How To Avoid Cultural Potholes On The Road To Global Expansion
By Sue Welch, founder and CEO of Bamboo Rose
- Wal-Mart’s Failed Expansion Into Germany
- Starbucks’ Stumble In Australia
- Best Buy’s Short-Lived Effort In Europe
- Even eBay Found The Competition In China Too Fierce
The business headlines are littered with tales of global expansion gone awry. While the reasons behind the struggles are complex, there is a common thread in these experiences: Missing the cultural differences and needs of the target market.
In the end, overlooking cultural norms — such as Germans being used to bagging their own purchases, the European penchant for smaller shops, or the Chinese preference to build trust directly with sellers rather than rely on rating systems — can make success impossible.
It might seem expanding into global markets, then, is a risk too large to take. After all, it isn’t easy or cost effective to send dozens of employees into a target market for cultural immersion before building an operation. Nor is it realistic to bring teams of locals to the home office and expect them to share insight into what is often subtle and innate about their cultures overnight. At the same time, global expansion is too compelling an opportunity to ignore. Getting it right is actually getting easier for innovators who embrace the new reality of consumer-driven retail and digital technology to harness the potential.
Digital Channels: Shop The World Before You Buy
For consumers, shopping in digital channels is simply something they do. It hasn’t necessarily been a core part of the way retailers source from overseas, but it most definitely needs to be now.
Sourcing via digital channels can significantly reduce the time, risk, and cost of bringing new and exciting merchandise into the operation. More importantly, shopping virtually gives retailers a strong sense of what is available in the local market — from designers and materials to production capabilities. With this information, it’s like working within the local market — retailers inherently understand customers’ wants and needs, and the leap to building an operation can be made with confidence.
Co-Creative Retail: Unlocking The Power Of Local
When retailers think and act locally, they are much more likely to succeed globally. The good news is, with today’s digital, cloud technology, it’s much simpler to quickly become locally relevant — and appropriate — through co-creation models.
Joining a digital B2B community allows for broad idea sharing and involves stakeholders right from the start; a significant departure from the traditional way retailers bring product to market — top down, in silos, and with little room for variability. When retailers co-create, they engender inspiration which helps them stay on top of trends and create innovative products with help from the entire retail community including partners, suppliers, designers, agents, mills, and more. This approach is especially vital in cultivating local relevance, flair, and sensitivity by enabling:
- Deeper market insight: Franchisees and international customers can quickly and easily provide information on local differences and preferences during the development stage, long before product lines are finalized.
- Market-based product offerings: Connectivity allows retailers to make smart decisions around what products they offer, as well as where to drive revenue and improve profitability.
- Deeper understanding of the channel options: Getting quick feedback from in-market resources can help retailers be strategic. Should they build another store and invest in a local, physical presence, or join an online community to sell to multiple markets at once? Technology can help with that decision.
Demonstrating local awareness and reflecting that back with merchandise and more goes a long way toward cultivating brand awareness and customer engagement. Facilitated by co-creation models, retailers tap into that powerful connection to fuel innovation, efficiency, and stay much closer to customers and their preferences.
Thriving In The Global Village
In many ways, the world is much smaller today, but it’s far from homogenous. For retailers, navigating the nuances of local culture successfully is the only way to succeed in the global marketplace. Embracing the new reality of consumer-driven merchandising to bring products and services to market that truly reflect changing customer norms — both at home and abroad — is an essential shift.
About The Author
A veteran of the tech startup world, Sue Welch is the founder and CEO of Bamboo Rose, a B2B digital marketplace. Welch is committed to bringing the world of product development and sourcing to par with how consumers shop for goods through a collaborative platform that enables digital sourcing and is driven by trade engines. Follow Sue at @SueWelch and Bamboo Rose at @GoBambooRose.