In partnership with Edge RetailWeek World Retail Congress
Matthew Furneaux
Matthew Furneaux, Global Commercial Director, Loqate, a GBG Solution

Quick. Easy. Convenient. Three simple words that translate well and define consumer expectations the world over. Knowing this to be true and responding accordingly is a key factor for successful retailers, as evidenced in this year’s International Retail Index. Meeting these demands in your home market is one thing but expanding market share internationally can present several challenges.

Those challenges can be daunting. Language, currency, first time deliveries and culture are all potential barriers. But huge markets like China, with a massive, digitally connected population, with over 100m people regularly accessing e-commerce sites outside of China,  look very attractive.

The good news is that over the last few years innovative retail technologies have emerged to make expansion easier than ever before. Global Payment services that can be enabled with just a few lines of code. Addressing systems that understand the 130+ different international postal address formats and know your customer’s address simply from the location of their smartphone or wearable device. There are also exciting developments in voice technology allowing consumers to not only browse products but also search for their address in the checkout by simply saying where they are. This exciting blend of technology is what is helping to make internationalisation a realistic objective for an ever-greater number of retailers.

We are delighted to once again launch the International Retail Index to celebrate and learn from the brands that are truly leading the way.

Robert Gregory
Robert Gregory, EMEA director of advisory, Edge by Ascential

Last year, the launch of the inaugural International Retail Index tracked how retailers were investing in and adopting digital skills and services to reach global audiences.

With physical stores no longer needed to reach consumers around the world, the rise of ecommerce was allowing a whole new breed of flexible, digitally native players to grow globally at a rapid pace.

In the 12 months since, the pace of change and disruption impacting the retail sector has accelerated. Retailers facing tough trading conditions and saturation in their domestic markets are increasingly viewing international retail expansion as an opportunity that must be explored.

We are also seeing new technologies and ways of engaging with consumers that are sure to become more influential in the coming years. One of these, voice, has gained great traction over the past year, being installed at a growing number of people’s homes. Although its full potential has not yet been reached, some retailers are already experimenting and viewing it as a new way of building a relationship with consumers, in the same way that savvy retailers used social media to build global brands.

Speed and convenience of fulfilment is another area of rapid development. As consumer expectations for ever-shorter delivery times continues, leading retailers are already investing in offering same-day, next-day or two-day delivery – even for international orders. The next stage will be offering delivery to a range of non-conventional locations, such as in-home or in-car deliveries.

To reflect the changing landscape and priorities, Edge by Ascential (formerly PlanetRetail RNG) has incorporated new metrics and measures into this year’s index. The result is a ranking that demonstrates the need to constantly invest in capabilities for the future. Standing still is not an option.

Ian McGarrigle
Ian McGarrigle, chairman, World Retail Congress

One of the key driving forces behind the launch of the World Retail Congress was the rapid expansion of international retailing that was taking place in the late nineties and noughties. The BRIC economies (Brazil, Russia, India and China) proved highly attractive for persuading many retailers to begin crossing borders and building new networks and, in many respects, a new kind of retailing.

This extension of modern retailing into emerging markets, together with the migration of brands around the world, was symbolic of rising global prosperity and optimism.

Today, the world has changed dramatically and many of those pioneering international retailers have retrenched and withdrawn from countries in the face of economic challenges during the past 10 years.

Retailing is also undergoing enormous change as it embraces the digital revolution. And with it is coming a new wave of international growth by retailers. While the first wave was a very physical era, with strategies built around bricks-and-mortar store openings, today it is ecommerce and digital technologies that are opening up cross-border opportunities for retailers and brands in a way that has not been seen before.

This important International Retail Index report – produced again by Loqate in partnership with Retail Week and Edge by Ascential – not only underlines this new opportunity for retailers of all sectors and sizes, but also provides powerful insight into what makes for successful international strategies.

What links many of the retailers highlighted in the report is their clarity in placing consumers at the heart of everything they do and in ensuring that their online services deliver seamless, efficient and trusted interfaces.

It is a recognition that the digital world has placed power in the hands of the consumer, who is now willing and able to shop from whoever, whenever and wherever they are located in the world.

At the end of 2018, Inditex-owned Zara launched a dedicated worldwide online platform to bring its clothing, accessories and footwear collections to a total of 202 markets. And when fellow fast-fashion retailer H&M launched an ecommerce proposition in Thailand in September, it represented its 50th online shopping market.

