Two hundred years after Napoleon’s famous observation, we are still a proud nation of shopkeepers. But for many of us, future success will mean that we have to look beyond our national borders for new market opportunities.
Two hundred years after Napoleon’s famous observation, we are still a proud nation of shopkeepers.
But for many of us, future success will mean that we have to look beyond our national borders for new market opportunities. Of course, the UK market will remain the primary focus for many but, with predictions of a compound growth rate domestically of 11.5% over the next four years, there are already compelling reasons for ambitious British retailers to look elsewhere for expansion. Fortunately, circumstances are conspiring to help this along.
Firstly, predicted growth rates in other large retail markets are much higher than for the UK, with the US and China expected to grow 17.5% and a whopping 85% respectively in the next four years. Compound growth in the British retail market will barely get into double digits over the next four years.
In addition, and crucially for British quality branded retailers, consumer demand for luxury goods has picked up strongly in both the Chinese and US markets. As the economist Jim O’Neill pointed out at our annual retail dinner, China is becoming interesting as a place to sell to, rather than a source of cheap goods.
The gradual easing of restrictions on foreign investment in many important markets is also allowing better access for UK retailers. Progress has been made in South Korea for instance and even India is taking some tentative steps towards market liberalisation. The web of free trade agreements currently being negotiated by the EU will free things up even further. UK retailers are already in a strong position in global ecommerce, selling £5bn worth of goods online to customers overseas and that total figure is expected to rise to £28bn in just four years.
As one example, Next sells to customers in more than 61 countries. Online selling not only provides a realistic way to expand sales overseas for many product categories but for many it can provide a bridgehead for a more permanent presence in other markets.
Finally, the Government is lending a hand. The Prime Minister has given support by leading trade missions around the world and he has been keen to include retailers. The Government has also launched its ‘Great’ campaign, which is capitalising on the tremendous boost to the UK’s image from last year’s Olympics and Jubilee celebrations and, on October 16, UKTI will be launching a major new programme to support online retailers’ overseas expansion.
Of course, exploiting opportunities overseas is far from easy. A recurring message from the speakers at our international conference in June was that there is no substitute for researching a market before taking the plunge.
And, in many cases, this is a long game - returns can take a few years to materialise and there is a downside risk that a failed venture in one market will tarnish your brand elsewhere.
So nobody is saying that international expansion is easy. All the same, there is an alignment of circumstances that has created a window of opportunity for British retailers looking to grow their businesses. It must at least be worth looking through it.
- Helen Dickinson director-general, British Retail Consortium