UK small retailers believe America is the hardest overseas market to crack

Nearly half of British retailers believe the US remains the hardest market in which to achieve commercial success despite being the current export destination of choice.

A study by Barclays questioned retailers on their attitudes towards international expansion and how they plan to expand, whether via online channels, opening stores or joint ventures.

It finds that the US remains the top choice and comes as reports surface that Sir Philip Green hopes to turn Topshop into a $1 billion US business within the next five years and Hobbs plans its expansion into the US.

However, retailers also consider the US to be the most challenging market, despite the growth of online which provides a low-cost means of entry and the seemingly similar cultures and values shared by British and American consumers.

China comes in second with around a third of retailers (33 per cent) saying they had experienced difficulties when trying to set up shop there.

Asia, more broadly, is third with 19 per cent of those retailers questioned claiming they had experienced difficulties.

Asked about future expansion, nearly a quarter (23 per cent) of retailers say Germany is their number one choice for overseas expansion in the next five years, closely followed by China and Australia.

Richard Lowe, head of retail and wholesale at Barclays says, ‘On the surface the US would appear to be an easy market in which to secure a foothold but its sheer scale means achieving commercial success across the whole country is an incredible feat. As for China, nothing is impossible, but everything is difficult.’

Between 2012 and 2016 total UK retail spend is expect to grow by around 11.5 per cent to £345.6 billion. In the US this figure is nearer 17.5 per cent (to £2.3 trillion by 2016) and in China this figure is 85 per cent (to £3.6 trillion by 2016), the highest in the world.

Russia and Brazil also enjoy standout growth predictions over the next five years with 68 per cent (£649.8 billion), and 49 per cent (£536 billion) respectively.

Lowe adds, ‘It would be unreasonable to say there is no further growth in domestic markets, but it is becoming increasingly difficult to extract in the current climate. The economic realities across the western world mean that retailers now have international expansion firmly on their radar.’

Nearly a quarter of retailers surveyed state that Africa will be the new retail growth story within a decade, with first mover advantage (33 per cent) considered to be the most important consideration when expanding.

Only 21 per cent say they currently generate sales on the continent. Of those which do, more than half (53 per cent) say South Africa is their top market.

Related Topics

Exporting
Retail

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