Today’s globally ambitious retailers are embarking on a very different route to expansion to that taken by the industry’s earlier global pioneers in the 20th century.

Since the turn of the millennium, there have been many examples of retailers opening stores outside of their home countries but the typical route to global expansion is now digitally-led, and it often comprises a neatly connected combination of bricks and clicks.

Against this backdrop, Retail Week and Loqate, a GBG solution, have created the second annual International Retail Index to highlight best practice for retailers expanding abroad, with exclusive data from Edge by Ascential.

The following five chapters shine a light on 30 retailers that, based on a variety of modern-day metrics, are showing the wider sector what it takes to successfully map out, launch in and grow across new territories.

Focusing on key markets for international expansion – the UK, US, Benelux, the DACH region and the Nordics – the list contains 15 global players based on worldwide sales. It also features large retailers in key sectors such as beauty and electronics, as well as a curated list of smaller businesses that the panel believes represent the future of global growth.

Based on metrics such as percentage of sales from non-domestic operations, online and fulfilment capabilities, social media activity and a willingness to innovate with new technology, Amazon ranked highest this year, and Inditex and H&M made the top 10 alongside internationally active Ikea and a host of online pure-plays.

In this report, we look at the rise of the digital natives as global powerhouses and the move by many retailers to speed up cross-border delivery

ASOS and Boohoo rank higher than one of the world’s most recognisable and valuable retailers, Apple, because of their capacity to deliver to 200-plus countries at rapid speed, while Zalando is commended for ramping up its new market strategy in recent months. The German marketplace, which we focus on in Chapter 1, entered two new countries in 2018 and has expanded its categories into areas such as men’s beauty.

Sports Direct appears in the list for the second year in a row. While it offers delivery to nearly 100 markets, it ranks lower than in 2018 because of our newly identified metrics for gauging global success, such as the use of social media and an innovation action plan.

Among the newer retailers in focus are watch and jewellery retailer Paul Valentine and fitness clothing and equipment business Gymshark (see Chapter 3), both blazing a trail in their use of social media and influencer marketing as they spread their international wings.

In this report, we look at the rise of the digital natives as global powerhouses and the move by many retailers to speed up cross-border delivery. We feature compelling examples of social media strategy, voice technology and inspiration from wider retail.

Global exploration in European retailers’ DNA

Advisory research director for EMEA at Edge by Ascential Robert Gregory says that Amazon aside, European retailers are arguably more advanced in terms of their global strategies than their North American counterparts.

“Perhaps European retailers have had an urgency and a need to grow internationally and overseas because opportunities in home markets have been more limited,” he explains.

“Great examples of this are H&M and IKEA with over 90% of their sales coming from outside their home country of Sweden. They have really built up global networks and have country-specific sites, which have all the language capabilities and local currency.”

Gregory says several US retailers in the list use platforms such as Borderfree as a way of entering new territories. The company has dealt with customs management issues and international delivery for third parties in the US for years and expanded to the UK and other territories more recently.

“Borderfree is an enabler for US brands to sell internationally,” notes Gregory. “This suggests [North American retailers] are less advanced than European brands in internationalisation. Perhaps it’s more in European retailers’ DNA to tailor towards local markets, simply because they have had to in order to grow.”

For the purposes of the ranking Retail Week and Loqate analysed a curated selection of 30 retailers with operations in the US, UK, DACH, Benelux and Nordic regions.

The 30 retailers are a combination of:

  • 15 leading global retailers based on their global sales for 2018
  • The largest players in key sectors such as fashion and apparel, beauty and electronics, to ensure top three coverage per sector (e.g. Sephora, Gap, Deichmann)
  • A curated list of smaller yet fast-growing and digitally-focused brands in priority markets (e.g. Gymshark, Paul Valentine)

For the purposes of comparison in the ranking, we excluded retailers:

  • That do not have a strong presence in the relevant markets
  • That do not have either an international presence or online cross-border capabilities
  • That do not have significant ecommerce operations (e.g. Primark)
  • That primarily operate in sectors that are not suited to cross-border ecommerce, such as DIY or grocery (e.g. Tesco)

