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merican retail concepts are blessed with having a home in the largest, most affluent consumer market in the world. Yet many of these retail brands have saturated their home turf and see overseas markets as the primary growth driver.
A retailer can spend years rolling out a brand in the largest U.S. metro markets and then several more years penetrating smaller markets before looking overseas. Today's globalization, however, makes moving internationally sooner a much more attractive opportunity.
American Apparel is a great example of a brand that has moved aggressively overseas while still exploiting tremendous growth opportunities domestically. The concept's rapid expansion began in 2004 with 23 new locations in the U.S., nine in Canada, and three internationally. Between 2005 and 2008, U.S. store growth was 250%; internationally it was 400%. Many observers suggest that the synergies among shoppers in international cities are greater than the synergies within any particular nation. American Apparel's urban brand is particularly well-suited to this phenomenon.
A recent report from PricewaterhouseCoopers and TNS Retail Forward predicts that "barriers to global trade will continue to come down" and that "developing markets will continue to phase out restrictions on foreign retailer operations and liberalize regulations of direct foreign investment." They call global expansion a key source of revenue and a necessity, not an option, for retailers. They also see the growth of middle class consumers around the globe as a key driver of these international opportunities.
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