Rumours continue to abound regarding the imminent arrival in Australia of a wave of US retailers.  This article names a long list of firms reportedly considering a down under arm, including:

• Marble Slab Creamery (icecream chain)
• Maggie Moos (more icecream!)
• Great American Cookies
• Shoebox New York
• Johnny Rockets (a diner chain making an Aussie return)
• Gap (fashion)
• Abercrombie & Fitch (fashion)
• Forever 21 (fashion)
• Victoria’s Secret (lingerie)

The article raises some interesting examples of “success” by US retail firms/brands (e.g. Apple, Athlete’s Foot, Tiffany’s) and some duds (Starbucks, Disney).  I’m not yet convinced by the robustness of the arguments that entry into Australia will be easy, or that consumers are desperately awaiting these US firms.  There are some nice quotes here about why US firms need to be careful:

“US retailers need to really consider whether the product being offered is American-centric or appeals to a global audience.”

“If American retailers can offer something different to the market, they’ll be a winner.”

“An American retailer may not have a massively different product range to rivals such as Cotton On or Just Jeans, but if they have a brand name with a good amount of demand behind it, they’ll be able to sell and thrive.”

“They do need a brand power…But they also have other things, such as a geographical supply chain advantage, a strong Australian dollar and the ability to handle more retail virtually than at any time before.”

It is intriguing that a number of the brands are looking to enter via franchising (particularly the first four on the list).  There is the usual logic for doing this (shifts big chunk of the cost burden and risk on to others, and may allow local franchisees to adapt to local tastes).  There are BIG potential pitfalls too – misaligned processes, poorly supported brands and marketing, inadequate screening and nurturing of franchisees.

My expectation is that less than half of these firms will end up showing up in the shopping centres of Australia. Hype will always outweight reality. Nevertheless, my “melting barriers” analogy seems to be holding up.

I will return to the list again in a later post to explore some of the geographic angles of this (following on from Sakshi’s discussion of a couple of months back).

Filed under: International business, International retailing, Retailing, Strategic management

The original is here: International BS