We analysed each retailer across a range of criteria, focusing on the ability to reach and serve shoppers across the world. For each metric, we allocated the retailer a weighted score (out of 100). Metrics included:

  • Global presence metrics (measured at group level):
    • Non-domestic sales, 2018
    • Percentage of total sales from non-domestic operations, 2018
    • Forecasted growth in non-domestic sales, 2018-23
    • Proportion of the total store base that is non-domestic, 2018
    • Number of international markets where present (either with physical stores or dedicated online operation), 2018
    • Number of social media followers (official account in the primary market measured across Facebook, Twitter and Instagram as of July 2019)
    • If the retailer has an international online presence – offering cross-border ordering through a global or primary ecommerce site, country-specific branded sites or through a global delivery platform such as Borderfree
    • The number of international markets delivered via its ecommerce operation
    • If the retailer has a transactional smartphone app in its home/primary market
  • Online capabilities (the most relevant platform in the home or the priority market was measured):
    • If global shoppers can view the ecommerce site in multiple languages and currencies
    • If address verification is provided for international locations
    • If the ecommerce operation offers global digital payment solutions (e.g. PayPal, Apple Pay, Google Pay, Amazon Pay)
    • If the ecommerce operation offers one or two-day shipping for cross-border international orders
    • If the primary ecommerce operation allows orders to be tracked on its own site
    • If the retailer offers a subscription membership service that offers free/discounted local or international delivery for orders in return for a monthly or annual fee (e.g. ASOS Premier)
    • If the retailer has a presence on Amazon or Google voice platform (measured through official partnership or presence of official skill/app)
    • If the retailer is a leader in digitalisation and advanced capabilities. Has it established innovation centres, is it trialling new technology solutions (such as checkout-less stores, biometric or facial recognition, automation, augmented reality) or innovative last-mile fulfilment services? (Based on tracking by Edge over the past 12 months)
    • Each retailer was scored against each key metric. Each metric was weighted with an emphasis on international expansion and relevant digital capabilities
    • This allowed us to create a score out of 100 for each retailer

The rise of ecommerce and digital influence has rewritten the rules of international expansion

In the past, rankings were traditionally determined by physical footprint of stores and markets operated in, with lists dominated by the usual suspects such as Walmart, 7-Eleven, Carrefour, Spar and Tesco. Globalisation would take years of carefully crafted store opening plans in strategic locations. But the rise of ecommerce and the influence of digitisation on businesses means the rules have changed.

What do my customers expect?

This was very much a theme of last year’s International Retail Index, and it has played out again in 2019.

Fast-growing primarily digital players can – and will – deliver to multiple international markets within just a few years of launch. Moreover, the agile nature and clear focus of Amazon, ASOS, Boohoo, Zalando, et al means they can leverage social media and new technology to reach audiences far and wide.

These digital natives – Paul Valentine and Gymshark are included on this list – understand that online retail should be frictionless and can be shaped to meet the needs of international shoppers by following fundamental marketing and web rules that don’t necessarily come naturally to traditional retailers.

Edge by Ascential’s Gregory says: “Every retailer has the opportunity to become international now.

“If you were to run one of these rankings 10 or so years ago, it would have been dominated by one of the big global bricks-and-mortar retailers, who have had decades and decades of opportunity to invest in building physical stores in new markets.”

Commenting on the digital-first retailers on the list, which make up half of the top 12, Gregory says they tend to have the best offering in terms of speed of delivery, local language capability and mobile apps.

“The space race and flag-planting characterising 20 or 30 years of retail has made way for ecommerce. You can have a relatively new digital brand that in the space of five years can reach consumers in territories all around the world.

You can have a relatively new digital brand that in the space of five years can reach consumers in territories all around the world.

Many of these successful businesses tick the boxes when it comes to international address entry capabilities, clear and easy returns for customers and multiple payment and currency options that appeal to localised markets.

Zalando on the rise

Zalando has risen up the index this year following a year of significant growth for the business. It is using its expertise in local markets to attract third-party brands to sell via its platform.

Commenting at the eTail Europe 2019 event in London, Zalando’s vice-president of womenswear, Sara Diez, said the company has developed a full ecosystem of services and support to help the retailer and its partners grow.

