quality is in the value equation. You have to look at emerging markets and first question the quality of the product.”