A recent study by research firm A T Kearney reported that the retail sector in the emerging markets - particularly the BRIC nations of Brazil, Russia, India, and China -shows no signs of slowing down as a source of growth. In addition, many smaller untapped markets are providing new growth opportunities.
Faced with the erosion of their profit margins in the US and Europe, retailers are turning to these emerging markets, increasingly making emerging geographic markets a centerpiece of their global business model. Companies in a variety of industries - notably consumer products and technology - are looking to expand their presence in these regions, as emerging markets continue to see huge increases in demand, while growth remains sluggish in Europe and the US.
However, these retailers will have to rethink their retailing strategies for new markets, since their business models are based on practices established in the markets of the developed world, and might not always hold good in new markets. Hence, those retailers that are entering these new markets for the first time need to refocus their perspective in certain ways. Without a full understanding of the business landscape awaiting them, companies are not as likely to enjoy business success.
For example, when doing business in Asian markets, companies need to have input on the business and IT strategy from people who are already in Asia and understand the markets. That's especially true for companies that have traditionally focused on the US and Western European markets.
Consumers in Asia have different expectations and preferences about how and where they purchase goods, depending on where they live. As an instance, many of the customers in China and India are in a younger demographic, so it is important to leverage platforms such as e-commerce and social media to reach them. In China, the e-commerce market is starting up aggressively, with several consumers going online to buy products.
On the other hand, in Hong Kong, many people buy products at traditional retail stores located at shopping malls. The shopping behavior in Hong Kong is really about going out; it's part of their lifestyle and entertainment. Hence, a retailer should focus more on developing a physical presence.
As businesses seek to enter these markets profitably, they can benefit from partnering with local companies. Local partners can offer assistance in understanding the markets and developing localization strategies that help retailers quickly prepare for the demands. In the technology space, a global IT provider who has already developed expertise in various countries, including overcoming language barriers and cultural differences, can provide invaluable assistance.