The great globalisation rush

Slowing domestics markets have for some time been the catalyst for many to explore foreign shores, but complexity of the models used to do so and the emergence of new hot markets are the real game changers for 2016.

China continues to be at the forefront of many a retailers mind, but while stellar growth continues compared to the rest of the world, there are signs of a slowdown 7% in Q1 2015, down from 7.5% 2014, the weakest in 24 years.

Urban workforce growth has now stalled, which is creating wage and prices inflation. Liberal planning has also given rise an explosion of shopping centre development across China.

Key city locations have been snapped quickly by dominant brands, however retail analyst are warning of an over-supply in the market and urge caution in the choice of location. Louis Vuitton recent opened stores in Urumqi, Kunming and Zhengzhou, while Ikea has outlets in Tianjin and Wuxi and H&M has expanded into Chengdu, Changsha and Harbin.

As Chinese consumers adapt from being a producer to a consumer economy, purchasing behaviour is also changing, with a growth in demand for personalisation and the rise of the savvy shopper who is opting for more affordable 2ndtier luxury brands. Chanel, Patek Philippe and Cartier have all responded to this trend by adjusting prices specifically for the Asian market.

But while China shows signs of a slow-down other economies are pick up a pace, notably on the African content. In 2014, 19 new brands launched in South Africa. The market is now the 15th most targeted globally, with the recent arrival of brands including Cotton One, Forever 21, Zara, Mango and Gap.

Entry typically tends to be through franchise partners, most notably Busby and The Surtee Group. In 2016 expect to see brands expand their presence further into Africa, particularly in Nigeria, Kenya and Ethiopia.

Elsewhere, political unrest doesn’t ruffle the feathers of the strongest of global retail pioneers, with marked recent growth in Armenia, Georgia, and Kazakhstan. In 2014, JYSK, Laura Ashley, F&F, and New Yorker, Zara all entered Armenia.

While Zara adopts a total ownership model across its global operations, many global retail footprints are underpinned by a more complex operational model, embracing a mix of wholesale, franchise, direct and online.

Superdry has spearheaded international growth with a structure of 139 own stores; 74 concessions; 185 franchised stores; 23 licensed stores; 95 shop-in-shop stores; and 18 international websites.

As the global middle class nears the one billion mark, retail pilgrims are proving adept at spotting new market opportunities in far flung corners of the earth.

In the immortal words of André Gide, “man cannot discover new oceans unless he has the courage to lose sight of the shore”.