Retailers think US is hardest market to crack
A new study has revealed that nearly half of British retailers believe that the US is the most difficult market in which to achieve commercial success despite it being the current destination of choice for international expansion.
The survey by banking group Barclays found that retailers consider the US to be the most challenging market. This was 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 came in second with 33% of retailers saying they had encountered problems when trying to set up shop while Asia was third with 19% of those questioned claiming they had experienced difficulties in entering the market.
When asked about future expansion, 23% of retailers said Germany was their number one choice for overseas expansion in the next five years, closely followed by China and Australia.
Never Miss a Retail Update!Richard Lowe, head of retail & wholesale at Barclays, said: “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.”
While total UK retail spend is expect to grow by around 11.5% to £345.6 billion by 2016, in the US spend is predicted to rise by 17.5% to £2.3 trillion. However, China is expected to see an 85% surge in spending to £3.6 trillion by 2016, the highest in the world.
Lowe continued: “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 thought that Africa would be the new retail growth story within a decade. However, only 21% currently generate sales on the continent. Of those which do, 53% said South Africa was their top market.
When asked where in Africa they would consider expanding in future, South Africa remained the number one choice for 18% of those questioned followed by Ghana and Kenya. The reasons given for this interest was Africa’s burgeoning middle class followed by the take up of mobile technology.
“Many of the trends which have driven the economic development of emerging economies in Asia and South America are beginning to take hold in Africa,” added Lowe.
“It’s rapidly expanding middle class increasingly need goods and services which cannot be catered for domestically, providing a golden opportunity for internationally-minded retailers. This is a truly ‘ground floor’ moment in many African economies.”
