How do you navigate the changing landscape of Europe?
This is a question we hear time and time again at Endaba from executives looking to harness the opportunities in Europe. Yet, the answer is not so simple!
On Wednesday 2nd November, Endaba hosted a business breakfast that brought together senior retail executives for an open discussion on expansion, sharing their European experience and expertise. Endaba also shared insights from our historical Market Intelligence and how it helps businesses to make better-informed strategic decisions.
The discussion explored what senior retail executives consider to be key elements in their expansion into Europe, be it a unified brand image, catering to every customer or simply expanding into as many markets as possible!
The breakfast began with a debate about what is the most successful business model for expansion into Europe – centralised vs. decentralised? In a centralised model, decision making is exclusively in the hands of top management in one specific geographical region. Whereas in a decentralised model regional management teams have more autonomy and influence in decision making. It was universally agreed that a centralised model was most efficient and profitable, but a degree of decentralisation was necessary for successful for European expansion, as it allows individual markets autonomy to ensure they are relevant to their local personality, ultimately maximising sales and profit. On top of this flexibility, it is important to retain a brand’s consistency in order to stay true to their purpose.
The 3 most important factors considered were:
It all starts with talent. A company is only as good as its people.
There was a resounding agreement around the table that alongside a centralised model, there must be the right talent to support this structure. Companies must ensure their head office teams have a high calibre of management with the relevant market and international experience, working globally across different markets. They must also trust and empower them to enable local market activation.
A successful global strategy should incorporate global differences, and everyone has to champion the strategy.
Expansion plans should be driven by a company’s overarching growth strategy. A company needs to determine their growth strategy and be clear on their goals. Increasing the bottom line is often the motivation to expand rather than focusing on the sustainable growth of the business itself, and this can be damaging.
It is a common misconception that as part of a business’ growth strategy, they must have a physical store in every key market. Whilst this builds a company’s global footprint, often stores are opened in oversaturated markets because it is expected, rather than asking ‘why’. Through the power of digital, today’s reach extends far beyond the physical space, making mass store openings an outdated approach. Decisions to expand must be made with the entire organisation in mind and at the right stage of a brand’s lifecycle. Expand too quickly and companies risk choosing unsuitable locations, losing their authentic and true brand experience, and investing disproportionately across their channels in Europe. However, expand too slowly and the risk lies with being underrepresented in key markets.
COMPANY’S PURPOSE AND KNOWING YOUR CUSTOMER
Customers can no longer be thought of simply by location, gender or age…the customer is now global.
With today’s global customer, it is vital that companies are fully aware of the worldwide perception of their brand. Companies can no longer rely on where customers shop, but how and why; they need to view the customer as an individual, understand their motivations and ensure a seamless and relevant branded customer experience. Local execution is all about connecting with the customer without jeopardising the brand. With any expansion into new markets, a company must stay true to their core values and purpose.
Whilst it may seem more efficient to apply a decentralised model whilst expanding, this can be highly damaging and detrimental to brands; inconsistencies occur and brands can be misrepresented and misinterpreted. It is vital that companies remain tough brand owners and exit partnerships when necessary.
So…what can companies do to ensure a successful expansion into Europe?
The changing landscape of Europe can seem like a daunting place to navigate. By staying true to their purpose, values and understanding their customer, companies are able to establish a strong growth strategy as well as identifying and securing a high-calibre of talent; therefore, they are well positioned to expand and achieve sustainable growth!