Ways to Break the Boundaries of International Expansion
15 Jun 2021 - There are ample opportunities internationally for British businesses, despite the challenges of Covid and Brexit, says Damian Hopkins, CEO of Select Licensing & Franchising, and former international director at Matalan.
International markets have always interested me throughout my career in the fashion industry.As far back as the early 1990s, I targeted numerous international markets, exporting my own, British-made branded childrenswear to Europe, the Middle East and Far East. My business was a finalist for the British Export Award in 1996.
In the early 2000s, and in the 2010s, my company at the time developed both licensing and distribution models for celebrity brands to cover numerous international territories. I worked with the Kardashians on their clothing launch throughout the EMEA region in 2012, and Robbie Williams’ menswear brand, Farrell, which was launched worldwide in 2011.
However, more recently, my focus has turned to international retail franchising and licensing. As we all know, the UK is a hotbed of fantastic creative retail businesses and brands that produce high-quality, innovative and well-designed products. More often than not, these brands and products have a broad consumer appeal far beyond our shores.
One such business that I have been closely involved with recently has been Matalan. Given the value and quality of the product, and the breadth of the offer across ladies', children's, men’s and home, I knew the retail model would appeal to consumers internationally.
Over the past five years, we have developed and built a thriving international division at Matalan, now operating across 13 countries including the United Arab Emirates, Saudi Arabia, Oman, Egypt, Malta, Georgia, Kosovo and Gibraltar, supported by seven franchise partners. This year, Matalan will reach the milestone of opening its 50th international store – a great achievement, particularly during these challenging times.
Despite Matalan’s success, international expansion is fraught with challenges, even without the uncertainty of a global pandemic to deal with, and the added complexity of exporting from the UK after Brexit.
Here are three of the biggest challenges a business will face when entering new international markets and how to tackle them:
1 Identify the right partner
A partner with a proven track record of retail success, and one that has the financial capability required to invest significantly into your brand for not only stock, but marketing, PR and store operations is crucial. Often, a large UK brand is unheard of in the new territory and requires significant marketing and PR to gain consumer recognition and trust. I highly recommend engaging with the Department of International Trade which offers helpful advice to British businesses expanding overseas.
2 Understand local government regulations
When launching in a new market, you will often encounter restrictions and compliance issues on products, imports and additional testing requirements. Investing time to understand these regulations before entering the market is well worth it, as failure to comply to local regulations is costly and will lead to very long stock delays or product rejection, and possibly even destruction at port of entry.
Countries such as Egypt and Saudi Arabia are notoriously difficult to deal with: foreign business legally cannot enter without a local partner. We have overcome this by working with excellent local partners, and support from the Department for International Trade, which helped us navigate many of the local requirements.
3 Identify the right model for your business to expand internationally
The franchise model works well for businesses that wish to expand without taking too much risk in new markets that are unknown. It is also a low-cost entry model for the brand, and it is often quicker than entering the market directly. And of course, countries such as Egypt and Saudi Arabia mandate having a local partner.
Other options for international expansion include direct entry. In India, for example, the government eased its restrictions on foreign direct investment (FDI) in 2015. This has allowed companies such as H&M to open directly in India and expand its footprint in the country.
The other opportunity for brands is to enter new markets via licensing. This is a low-risk financial model and one that can work well if the correct partners and controls are in place to protect the brand's intellectual property. We have worked closely with British heritage brand Wolsey to identify the right partner in Korea, and later this year will be launching a range of Wolsey men’s apparel and accessories alongside a golfwear line for the Korean market.
The Covid-19 pandemic has created numerous new challenges for international expansion – not least the inability to travel to visit sites and meet new partners either here in the UK or abroad – but we have all had to adapt, and the use of video call technology has enabled us to still meet regularly, take virtual site and store tours, and continue to open in new locations.
I believe there are exciting opportunities for British brands in the less well-known markets of eastern Europe such as Poland, Georgia and Armenia, as well as the Balkans, Africa, and India. In many of these countries, the consumer fashion aspiration and body shape is in line with the UK market, but there are fewer credible brands competing for the customers' spend.
There is plenty of opportunity for growth globally for UK businesses who are willing to invest both the time and resources to get to know these markets, their consumers' needs and, operationally, how to enter and trade successfully.