Retailers should continue to invest in overseas expansion in spite of the recession, according to key retail chiefs.
Speaking at a panel of retailers at the Retail Week Conference, Aurora deputy chief executive Mike Shearwood said: “The fact that we are in a difficult economy worldwide, doesn’t mean we should stop expanding.”
Debenhams international director Francis McAuley agreed: “It would be the wrong idea to stop expanding.”
Mothercare chief executive Ben Gordon said “this is a great time” to be expanding overseas. “There is the appetite and infrastructure. If your brand travels well you can expand.”
McAuley added that franchising, the route Debenhams uses for its international stores, offers a quick route to market and is non-capital intensive.
Planet Retail global research director Bryan Roberts said that the success of retailers overseas depends on their performance in their domestic market and their ability to generate money at home to offset the initial cost of opening overseas.
Roberts said: “In general terms, franchising can be hugely successful in food service and fashion, less so in grocery.” He said that grocers which use local partners can be poorly merchandised and marketed.
Shearwood added that retailers can be successful using the franchise route if they are sure that their partner is right. “They need to understand the culture of our business and have a day-to-day trading relationship,” he said.
Opinion was mixed about which countries retailers should focus on entering.
McAuley said that Debenhams is yet to open in China due to the variation of the shopper across the large country. Debenhams has restarted its attempts to enter Russia after ending its relationship with a previous partner. He said that India, where it has recently opened remained “bloody difficult”.
Roberts said that China presented some great opportunities because it had opened up its borders to organised retailers. He said that India was “the most over-hyped market on earth” and that retailers had been too quick to expand there. “There isn’t a market there, there isn’t the spend. India as a market will not be happening for another five years.”
Gordon said that Mothercare, which has 25 stores in India and would have 100 in four to five years, had been successful there because it has a partner which has an established infrastructure.