Designing a global channel strategy to accelerate growth
All channels are not created equally
With an extraordinary amount of disruption affecting the retail industry, many retailers are wondering if they should prioritize brick and mortar expansion, digital expansion or a brick + click approach.
As the thriving global retail market continues to mature, many US retailers are considering designing a global channel growth strategy. However, with an extraordinary amount of disruption affecting the retail industry, both domestically and abroad, many retailers are left wondering if they should prioritize brick and mortar expansion, digital expansion or a brick + click approach.
Evaluating global channel growth strategy options
For retailers expanding into global markets over the last decade, the default strategy has been to enter and grow primarily through brick and mortar stores, then follow with digital. However, as retail has evolved, global ecommerce is expected to reach $456 billion in 2016 and grow by an average of 12.8 percent per year from 2016 to 2020. Key emerging ecommerce regions such as Asia Pacific and Latin America are expected to drive this, growing at a double digit compound annual growth rate (CAGR) through 2020. This evolution has fed the need for retailers to reevaluate their entry and growth. As such, we have started to observe a shift from brick and mortar first to digital or brick + click first. Retailers should evaluate the following global channels before moving forward:
· Brick and mortar first
· Digital first
· Brick + click
Deloitte’s Global Channel Opportunity Framework
While retailers can successfully enter and grow in international markets with all three of the above strategies, designing the optimal strategy requires understanding the digital potential and brick and mortar potential of each market, as well as how this potential is evolving over time. Deloitte has created a Global Channel Opportunity Framework that takes into account both digital and brick and mortar market factors to provide a perspective about potential entry and growth strategies in specific markets. While a helpful decision-making tool, the framework is only one piece of the puzzle and is not “one size fits all.” Retailers must analyze and understand their company’s business model, capabilities, priorities, and preferences before finalizing channel strategy decisions. Download our report for more details and insights on the framework.