Retailers are in the expansion mode, developing their networks, and expanding into new markets. How cost-effective is it to consider retail expansion, and what are the profitable strategies?
Retail expansion is a portfolio game, with a blend of success and failures. Market is fraught with competition. However established a retailer is; he would still have the euphoria to expand his business; either by increasing his existing store size, or adding more products to his list, or spreading across the country. Discreet retailers are rewarded for their long term outlook in business, their maturity with varying consumer preferences, and for their ability to balance short and long term opportunities.
Retailers seeking to expand their business must be capable of analyzing various retail specific variables. They need to devise successful expansion strategies and identify emerging markets, and investment opportunities. A retail expansion can happen in any of the following ways:
- New geographical markets, within the country.
- Going for a retail expansion in a big way. Increasing the size of business across the country's borders.
- Increase the power of the brand name.
- Increasing the product mix; adding more products to the existing list of merchandise.
- Working on the existing market, targeting the customers with new price points, promotions etc.
Brands on Expansion:
A research report by CBRE on retail expansion states that the number of retailers who plan to expand their business has increased by 19% in 2011. This is more than the previous years ratio of 13%. A large scale expansion is on the cards by many retailers in a global range, especially in apparels. US clothing brand Forever 21 has recently announced its plans to enter the UK market, aiming for more than 100 stores. Brands such as Superdry and Hollister are also on the expansion mode. In 2011 28% of the denim retailers plan to open more stores, which was only 16% during 2010.
Germany seems to be the most attractive destination for apparel retailers. Good economic growth and less global retail stores in Germany drive the country's popularity. This has captured the attention of 41% of global retail players who are chalking plans to enter Germanys retail segment. Poland, France, Spain, and UK closely follow behind.