Studies which examine the direction of fashion retailers’ foreign market expan- sion are limited, both in terms of the volume and the breadth of companies
Developing a research agenda for the internationalization of fashion retailing 93
considered. Those studies which examined the direction of expansion of spe- cific fashion retailers have found that the choice of market to be entered is largely determined by the market positioning of the retailer concerned. For example, Lualajainen (1992) found that the luxury goods retailer Louis Vuitton focused its international expansion upon the world’s leading centres, specific- ally the capital cities of the most prosperous nations.
Hollander (1970) found that a focus upon capital city expansion was a com- mon trait of the internationalizing luxury fashion retailers and he termed this expansion strategy the ‘New York, London, Paris syndrome’. He explained that luxury fashion retailers adopted this strategy of opening flagship stores within the world’s leading centres in order to create an allure and sophistication for their organizations. As such, the operation of a flagship store in Paris, Rome or the like communicated to consumers that the company was cosmopolitan, successful and accessible to the world’s richest and most beautiful people.
Table 5.3 The four types of international fashion retailer
1 The product specialist fashion retailers: These are companies that focus upon a narrow and specific product range, such as Hom Underwear, La Senza, Tie Rack, Nike, Sock Shop and Jacadi and have a clearly defined target customer group either based upon demography (such as childrenswear), gender (such as La Senza and Hom Underwear) or a specific interest (such as sport and Nike and Reebok). While there are some obvious exceptions, such as Nike Town, these retailers typically operate small-scale stores either within busy customer traffic sites, such as adjacent to airports/railway stations or major mass market shopping areas, such as Oxford Street in London and Fifth Avenue in New York.
2 The fashion designer retailers: Fernie et al. (1997) provided a clear definition of the international fashion designer retailers which states that these have an international profile in the fashion industry as evidenced in their having a bi-annual fashion show in one of the international fashion capitals (i.e. Paris, Milan, London and New York) and have been established in the fashion design business for at least 2 years. These firms retail merchandise through outlets bearing the designer’s name (or an associated name) within two or more countries and market their own label merchandise. Company examples of this group include Gucci, Valentino and Chanel, who
normally locate within premium locations within capital and other important cities. 3 The general merchandise retailers: Corporate Intelligence on Retailing (1997)
identified these as retailers that include a mix of fashion and non-fashion goods within their merchandise offer. Examples include department stores such as Marks & Spencer, Harrods and Sogo. These foreign stores are often located within key shopping centres and tourist locations, the merchandise offer increasingly extends beyond two trading floors (Corporate Intelligence on Retailing, 1997).
4 The general fashion retailers: Unlike the product specialist fashion retailers which tend to concentrate upon one or two fashion product groups, the general fashion retailers are described by Corporate Intelligence on Retailing (1997) as offering a broad range of fashion merchandise and accessories, either to a broad (e.g. The Gap) or highly defined target segment (e.g. Kookai). This group are typically low to mid-priced and locate in ‘city centre’ locations so as to allow maximum access for mass market customers (Corporate Intelligence on Retailing, 1997).
While the luxury fashion retailers typically focus their expansion upon geo- graphically disparate foreign markets, other studies have found that general fashion retailers have tended to concentrate their expansion upon the markets that are geographically and culturally proximate to their local market. Again, drawing from the work of Lualajainen (1991), the international expansion of Hennes & Mauritz of Sweden attests to the fact that those retailers which seek to serve the broad mass market typically opt to enter those markets which are culturally and geographically close, so as to minimize the associated risk and maximize their control over their operations there. It is only when this adequate coverage is achieved within adjacent foreign markets that considera- tion is given to entering into markets that are culturally and geographically distant from the home market.
Moving from the firm-specific level, a series of patterns relevant to the geo- graphic expansion of fashion retailers can be identified as follows:
䊉 European fashion retailers typically confine their foreign market entry to other European markets, as well as the North American market.
䊉 American retailers typically enter into Canada, followed by the markets of Western Europe, specifically the UK.
䊉 European designer retailers have extended their international participation into the Japanese and Pacific Rim markets.
In the 1990s, partly as a consequence of the highly competitive conditions within the European Union and as a result of the opportunities afforded by the demise of the USSR, fashion retailers have reorientated their interna- tional expansion to include Russia and the other markets of Eastern Europe. Furthermore, the previously underdeveloped markets of South America and the Middle East have emerged as the new centres for fashion retailers’ foreign market expansion (Fernie et al., 1998).