Recent developments at the fast-growing business, which wants to generate €20bn (£18bn) a year in revenue by 2023, include the creation of Zalando Fulfillment Solutions (ZFS) and Zalando Marketing Services (ZMS). Respectively, these tools allow partner brands to take advantage of pooled logistics and help with messaging in new markets.

“We are asking the brands to share inventory and we will take care of the logistics,” explained Diez.

In relation to ZMS, she said: “A lot of brands are realising we do complement them and they see a lot of benefits in partnering with us.” She added that this was down to Zalando’s multi-brand environment and because it can provide more localised market information to a brand’s established marketing.

Diez added that another attractive reason for working with Zalando was access to aggregated data.

“We are great advisers on helping brands tackle opportunities. Even though we offer this partner programme where the partner is fully responsible for putting an assortment online, we do help them out and guide them.”

This strategy – and its recent launch into the beauty category in partnership with companies such as Arcadia – shows Zalando does not stand still when it comes to attracting new customers and growing its partner network.

Zalando’s second-quarter results for financial year 2019-20 showed the company had achieved its fastest growth in online site visits for six years – an increase of 34.3% year-on-year to reach 986.4 million. This growth in audience numbers helped revenue surge by 20.1% to €1.6bn (£1.5bn) for the three-month period, off the back of record quarterly orders totalling 36.1 million.

After five years without expanding its international website network, Zalando launched in Ireland and the Czech Republic in 2018, bringing it to 17 markets where it has a dedicated presence.

Localisation and personalisation

Across the retailers measured, there was an even split between those offering international delivery from their core global site – for example, Marks & Spencer – versus those that direct consumers to a relevant local site, such as H & M, ZARA and IKEA.

Gregory says: “The latter is the more advanced way, of course, and offers the greatest opportunity for brands in the long term.”

However, H & M’s site – except for language and currency – is replicated across regions, including range, which suggests there is more forward-thinking retail businesses can do to provide better-personalised web experiences based on location and previous purchases. Amazon has been a leader in this type of data-led strategy for several years.

“There’s still a major opportunity to tailor local sites further and it will be this that sets apart the winners and the losers,” Gregory adds.

One retailer – again, an online pureplay – is showing others the way forward in terms of developing a local and personal approach. That company is ASOS.

ASOS chief executive Nick Beighton described the recent enablement of localisation features within the retailer’s global platform as “one of the most significant developments” in its international growth strategy. In the past two years, ASOS has released its ‘Rest of World’ and ‘Rest of Europe’ sites, “providing the next step in localising in 200 markets for those customers outside our largest markets”.

Beighton added that these localised sites have helped the business “increasingly tailor the experience for these specific markets, giving different content, visual merchandising and price zones”.

ASOS has also continually tailored languages and currencies on its international sites, as well as launching new payment methods including Google Pay in the UK, and Afterpay and Yandex internationally.

“Within localisation, we have improved our push notifications and on-site contextual messaging software, which is used to talk to customers,” Beighton said. “This included the ability to target specific onsite messages at different states within the US, Russia and Australia.”

But internalisation has not come without its challenges for ASOS. It has issued several profit warnings over the last year, mainly due to the impact warehouse problems have had on its European and US businesses.

An IT upgrade glitch at its hub in Germany and stock problems in the US have come as a surprise to the previous stock market star ASOS as it battles to implement a suitable infrastructure to serve customers efficiently outside its UK heartlands.

Beighton said in a conference call with analysts in July: “We acknowledge that this is a failure in execution.” But he vowed to have the issues sorted by the autumn and said these automated warehouses will ultimately set up ASOS for success internationally in the future.

Action points – what to do next

  • Prioritise digital transformation to approach global trade from a digital-first perspective
  • Invest in your mobile strategy to appeal to the on-the-go consumer
  • Localise your offer in terms of product, payment methods and currency options for each market
  • Create an efficient supply chain capable of speedier delivery

Continue reading about customers' expectations

Voice-enabled technology is rising in importance and will define the retail winners of the future

Although not directly related to international expansion, voice-enabled technology is being touted as a major disruptor of retailer-consumer interaction in the coming years, so is worthy of analysis.

How is voice influencing my customers?

