CHAPTER 14

INTERNATIONAL RETAIL PRODUCT MANAGMENT

LEARNING OBJECTIVES

Understand why a retail organisation should become involved in international RPM activities Understand the two opposing approaches to international RPM: standardisation and adaptation Consider the implication of international RPM on the retail buying organisation Consider the opportunities and challenges associated with international sourcing

PRODUCT RANGE: STANDARDISE OR ADAPT?

A global strategy
reproduction

of a successful retail formula across

the globe concentrates on similarity of customer needs same product range in all outlets

A multinational strategy
opening

retail outlets that are adapted for different international markets takes different customer needs into consideration different product ranges for different outlets

THE TRANSNATIONAL STRATEGY

Retail operations are managed on a global basis, with standardised procedures, but product ranges are adapted to different regional markets The basis of many successful international retail strategies Some product categories have more localised preferences (e.g. food) Luxury and high fashion branded products have international appeal

STANDARDISED RANGE

ADVANTAGES
economies

of scale buying power increases internationally recognised brand image

DISADVANTAGES
novelty

appeal of retail formula may decline unable to take buying and selling opportunities lack of transfer of knowledge / experience

ADAPTED RANGE

ADVANTAGES
able

to adapt to emerging market opportunities become readily accepted within new culture may be able to benefit from existing management expertise and supply base

DISADVANTAGES
higher

costs (buying, marketing, training etc.) does not build global recognition for retail brand

UNAVIODABLE ADAPTATIONS
Multilingual product information Logistical necessities (packaging, labelling, documentation) Products technical compatibility International health and safety standards Pricing (distribution costs)

ORGANISATION FOR INTERNATIONAL PRODUCT MANGEMENT

A purely standardised approach will not require separate product managers

scale

benefits of centralised buying will be realised international outlets may not receive the attention they need

An adapted retail strategy needs decentralised buying decision making

faster

response to market opportunities local expertise and suppliers can be retained or built

LOCAL VS GLOBAL SOURCING

LOCAL

suppliers will be familiar with local tastes and preferences supporting local industries can help a retailer to integrate into new market economy

GLOBAL

can help to develop an international outlook necessary to remain price competitive enabling technology has made global sourcing more viable for many consumers are becoming more international in their product usage can be difficult to determine exactly where/how product is made

ALTERNATIVE GLOBAL SOURCING STRATEGIES

Limit level of imported goods, use domestic suppliers for specific product or services (e.g. quick response) Spread risk by sourcing from a number of different countries and suppliers Limit buying to certain geographic regions to limit costs Use intermediaries (such as buying offices, agents, distributors, e-commerce trading networks)

ETHICAL SOURCING

Buyers may be unaware that supplies are being made where working conditions are unsatisfactory (long/complex supply chains) Retailers are morally and increasingly legally responsible for trade conduct (corporate social responsibility) Consumer expectations are getting higher Fair Trade and the Ethical Trading Initiative (ETI) are examples of retailer responses Ethical issues need to become part of supplier assessment and product selection