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Retail Business Environment

Notes traditionally been perceived as an unproductive link in the channel of distribution. The outcome
of this is that concepts such as marketing, product advertising or the role of the salesperson were
previously unknown or at least absent. While many foreign operations are moving into former
CPE markets as a result of consumer demand and limited indigenous competition, the former
State-owned operations are moving into former CPE markets as a result of consumer demand
and limited indigenous competition, the former State-owned operations are finding it difficult
to transform themselves.
It is important to note that the above description does not fully explain the structure of CPEs and
former CPEs. With a retail industry based on supply rather than demand, the pattern of growth
in terms of size and number of retail businesses does not follow the same rules. The nature of the
economy dictates that increased consumer demand is not met by more stores or the development
multiple organizations, this former CPEs need to be analyzed.
The following section refers to markets by their national borders, which suggests that there are
various differences between national retail markets. While fully supporting this assertion, it is
also necessary to point out that there may be similarities between markets – retail characteristics
do not necessarily change abruptly at national borders. For example, it may be difficult to
distinguish differences between retailing in western Germany and conditions across the Dutch
border. It is also true to say that conditions may vary considerably within national markets;
indeed, this was a point made by Hollander (1970) in a similar study of global retailing. He
suggested that differences between retailing on the East Coast of the USA and on the West Coast
far outweighed variations between the retail environments of north-east USA and Canada,
despite the national border separating them. This concept, that variations may be greater within
a market than between them, has also been supported in a European context (Dawson, 1994;
Myers, 1996).

3.2 The Motivations for International Expansion

Before discussing the motivations leading to globalization, it is important to have an
understanding of the structural changes that have occurred in the retail industry in the last few
decades. Although these trends have not in themselves caused globalization, they may be
conserved as prerequisites to significant levels of retail globalization.

There have been major changes in the retail environment since the Second World War. While to
some extent these structural shifts have occurred throughout Western Europe, they are most
apparent in the advanced retail markets of the UK and Germany, and particularly within the
food sector.

Structural Changes in Post-war Retailing
1. Retailers have grown in strength relative to manufacturers and in some cases are not
characterized as dominating the distribution channel.

2. Traditional independent retailers and co-operative societies have lost market share to
multiple retail organization.
3. Larger but fewer stores and retail companies.

4. Increasing consolidation of the retail sector measured by increasing rates of market
concentration and claims of saturation.
5. Higher profitability of major EU and US retailers and subsequent ability to embark on
expansionist strategies into foreign markets in order to achieve growth.

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