The Special Dimensions of Strategic Planning in a Global Retailing Environment

There are about 270 countries and dependent areas—with more than 7.3 billion people and a $115 trillion economy—in the world. The United States accounts for less than 5 percent of the world’s population and about 16 percent of the worldwide economy. Although the United States is a huge marketplace, there are also many other opportunities. Annual worldwide retailing sales have reached about $25 trillion—and they are growing. When we talk about the global environ­ment of retailing, we mean both U.S. firms operating in foreign markets and foreign retailers operating in U.S. markets.

The global strategic planning challenge is clear: “It is time to focus on a portfolio of coun- tries—with different levels of risk, at different stages of maturity, and with distinctive consumer profiles—to balance short- and long-term opportunities.”1

Yearly, A. T. Kearney ranks 30 developing nations on a 0- to 100-point Global Retail Develop­ment Index (GRDI) scale. Higher-ranked countries represent better opportunities to enter or expand in that market. The GRDI scores are based on four attributes: market attractiveness (25 percent), country and business risk (25 percent), market saturation (25 percent), and time pressure (25 percent).2 Table A3-1 shows the GRDI scores for the top 10 performing foreign countries.

When embarking on an international retailing strategy, firms should consider the various factors shown in Figure A3-1.

Opportunities and Threats in Global Retailing

For participating firms, there are wide-ranging opportunities and threats in global retailing.

1. Opportunities

  • Foreign markets may be used to complement domestic sales.
  • Foreign markets may represent growth opportunities if domestic markets are saturated or stagnant.
  • A retailer may be able to offer goods, services, or technology not yet available in foreign markets.
  • Competition may be less in some foreign markets.
  • There may be tax or investment advantages in foreign markets.
  • Due to government and economic shifts, many nations are more open to the entry of foreign firms.
  • Communications are easier than before. The Internet enables retailers to reach customers and suppliers well outside their domestic markets.

2. Threats

  • There may be cultural differences between domestic and foreign markets.
  • Management styles may not be easily adaptable.
  • Foreign governments may place restrictions on some operations.
  • Personal income may be poorly distributed among consumers in foreign markets.
  • Distribution systems and technology may be inadequate (e.g., poor roads and lack of refrig­eration). This may minimize the effectiveness of the Web as a selling tool.
  • Institutional formats vary greatly among countries.
  • Currencies are different. The countries in the European Union have sought to alleviate this problem through the euro, a common currency, in most of their member nations.

3. Standardization: An opportunity and a threat

In devising a global strategy, a retailer must pay attention to the concept of standardization. Can the home market strategy be standardized and directly applied to foreign markets, or do personnel, physical facilities, operations, advertising messages, product lines, and other factors have to be adapted to local conditions and needs? Table A3-2 shows how the economies differ in 15 countries.

4. U.S. Retailers in Foreign Markets

Discussed here are three of the many examples of U.S. retailers with high involvement in foreign markets.

Toys “R” Us has more than 750 Toys “R” Us, Babies “R” Us, and Side-by-Side stores abroad. In addition to company-owned stores, Toys “R” Us licenses 250 stores in 20 countries and jurisdic­tions. In these markets, such as Indonesia, South Africa, Turkey, and United Arab Emirates, the firm emphasizes licensing rather than direct corporate ownership. Why? This enables it to better tap the local knowledge of franchisees in certain markets while still setting corporate policies.3 Toys ‘R” Us also has an online presence in 19 countries and jurisdictions.

The majority of McDonald’s restaurants are outside the United States. Sales at McDonald’s foreign outlets in over 100 foreign nations account for two-thirds of total revenues. Besides Europe, McDonald’s has outlets in such nations as Argentina, Australia, Austria, Brazil, Canada, China, Colombia, Egypt, Greece, India, Japan, Malaysia, Mexico, New Zealand, Pakistan, Russia, South Africa, South Korea, Spain, and Uruguay. To appeal to foreign tastes, McDonald’s adapts its menu around the world. For example, its French units sell macaroons, offer blue-cheese burgers, and offer a wide choice of sauces for french fries.4 has rapidly expanded globally by introducing dedicated Web sites for specific nations. They include Canada (, China (, France ( .fr), Germany (, Great Britain (, Japan (, and Spain ( Although these sites all have the familiar Amazon Web design, they differ by language, products offered, and currency.

5. Foreign Retailers in the U.S. Market

Although the revenues of U.S.-based retailers owned by foreign firms are hard to measure, they equal several hundred billion dollars annually. Foreign ownership in U.S. retailers is highest for general merchandise stores, food stores, and apparel and accessory stores. Examples of U.S.-based retailers owned by foreign firms are shown in Table A3-2. A large number of foreign retailers have entered the United States to appeal to the world’s most affluent mass market. Here are three examples.

The Netherlands’ Royal Ahold and Belgium-based Delhaize Group recently merged into Ahold Delhaize. Royald Ahold operates Stop and Shop, Giant Foods, and Martin’s Food Markets. It also owns Peapod, the online food retailer. Delhaize Group’s U.S. operations include Food Lion and Hannaford supermarkets. The combined operation will result in the creation of one of the largest grocery chains in the United States, with over 6,500 stores. The merger is subject to approval by the Federal Trade Commission.

Luxottica, an Italian firm, operates more than 7,200 optical and sunglass stores in over 150 countries in North America, Asia-Pacific, the Middle East, Latin America, and Europe. It has the highest market share in the U.S. optical retail market with its LensCrafters, Pearle Vision, and Sunglass Hut stores. Luxottica also operates leased departments at Sears Optical and at Target Optical stores in the United States. Luxottica’s annual total 2015 revenue (including eyeglass and sunglass manufacturing) exceeded $10 billion (U.S.).5

Ikea is a Swedish-based home-furnishings retailer operating more than 300 stores in 37 nations. In 1985, Ikea opened its first U.S. store in Pennsylvania. Since then, it has added nearly 40 other U.S. stores in such cities as Baltimore, Chicago, Elizabeth (New Jersey), Hicksville (Long Island, New York), Houston, Los Angeles, San Diego, Seattle, and Washington, DC. The firm offers durable, stylish, ready-to-assemble furniture at low prices. Stores are huge, have enormous selections, include a playroom for children, and other amenities. Today, Ikea generates 94 percent of its sales from international operations, and 15 percent of total company sales are from its North American stores.6

Although the revenues of U.S.-based retailers owned by foreign firms are hard to measure, they reach several hundred billion dollars annually. Foreign ownership in U.S. retailers is highest for general merchandise stores, food stores, and apparel and accessory stores. Examples of U.S.- based retailers owned by foreign firms are shown in Table A3-3.

Source: Barry Berman, Joel R Evans, Patrali Chatterjee (2017), Retail Management: A Strategic Approach, Pearson; 13th edition.

1 thoughts on “The Special Dimensions of Strategic Planning in a Global Retailing Environment

  1. Meg Goodwill says:

    Thank you for sharing superb informations. Your web-site is so cool. I’m impressed by the details that you have on this site. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for more articles. You, my pal, ROCK! I found simply the info I already searched all over the place and simply could not come across. What a perfect site.

Leave a Reply

Your email address will not be published. Required fields are marked *