UPDATE: U.S. Retailers Still Going Overseas
By Stephen Stephanou
Last Spring we profiled U.S. retailers who are expanding aggressively overseas. Since then, this trend has only gained momentum.
Among the most popular means of expansion is franchising with established international operators. The expectation is that this approach helps reduce the risk of operating in previously unchartered waters. The biggest beneficiary recently has been M.H. Alshaya Co., who operates over 1,700 stores in 16 markets across the Middle East, North Africa, Turkey, Cyprus, Russia, and Poland. M.H. Alshaya Co. is the retail business of the Alshaya Group, which was founded in Kuwait in 1890.
One of M.H. Alshaya Co.’s recent coups was a multi-year franchise agreement with Williams-Sonoma, Inc. to launch their portfolio of brands in the Middle East. The first four stores are expected to open in Dubai and Kuwait in 2010 and will include the Pottery Barn and Pottery Barn Kids brands.
Collective Brands Inc. is also partnered with M.H. Alshaya Co. to franchise in the Middle East, but recently announced an expanded agreement to Russia where Collective Brands Inc. hopes to open 90 Payless ShoeSource stores in five years and up to 300 over the long run. Russia, in particular Moscow, seems to be gaining traction as a destination for U.S. brands.
Another risk-mitigation strategy is co-branding. Cold Stone Creamery recently pursued such a strategy when entering Denmark. The company partnered Michelsen Chokolade, the leading chocolate manufacturer and retailer of Denmark. The first two co-branded units opened in June 2009 in Copenhagan. Eleven more co-branded stores are in the works over the next year.
Other recent news and notes include:
Krispy Kreme has opened its first doughnut shop in Turkey. It is the first of 25 Krispy Kreme shops the franchisee plans to open in the country over the next five years. The Company also has announced a franchise development agreement for China.
After a difficult second quarter where they closed 29 Ruehl stores, Abercrombie remains very encouraged by their prospects for international growth. They are on track to open three international flagship locations this year, including two stores in Milan and one outlet in Tokyo.
Pizza Hut, which operates 300 delivery units and 400 restaurants in the UK, is planning to open as many as 50 delivery units each year starting in 2010.
Martin Coles, head of international operations at Starbucks, said recently that it plans to add to its more than 50 locations around Paris and Lyon. “There is a tremendous opportunity because of the availability and quality of real estate for us to continue an aggressive expansion path,” Coles said of France. “We’re talking about an economy, a population base and [economic] growth every bit as good as a market like the UK.” Starbucks operates roughly 750 stores in the UK.
Polo Ralph Lauren is accelerating its expansion in Hong Kong and China with a plan to open up to 15 stores each year. “We were going to come at this business aggressively anyway but now it’s even more of a reason as business in the US and Europe have flattened,” said George Hrdina, president of the company’s Asian business. “We do more Ralph Lauren business on the island of Manhattan, New York, than we do in Hong Kong and China.”
Frozen yogurt maker PinkBerry opened in Kuwait City over the summer and soon will open in Dubai. Also, 18 new Chili’s restaurants are coming to Mexico along with 160 new Autozones.
