Challenges and opportunities of new retail horizons in emerging markets: The case of a rising coffee culture in China

Economic growth and a rising middle class consumer base make emerging markets an attractive prospect for many international businesses. Changing patterns of retail in these countries present opportunities for business expansion that many are keen to capitalize on, but also present challenges for reaching their ambitions. This article examines the growth of the coffee shop industry in China—considering its key dynamics and drivers—in order to address questions about successful retail expansion in emerging markets. We aim to explore how changing consumer cultures have contributed to a rapidly growing industry and what strategies businesses have used to enter the market and maintain growth, as well as considerations for potential retail success in the future.     

Applying the scenarios method to capture uncertainties of retail development in emerging markets

Retail development in emerging markets has been the result of key driving forces operating in a variety of ways leading to unpredictable and complex patterns of retail change. Existing theories of retail change remain inadequate for capturing the complexities inherent in emerging markets. In order to capture the impact of the complex interplay of driving forces on retail change in emerging markets, the authors adopted the scenario method which accepts structural uncertainty and allows for multiple interpretations of multiple futures for the phenomenon under study. An example case study is presented, where four possible visions for retail development in emerging markets in Asia are identified. The four scenarios are firstly, a scenario where Traditional Retailers dominate through mom and pop stores, a second one where Regional Retailers dominate, a third one where Discounted Retailers dominate and a fourth where Mixed Retailers gain predominance. The scenarios highlight that the politics of retailing give rise to new conventions of competition in emerging markets, which sustain the coexistence of a variety of retail formats in these markets. The scenarios approach demonstrates that the nature of consumer behaviour rooted in traditions and customs alongside rising aspirations sustains a dual model of retailing in emerging markets. The paper concludes with reflections for retail development theory and implications for practitioners and policy-makers.     

An Examination of International Retail Franchising in Emerging Markets

There has been an urgent call from both the franchise industry and the academic community for research on world franchising markets, specifically in the retail sector. This article is an attempt to summarize the main research that has been conducted thus far on international retail franchising. The article begins with an overview of the development of the literature and then discusses the nature and scope of emerging markets, with particular reference to their impact on the stakeholders of international retail franchising. Next, the article develops a conceptual model relating international retail franchising to its stakeholders. Then, a review of the research is divided into the areas of emerging world market: Central and Eastern Europe, Mexico and South America, Asia, and other areas that include India, Kuwait, and South Africa. The article concludes by discussing the next step to developing a research base for further understanding of emerging markets in addition to the opportunities and challenges for retail franchising and future research.     

Assessing the needs of international markets against an emerging market company's capabilities: A tool for internationalization

Senior managers in emerging markets often strive to ensure that their companies develop sufficient capabilities to confront the needs they encounter in international markets. However, extant research and practice remain unclear as to how senior managers in emerging market companies can approach assessing the needs of their international markets against their own company's capabilities, to aim for a balance between both. This article offers an innovative approach for assessing the needs of international markets against an emerging market company's capabilities. Based on the assessments of 100 senior managers leading emerging market companies, we explain how this approach can provide two key insights. First, evidence of a balance between the needs of international markets and an emerging market company's capabilities, that indicates the company's competitive position is focused; or evidence of an imbalance between the needs of international markets and an emerging market company's capabilities, that indicates the company's competitive position is either vulnerable or overqualified. Second, an understanding of where the gaps between the needs of international markets and an emerging market company's capabilities are, that enables improving the company's competitive position by closing these gaps. Drawing on this approach, we offer an open access tool that allows senior managers in emerging markets to identify and improve their own company's competitive position for internationalization. Using this tool, senior managers can lead their emerging market companies toward a focused competitive position in international markets, providing better chances of successfully capturing potential benefits.     

