- 8 Oct 2012
Alex: With many UK retail brands now performing well overseas we decided to chat with Nigel Illingworth our CEO of Merret at Retail Assist about his views on Internationalisation, along with his recommendations to consider when making decisions to trade in multiple countries.
Nigel, we’ve recently seen and heard lots of news about UK retailers expanding to the likes of the USA, China and the Far East. As well as gaining bricks and mortar stores overseas, retailers are also developing trading partner relationships, and providing the localisation of language on their website. At what point do you think retailers need to make the decision to set up international operations?
Nigel: This is dependent on the amount of trade they are gaining from that country at the current time. Once trade reaches a threshold value, then decisions need to be taken about whether an international operation would be of value, over the current distribution from UK. As a certain sales volume has been achieved this becomes the tipping point to start to weigh up international trading costs.
It also depends on the type and volume of product they are selling. Many branded retailers are starting to see a real boom. There is a real desire for British designs and fashion in these emerging overseas markets. In some cases this is almost taken to quasi-religious proportions and therefore the retailer needs to maximise on this as soon as possible. Where the product branding strengths are less obvious there are still opportunities to grow market share quickly and economically where the market is saturated in the UK and the company already has a quality web presence with associated fulfilment processes.
Alex: I’m guessing it’s not just a case of the costs involved but the legalities and red tape which surrounds much of the international trading zones. Can you give me some examples of these areas you have experienced with clients?
Nigel: There are lots of regulations around export including the requirement to supply CN22/23 export documentation, which includes product weights and compositions with the correct language variants. For example what is named Viscose in the UK, is known as Raylon in the USA.
Retailers also need to allow the customer to tender in numerous currencies, whilst also deciding how to facilitate true differential pricing to maximise market opportunity. The ‘Actual Price’ in a market should be treated separately from ‘Tendered Currency’.
Another consideration is the VAT implications of trading overseas in relation to the volume of rules and regulation related to the trading thresholds and rates.
Retailers have to decide how to charge for delivery and returns, and consider how to facilitate delivery and returns in countries that are distant and have basic postal/carrier services.
Alex: There is also the issue of language barriers. How have you seen retailers overcome some of these hurdles, and what have you seen retailers achieve to date?
Nigel: Many retailers have localised their websites. There are of course lots of issues around labelling and legal requirements, all of which require localisation or translation. Many retailers have set up international trading partners. This is allowing retailers to concentrate on their core speciality of retail, and letting the local partners set up trading agreements etc. This obviously reduces margin but does allow you to get a quick foothold into a new market.
The other option is the ability to extend and expose your web site further afield. This can be don’t by translation at source or there are now emerging companies that will provide real-time translation where the web page is intercepted and translated between the customers PC and the retailers web server.
Alex: In your view where do you see the most popular and growing international market places to be at the moment?
Nigel: I would say the Far East including Australasia, Singapore, and Japan. This is especially true for strong Brands or seasonal fashion where the southern hemisphere is trading in the opposite season to the northern hemisphere. For example, last season’s summer dresses are now coming into fashion as the start of this season’s summer dresses.
Alex: Thanks very much Nigel for some fantastic insight into a very topical issue right now. It will be interesting to see over the coming months how many of our UK retail base make it overseas, and which foreign retailers make it in to the UK. Hopefully some of the points raised may help you with some of the challenges you may be facing. If you would like to discuss your challenges further then please get in touch.