Retailers and International Markets: Motives for Expansion

4800 Words Nov 5th, 2010 20 Pages
Retailers and International Markets: Motives for Expansion
Nicholas Alexander
University of Edinburgh, Edinburgh, UK International retailing is not a new phenomenon. The Woolworths operation, for example, was introduced into the United Kingdom from the United States in the first decade of the twentieth century. Neither is international retailing limited to a few countries; many of Europe 's leading retailers have multinational interests. The French group Carrefour has operations in other European countries and South America. Vendex, based in the Netherlands, has interests around the world, as does the UK 's Marks & Spencer with its European, Canadian, US and Far East operations. Nevertheless, it would not be an exaggeration to say that
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IKEA, for example, has a policy to saturate one market before beginning to expand in another (Arbos, 1985). Indeed, saturation, and the potential to fill niches in other markets, are motivating factors which often work in tandem. Saturation and niche opportunities are certainly issues relevant to international retail expansion. However, they are not the only reasons for expansion and perhaps not necessarily the most important. Transatlantic Investment By Whom? Transatlantic retail expansion by European companies, although a feature of retailing before the 1970s, achieved particular notice as a result of acquisitions during that decade. For example, the Brenninkmeyer family of Belgium began making acquisitions in the US market in 1962 with Ohrbachs of New York, which was followed in 1978 and 1980 with their takeover of Maurices of Minnesota and Hub Distributing of California (Ball, 1980). The acquiring organisation and all three US retailers were primarily clothing operations. However, in the 1970s and early 1980s, grocery retailing was the main sector for takeovers. Grocery retailing was the primary interest of Cavenham (UK), the company which bought the grocery retailers Grand Union, Colonial Stores and J. Weingarten in 1973, 1978 and 1980. European interest in US grocery retailing led to a situation where by the early 1980s, it was calculated, at least 10 per cent of the US grocery sector was owned