Expand into International Safe Harbors

If you’re thinking of going international—maybe having a physical presence in another country, maybe maintaining only a virtual presence via ecommerce—attend to the current state of mind of that country’s consumers.

• How financially stable do consumers feel? In a recent interview with CNBC, Saks Chairman and CEO Steve Sadove said that, in his experience, there is an almost perfect correlation between sales at Saks and the state of the stock market. A posting on the Consumer Nation blog says that consumer confidence is currently high in Brazil, Russia, India, and China. The acronym BRIC has been a guideline for some time for global investing, so it’s no surprise that those four are promising locations for retailing.
• How deprived of luxuries do consumers feel? A number of observers of the retailing marketplace are pointing out both how sales of luxury items are picking up now and how sales of luxury items are a leading indicator in predicting overall retail sales. Mr. Sadove congratulated luxury retailers on maintaining demand for their products by keeping supplies a bit scarce. The Consumer Nation blog points to the consumers of Kuwait and Dubai as hungry for luxury.
• How nationalistic are the consumers? If the consumers want to give their business only to retailers based in their own country, you might choose to partner with a retailer who is already there. If consumers in that nation don’t want to buy brands associated with certain other countries, that affects what you’ll choose to merchandise. Preferences change over time. Researchers from Canada’s Carleton University and York University explored what happened to Australian consumers’ attitudes toward French brands and retailers. Around the time of the 1995 French nuclear testing in the Pacific, those attitudes nosedived toward the negative. But a decade later, the French and their products had been forgiven. There can be patterns of nationalism. Researchers at University of Michigan and University of Minnesota found consumers in India more receptive to retailing associated with India with detergent, but not with luxury chocolates.

     When deciding where to maintain your retailing footprint, there are business fundamentals to be respected: Shipping costs, the government’s receptivity to private enterprise, expectations of payoffs, and more. But even those fundamentals are influenced by the state of mind of each nation’s consumers.

Click below for more: Feature Country-of-Origin Advantages Tiptoe to International Markets via Ecommerce