Articles

The Myth & Reality Of The Global Invasion.

Commentators, analysts, ‘people on the street’, experts, opinion leaders, spin merchants and basically everybody with a mouth have been trying to tell us for years that Australian retail is sub-standard in every way and that global brand leaders will descend like new age Vikings to conquer our under-developed and ineptly defended world.

Shoppers of course say bring it on – they kind of fancy the idea of a bit of Viking in the mix to spice things up a bit.

I hate to be old enough to have to admit it but the ‘global invasion’ seems to occur in a very cyclical fashion – so those of my vintage have heard it and seen it a few times over. It very rarely lives up to the hype – generally because those who hype it are either vested interests or vastly naïve in the understanding of the context of the Australian competitive landscape – but it always produces changes to the retail landscape.

It was fascinating to watch everyone from Frank Lowy to an office worker from Adelaide flock to Westfield Sydney for the recent opening of their first Australian store. Aldi has built a formidable business from scratch. Staples have subsumed Corporate Express into their rapidly growing global office supplies behemoth.

But not every global brand that comes to Australia achieves sustainable success. While the domestic cringe factor is alive and well and fuels early trial, unless the substance of the new entrants proves itself to the Australian shopper these businesses eventually fail.

Thanks to modern travel, media and the internet / e-commerce explosion, shoppers are brand and product aware and ultimately hard judges.

Fads are called fads for a reason. They are a spike of hype over substance and take on a pop culture icon status for a nano-second within tribal peer groups. For those of us who constantly travel the world studying these retail brands and have had direct behind the scenes exposure to many of these businesses, we know that they are often hype not substance or that they exist within a very specific context, which is hard to replicate in other parts of the world.

Once the magic is dusted off by the presence of a local store and the realities of the local market they collapse. Unfortunately many Australian retailers panic and get sucked in to playing by the global brands rules – sometimes before they have even landed on-shore. The idea of what the global brand could achieve scares them into doing something that at best will make them look like an imitator and at worst blow their business to bits.

The world’s biggest retailer – Wal-Mart – has never been able to make a move on Woolworths because Woolworths numbers are too good and the shareholder returns would be negative.

That should tell you something. Context matters. Your business exists within the status quo. What will the real short, medium and long-term effects of a new competitor within the Australian retail context? When you work that out, you are ready to put your business in the best position to compete on terms that suit you.