Designing Markets for Developing Countries

This paper highlights what we know from market microstructure and how this should guide the design of equity markets in developing counties. I first consider the basic economic functions of capital markets and of exchanges. I develop more fully the importance of price discovery and liquidity, and how these are affected by the market environment and by characteristics of firms themselves. I then consider the particular implications of this for capital markets in emerging countries. Research has suggested various links between market designs and performance, and I review the implications of these for exchange structure. I conclude with some thoughts on how best to structure markets for newly listing companies.     

What do bond holdings reveal about international funds' preferences?

International bond funds are important institutional investors in emerging markets and their asset allocation decisions have significant implications for bond market developments and debt management policies in developing countries. This paper studies emerging market bond holdings of international funds and analyzes economic and financial factors affecting their bond preferences. It shows that mutual funds prefer to invest in countries with sound fundamentals and more openness to trade. In addition, they favor bonds with high past returns and yields while averting bonds with high transaction costs and idiosyncratic risks.     

Role of economic and political freedom in the emergence of global middle class

The study examines the role of the economic freedoms such as regulatory efficiency, open markets and limited markets, political freedom and rule of law in the growth of the global middle class through international business activity in 34 emerging markets during the period of 1994–2011. The analysis suggests that some dimensions of freedom are more critical than others in making these markets attractive locations for international business and this in turn leads to domestic growth and thus growth of the middle class in these countries. The results also reveal the existence of a feedback loop, whereby the growing middle class becomes a driving force for further expansion of international business activity and economic growth.     

Lessons learned from Brazilian multinationals’ internationalization strategies

Internationalization of emerging market multinationals is a recent phenomenon gaining importance in the global economy. This foreign expansion of a new breed of companies has challenged established theories and practices in the field of international business (Cuervo-Cazurra, 2007). This article addresses the issue of whether or not there is something to learn from these emerging market companies and their foreign expansion. Focusing on the international trajectories of four Brazilian multinationals (i.e., Odebrecht, Embraer, Stefanini, and Marcopolo), this study analyzes their strategies and managerial processes during and after the recent economic crisis with regards to internationalization. Our qualitative fieldwork suggests that the trajectories of these Brazilian multinationals are quite unstructured and evolve as a reaction to the opportunities they face in international markets. It seems all four companies in our sample shared a strong entrepreneurial spirit and a high motivation to expand their international operations despite the crisis and the obstacles they faced. Our findings and suggestions in terms of lessons learned should provide valuable implications for multinational managers from other emerging markets by providing a better understanding of how Brazilian multinationals expand internationally, deal with economic crisis, and manage relationships with local and foreign institutions.     

The Effects of Retail Banner Standardization on the Performance of Global Retailers

Global retailers often face an important decision about the extent to which they should standardize or adapt their retail banners, a choice that the authors refer to as retail banner standardization (RBS). Drawing on the international marketing and retailing literatures, this study investigates how RBS affects the performance of global retailers in a longitudinal sample of 69 global retailers from multiple countries and sectors, across ten years. Findings indicate that the role of banner standardization in the successful performance of global retailers depends on retailer and market-level characteristics. Specifically, the results demonstrate that RBS improves retailer profitability as retailers increase their global penetration and emphasize status-based differentiation. Findings also suggest that banner standardization has stronger effects on profitability as retailers increase their focus on emerging markets and e-commerce. However, the authors also find that while RBS increases profits at low levels of global diversity, this effect becomes non-significant as retailers expand to highly diverse foreign markets. As such, the study provides important implications for global retailers while also filling the gap in banner/brand standardization/adaptation research that lies at the intersection of retailing and international marketing.     

