There have been some high-profile casualties, examples of overextension, and plenty of cases of overconfidence – often attributed to under-preparedness, a lack of a detailed strategy and underestimating the complex challenges of operating in a new retail market.
Some retailers are taking the strategy to better understand the complexity of expanding across EMEA and better preparing themselves for entering a new market before making the costly move.
Retailers looking to expand across multiple global territories, need to consider the variety of challenges that comes with entry into a new market. The cost of setting up, from leasing physical retail space, employment laws, tax and currency challenges are only some of the many challenges that need to be considered.
In the past, retailers have often been driven to expand their retail business because of a growing demand for their product, cultural relevance and the growing market competition. Some retail brands saw markets such as China, South East Asia etc as untapped markets for their particular retail niche, fashion retailers, in particular, this was their main motivation for growing beyond the UK & Ireland.
Political situations can also change how retail brands choose to expand, Brexit being one of them. Britain’s decision to leave the European Union has potentially impacted retail businesses plans to expand until after the 31st of October and beyond until more clarity is given around what leaving will look like.
According to the Economist Intelligence Unit, an analyst arm of The Economist Group, “Eastern Europe is showing signs of more retail growth potential than the more mature west over the next couple of years.”
It expects 2.5% and 2.3% year on year growth in 2019 and 2020 respectively in Eastern Europe, compared to 1.1% and 0.6% in the west.
Some European countries have seen strong growth within the retail sector such as Spain, France, Italy and Belgium. One of Irelands largest apparel retailers have opened in the Slovenian capital Ljubljana in 2019, its inaugural central European site.
According to the Economist Intelligence Unit, the Middle East and Africa’s retail growth is set to speed up over the next two years with predictions of growth within 2.6% and 3.2% in 2020.
Things to consider for EMEA expansion
In emerging economies, regulations are constantly developing, especially in Saudi Arabia where there are large fines for breach of data and security. There is also a newly introduced VAT of 5% that was introduced in 2018.
If you are a retailer looking to expand within Europe and consider particular nation-states within the European region a key target for growth and require an experienced European IT partner to support your retail technology needs, then why not give us a call to find out how we can help you?