The Pitfalls and Opportunities for International Retail Expansion

Our first dispatch from MAPIC, the international retail conference happening right now in Cannes, was filled with sandy beaches, stunning sunsets and stellar soirées. But the conference is about business above all else, so it's time to get down to it.

Thursday morning, as everyone was shaking off the morning-after-yacht-party blues, Bisnow CEO and London native Will Friend hosted a breakfast panel on US retailers entering foreign markets and vice versa. The playful Brit turned MAPIC into a Bisnow event for one morning, getting panelists (right to left) Pinkberry VP Ryan Patel (whom we spoke to last month), Aeropostale VP Richard Li and SGN Group founder Sever Garcia to introduce themselves before diving into a lively discussion.

Ryan has helped Pinkberry grow into dozens of countries around the world, including the Middle East, Japan and even Peru, thanks to making sure all of his locations feel like they belong. That means localizing, with green tea flavors in Japan and passionfruit flavors in the Middle East, for example. “It’s not a choice,” he says. “You have to have a lucuma flavor in Peru to be considered a Peruvian business.” That touched on the primary theme for the panel and, really, for the entire conference: knowing your customer.

Sever, whose company helps European retailers come into the US, repeated the importance of knowing your customer, which doesn’t change too much from country to country. “Consumers are similar,” he says. “What changes is how you reach the consumer.” The top fashion brands in France and Germany are usually the same as the ones in the US, but the messaging is different.

Richard runs the global expansion for a brand that sells clothing to teenagers, so social media and technology are paramount for him. Aeropostale has more than 10 million likes on Facebook, and he makes some of his decisions based on where those likes are and where online orders come from. It’s a lot easier to convince investors to open locations in Brazil if Brazilians are already wearing Aeropostale. And it’s working: the company has 300 locations in more than 15 countries outside the US and Canada, and it’s up for a MAPIC award for best fashion/footwear concept.

Will, who started Bisnow’s office in New York before our HQ moved there officially, asked a question that the previous day’s US panel (more on that later) touched on: to expand into the US, do you need to start in Manhattan? Sever says aspirational and high-end retail have to have a New York presence, for branding and foot traffic purposes. But Richard and Ryan disagreed. Aeropostale has a New York office HQ and didn’t enter that market for 15 years after starting in malls with teenager-heavy demographics. Pinkberry launched in LA (although it now has 15 Manhattan locations and delivers in the borough). It all comes back to knowing your audience and having a plan to reach it.

On Wednesday, Charming Charlie VP Enrique Nehme, Sears Holdings VP Alan Shaw, Acadia Realty Trust COO Chris Conlon and Thor Equities EVP Sam Polese debated the same question, and had the same disagreement. Chris says New York is the best bet to make a successful US entrance, but “it comes with a big price tag and a big leap of faith.” Sam called New York an “international marketing phenomenon,” and says opening a store there makes a statement. “That’s different than just running a store in a mall.”

Alan told the enthralled crowd, many of whom were international retailers keenly interested in deals with the three landlords on the panel, that the majority of shoppers in the States not only aren’t in New York, but they don’t even care about it. “New York is unique, and success there might not translate.” Alan told those listening that "Americans still shop in malls," and the malls closest to their house. In Europe, things are different: folks can take trains for up to an hour to shop at a mall, and many malls have grocery stores inside.

Bisnow is only in America right now, but that doesn’t mean we don’t have our eyes out for what’s happening around the globe. We stopped by a panel on retail in the UK to listen to Hammerson head of new business Alice Roudaut, Harper Dennis Hobbs CEO David Harper and Cushman & Wakefield head of European, Middle East and Africa retail Justin Taylor discuss the latest trends across the pond. David talked about how some retailers are experimenting with iPads in changing rooms, with customers picking out alternatives and digitally telling clerks which selections to bring them. Our ears also perked up when they mentioned the American Dream center in the Meadowlands back here as an example of “retailtainment” and a possible trendsetter.

There's still plenty more story to tell about MAPIC, including who has the coolest booths (meantime, check out Cushman & Wakefield's show digs) and swankiest yachts. Come back for more.