International advertising campaigns in fast-moving consumer goods companies originating from a SMOPEC country

A particularly interesting area of research concerns how international fast-moving consumer goods (FMCG) companies from small and open economies that operate in turbulent markets plan successful advertising campaigns for international markets. The objective of this research was to determine how they are planned and what factors affect this planning. The theoretical part of the study reviews literature related to the internationalization of firms, international advertising campaigns, and standardization versus adaptation of international advertising. Based on the literature, a theoretical framework and propositions regarding the international campaign planning process for FMCG companies were developed. The empirical part uses the multiple-case study method to examine four FMCG companies that were founded in Finland. The empirical results show that five stages are especially important in the international campaign planning of FMCG companies. Moreover, the companies need to consider a number of factors when deciding on international adverting campaigns. The study presents a number of theoretical contributions and managerial implications. A novel finding relates to the importance of understanding the impact of the internationalization/globalization phase of the company. During internationalization often within the home continent, companies increasingly adapt advertising campaigns to different countries, whereas globalization to other continents calls for increased standardization across countries. Another interesting finding was that FMCG companies from small and open-economy (SMOPEC) countries often use innovative non-traditional campaigns to overcome the resource limitations.     

Black middle class township shoppers: a shopper typology

Due to an increase in spending power amongst Black middle class, this growing segment has become a lucrative investment opportunity for many retailers in South Africa and most emerging markets. The purpose of this study is to segment township consumers according to their demographics, life stage, attitudes towards township shopping centres and Living Standards Measure, to understand shopping patterns of township consumers. A survey among Soweto Black middle class township respondents was conducted, and maximum likelihood factor analysis was used to identify attitudes towards township mall factors. The study revealed five factors namely entertainment, convenience, mall essence, staff and mall basics, which were all consistent with previous studies, with the exception of staff and mall basics, which was revealed in this study. A K-means cluster analysis was then used to segment township shoppers according to their attitudes. Four shopper segments were discovered, namely disappointed crusaders, upcoming loyals, social seekers and local loyals, which, despite investigating shopper attitudes in place of shopper behaviour alone, were similar to well-establish shopper typologies. Each segment was profiled according to demographic variables, attitudes as well as shopping patterns. Results, therefore, suggest that retailers and developers need to consider the unique needs and differences among Black middle class consumers when developing retail strategies as they reveal unique characteristics from typical shopper typologies. Given similarities in some emerging countries such as India, the findings of this study could be generalized to other middle class consumers from emerging markets. Similar shopper segments may arise, which may be consistent with previous shopper typology studies and new segments unique to emerging market middle class consumer may be unveiled.     

The key role of intermediaries in Thailand's fresh food distribution system

New overseas retail formats have been entering emerging markets since the late 1990s. Accordingly, research on the advance of transnational retailers into emerging markets has recently flourished, and Thailand, one of the most popular host countries for transnational retailers, has often been examined as a case study. Many of these studies clarify the retail internationalization process and conclude that the new formats are driving the host countries' traditional distribution system toward a fundamental change. Although these studies consider the host countries' circumstances, they do not necessarily pay sufficient attention to specific characteristics of those host countries. In case studies of Thailand, the specific roles of intermediaries throughout the entire retail and distribution system are commonly overlooked. This paper argues that intermediaries continue to play an important role in Thailand's distribution systems, especially in the system of fresh vegetable distribution. This study first explains why earlier studies often attached less importance to the examination of intermediate distribution systems, despite the necessity of considering the roles of intermediaries for a deeper understanding of the impact of new retail formats on the host countries' distribution system as a whole. After discussing the key roles of intermediaries in Thailand's vegetable distribution system, this paper concludes that because modern retailers' involvement, particularly that of transnational retailers, at the agricultural production stage is still limited in Thailand, they often rely on intermediate distributors, such as local assembling wholesalers, coordinator-type intermediaries, and wholesale markets, for the intermediate distribution process.     

Internationalization performance of Chinese multinational companies in the developed markets

This study investigates the relationship between prior cooperation experience with partners from the developed markets and internationalization performance of emerging multinational companies. Based on the knowledge-based view, this study sheds light on the crucial role of knowledge base, organizational learning in the home country, and acquisition possibility of knowledge in the host country. Employing a sample of Chinese international firms, this study demonstrates that international experience accumulated by learning through linkage with partners from the developed markets improves the performance of companies from the emerging market. Organizational learning in the home country and acquisition possibility of knowledge in the host country moderate the effect of international experience. The implications of these findings for theoretical development and future research are discussed.     

