Chapter 12
International Retailing
LEARNING OBJECTIVES
After studying this chapter students should be able to:
• Provide an overview and description of the general merchandise retailing category
and offer examples and illustrations.
CHAPTER SPOTLIGHTS
• International Expansion of Retailers: Retail chains are rapidly expanding
internationally.
• International Retailing Defined: International retailing is defined as all activities
CHAPTER OVERVIEW
This chapter offers insights into the internationalization efforts of retailers and describes
the different categories of retailers. In particular, the chapter addresses retailers’ pursuits
CHAPTER OUTLINE
12-1 International Expansion of Retailers: In order to gain competitive advantage and
to increase sales and profits, retailers are rapidly expanding internationally.
12-2 International Retailing Defined: International retailing is defined as all the
activities involved in selling products and services to final international
12-3 Retail Formats: Variations in Different Markets
The three main retail formats are: general merchandise retailing, food retailing, and
non-store retailing.
12-3a General Merchandise Retailing
1) Specialty Stores: Stores that offer a narrow product line and wide assortment.
This category includes clothing stores, bookstores, toy stores, etc. These
stores represent the main retail format in developing countries, but are popular
4) General Merchandise Discount Stores: Stores that sell high volumes of
merchandise, offer limited service, and charge lower prices. All-purpose
discount stores like Wal-Mart offer a wide variety of merchandise and limited
depth. Category specialists (category killers) like Staples and Toys ‘R Us
carry a narrow variety of merchandise and offer a wide assortment.
5) Off-Price Retailers: Retailers that sell brand-name and designer merchandise
12-3b Food Retailers:
1) Conventional Supermarkets: Self-service retailers with annual sales higher
2) Superstores: Large food retailers that sell food, drugs, and other products.
This category includes combination stores that sell foods and drugs, which are
popular in the U.S., and hypermarkets, which combine supermarket, discount,
and warehouse retailing principles, which are popular in the rest of the world,
12-3c Non-Store Retailing:
1) Internet Retailing (also known as interactive home shopping or electronic
retailing): The use of the Internet as a venue for selling merchandise is
practiced both by dot-com companies, as well as traditional retailers
4) Catalog Retailing and Direct Mail Retailing: Venues for selling merchandise
to consumers using catalogs and other types of direct mail. Facilitates the
5) Direct Selling: A retailing venue whereby a salesperson, typically an
independent distributor, contacts a consumer, demonstrates product use and
6) Network Marketing: A variation on direct selling, involves signing up sales
representatives to go into business for themselves with minimal start-up
12-4 Issues in International Retailing:
12-4a Legislation and Regulation:
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12-4b Taxation and Cross-Border Shopping:
This practice is common in countries where consumers are charged lower duties
12-4c Variation in Retail Practices: A Consumer Perspective
Retail practices vary from one market to another depending on culture and market
12-4d Variation in Retail Practices: Salespeople and Management
Sales service differs from market to market, ranging from extremely friendly to
curt salespeople. Some stores can charge an entrance fee for people shopping
there, while other stores require a particular dress code of their customers.
KEY TERMS:
All-Purpose Discount Stores: General merchandise discount stores that offer a wide
variety of merchandise and limited depth.
Combination Stores: Medium-size retail stores that combine food and drug retailing.
Convenience Stores: Small retailers located in residential areas, open long hours, and
carrying limited lines of high-turnover necessities.
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Conventional Supermarkets: Self-service food retailers with annual sales of more than
$2 million and with an area less than 20,000 square feet.
Cross-Border Shopping: Purchasing products from a neighboring country where the
consumers may be charged lower duties.
Electronic Retailing: Selling through the Internet using web sites to increase market
penetration and market diversification; also called interactive home shopping and Internet
retailing.
Food Retailers: Retailers selling primarily food products.
General Merchandise Discount Stores: Retailers that sell high volumes of
merchandise, offer limited service, and charge lower prices.
Hypermarkets: Very large retail stores that combine supermarket, discount, and
warehouse retailing principles.
Network Marketing: Using acquaintance networks through an alternative distribution
structure for the purpose of distribution; also called multilevel marketing.
Off-Price Retailers: Retailers who sell brand name products and designer merchandise
below regular retail prices.
Warehouse Clubs: Stores that require members to pay an annual fee operating in low-
overhead, warehouse-type facilities, offering limited lines of brand name and dealer-
brand groceries, apparel, appliances, and other goods at a substantial discount; also
known as wholesale clubs.
Wholesale Clubs: Stores that require members to pay an annual fee operating in low-
DISCUSSION QUESTIONS:
1) What is the difference between a specialty store and a category specialist?
Specialty stores are retailers that offer a narrow product line and a wide
2) Describe the state of the department store around the globe. What strategies
appear to be more successful for department stores?
In the United States and Canada, department stores have suffered substantial
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3) Hypermarkets are a dominant retailing format in Europe but not in the United
States. What are hypermarkets? Give examples of successful hypermarkets
worldwide.
Hypermarkets are defined as very large retail stores that combine supermarket,
discount, and warehouse retailing principles. There, the consumer can find fresh produce,
4) Direct selling and network marketing have found great success in emerging
markets. What is the difference between the two categories of retailers, and how do
they gain access to consumers?
Direct selling is selling that involves a salesperson, usually an independent
distributor, contacting a consumer at a convenient location, typically, at his/her home or
5) What are some of the challenges that retailers face in international markets?
Retailers have to face different legislation and regulations from one market to
another, which can have a profound effect on the firm’s operations. Regulations might
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REVIEW QUESTIONS:
True/False
1. True
Multiple Choice
1. A
6. C
CASE 12-1
Stefanel Canada
1. Identify the retail category of Stefanel.
Stefanel is a clothing specialty store.
2. What are some of its competitors worldwide? How is Stefanel different from
its competitors?
Its competitors are the Gap, Abercrombie & Fitch, H&M, Zara, Benetton, and many
3. What is the company’s international expansion strategy? How does Jean Luc
Rocher’s proposal fit into the company’s expansion plans?
The company is rapidly expanding internationally, to Eastern Europe, the Middle East,
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