Towards a framework for the study of franchising as an operating mode for international retail companies

In recent years franchising has become a popular operating strategy for companies competing in the global marketplace. In particular, international retailing companies have increasingly been adopting franchising as a marketentry mechanism. While this growth in the popularity of franchising has led to increased research interest in the topic, there has only recently been a recognition of the need to consider franchising within the wider context of retailer internationalization activity. This paper attempts to provide a framework for the study of franchising as a strategy for retailers expanding into international markets. The discussion examines key findings to date from the established literature on international franchising concerning the motivations underlying internationalization, the internationalization process itself and the operating problems encountered. It is argued that a careful examination of findings from the international franchising literature can provide further development of retail internationalization conceptualization.     

The new middle class in emerging markets: How values and demographics influence discretionary consumption

The rise of new middle‐class consumers in rapidly transforming emerging markets has attracted the attention of Western business executives. What they know about this growing segment of customers will determine whether they succeed or fail in these markets. The present study examines the factors that drive the discretionary consumption of this new middle class, including the effects of consumerist values, religious values, occupation, education levels, and ownership of fixed assets. The study draws its insights from data gathered from 391 new middle‐class consumers in Ankara, the second‐largest city in Turkey. The findings provide important implications for businesses, both indigenous and foreign. An overall implication is that managers ought to understand and qualify the new middle class in emerging markets not simply by their access to disposable income but by deeper attitudinal and behavioral characteristics.     

Buyer power in international markets

This paper investigates the implications for international markets of the existence of retailers/wholesalers with market power. Two main results are shown. First, in the presence of buyer power trade liberalization may lead to retail market concentration. Due to this concentration retail prices may be higher and welfare may be lower in free trade than in autarky, thus reversing the standard effects of trade liberalization. Second, the pro-competitive effects of trade liberalization are weaker under buyer power than under seller power.     

The impact of customer awareness of manufacturer name disclosure on retail brand attitudes and loyalty in Korea

This paper explores the impact of exposing the name of the manufacturer on a retail brand product upon national brand loyalty, retail brand loyalty and store loyalty, It does so by exploring customer attitudes towards retail brands in South Korea, where there is a legal requirement for retail brands to portray the manufacturer׳s name. For international retailers entering markets where such disclosure is a legal requirement an understanding of the implications of this for retail brand management is essential. The findings suggest that in the Korean case revealing the name of the manufacturer who supplies the retail brand on the product packaging has a positive influence on attitudes towards retail brands, although it did not mitigate the perceived risks held by customers towards retail brand products in general.     

Cooperation as a Mediator between ICT and Export Success

The use of new information and communication technologies has been reshaping the export paradigm for more than a decade and exponentially increasing the possibilities of the exporting companies in international markets. The Internet improves establishing contact with partners in other countries for trade, optimizes daily communication with them, and makes companies more efficient in finding information on the markets they are reaching. According to these implications, to what extent do new technologies have a positive impact on the success of companies abroad? Does the use of these technologies facilitate cooperation between exporters and trading partners in the export destination country? The purpose of this research is to examine the influence of Internet technology upon export success when companies use this technology to find relevant information on foreign markets, improve communication in the business process, and enhance contacts with customers and distributors in distant countries. This study reveals that cooperative relationships between export companies and their foreign customers/distributors have a mediating effect between ICT and export success. Moreover, a surprisingly low significance of using ICT to support sales activities and develop lasting business relationships on export success has been found.     

Including emerging markets in international momentum investment strategies

Momentum return investment strategies that diversify across countries provide lower portfolio standard deviations and/or increased expected returns. These diversification benefits are larger when adding emerging markets than when adding developed markets, and they are larger than would be suggested by diversifying with long-only portfolios. Using data on almost 16,000 firms from 22 developed and 18 emerging markets over the 1990–2004 period, we confirm the profitability of momentum trading strategies in both developed and emerging markets and document the diversification benefits of including emerging markets in an international momentum portfolio investment strategy.