The latest forecast from business intelligence group eMarketer predicts 111.8 million people in the US will use a voice assistant – such as Amazon’s Alexa or Google Home – at least monthly in 2019. This is up by 9.5% year on year and the equivalent to 39.4% of internet users and 33.8% of the total US population.

eMarketer predicts 111.8 million people in the US will use a voice assistant – such as Amazon’s Alexa or Google Home – at least monthly in 2019
Assessing the market growth opportunity further, digital market forecast specialist Juniper Research predicts there will be 8 billion digital voice assistants in use globally by 2023, up from circa 2.5 billion at the end of 2018. While smartphone assistants will be the largest platform by volume thanks to embedded Google Assistant and Siri platforms, Juniper says the fastest-growing voice-assistant categories between now and 2023 will be smart TVs, smart speakers and wearables. It also expects Chinese companies offering voice-enabled tech solutions to make inroads internationally in this time.

 

Retailers raising their voice

The ability to use voice devices to interact with brands, find product details and even order items – as well as the technology’s prime position within people’s homes – has led to several retailers launching their own skills on Alexa or Google Home.

But compared to the growing popularity of these devices among consumers, the wider retail industry has arguably been relatively slow to roll-out voice tech-related services or capability.

Of the 30 retailers in the ranking, 14 have an official presence or app for either Alexa or Google Assistant. Retailers with a presence were, naturally, Amazon – as technology owner – as well as Apple, ASOS, Best Buy, Bol.com (part of Ahold Delhaize), CECONOMY, Costco, H & M, IKEA, Sephora, Target, Walgreen Boots Alliance, Walmart and Zalando.

Sephora, for example, uses the technology to emphasise its key brand proposition, which is founded on providing beauty advice and make-up tutorials to its loyal and growing fanbase.

Launched in 2018, Sephora’s entire catalogue of beauty how-to videos are on the Google Home Hub, allowing consumers to watch hands-free by using verbal triggers. With commands such as, “Hey Google, show me foundation tips videos from Sephora,” a video will automatically play on a user’s Smart display device.

Users can also vocally request videos to pause, fast-forward or rewind during the tutorials so that they can watch the content for tips and advice hands-free while they apply their make-up.

Best Buy continues to work on developing its voice-enabled tech capabilities and it supports commercial activity via Alexa and Google Assistant if customers link their Best Buy accounts to these devices.

Commands such as, “Hey Google, buy headphones from Best Buy,” will enable a transaction. Consumers can also use the technology to hear store hours and locations near them or track an existing order.

The same type of buying and information services are available for Alexa users. Best Buy also launched voice-only deals via Alexa in 2018, focused on smart home products. In effect, it is a case of a retailer that sells cutting-edge technology practising what it preaches by offering cutting-edge commerce opportunities. It understands that its customers want not just to buy the latest products, but that they want to buy into an innovative shopping journey; providing a synergy of product and purchasing.

Voice-only deals were not available at the time this report was published, but plans are afoot to reignite them again. Customers are urged by Best Buy to check in with Alexa in due course for more details – for now, they can buy the ‘Deal of the Day’ via this format.

Retailers are still relatively reluctant to release figures related to how often people are using their voice assistants to make purchases and raise queries with them. Walmart has said, however, that the most popular way of using voice tech when interacting with the grocer via Google Assistant is to add items to a shopping basket throughout the course of a week.

Research released by digital and data agency Artefact UK at the start of August found that six out of 10 smart speaker owners in the UK have used these devices to make a purchase in the past year. The nationally-representative survey of 2,000 British adults revealed that 22% said they have made a purchase within the past week.

Voice is currently very powerful for searching, but less for browsing

There is also a shift from natural language processing (NLP) to natural language understanding (NLU). This is where at home Smart Speakers can understand and act upon more conversational exchanges. It doesn’t just recognise what the consumer has said, but really understands it. As a result, voice is currently very powerful for searching, but less for browsing.

Nurturing tech talent

Most of the retailers deploying voice-enabled technology in the list were from the US, perhaps unsurprisingly as this is where the technology is most widely used by consumers. Those looking at its potential now and developing ways to use it, however, are putting themselves in a good position as and when the technology becomes more prevalent.

And for retailers concerned about the complexities and length of time involved in developing this type of technology, George Goley, chief technology officer at health food chain Holland & Barrett, allays their fears.

He said that creating the right nurturing environment for developer and engineering talent to thrive can be done speedily within retail. Some of the major innovations in voice tech and cloud platforms at his previous companies, Argos and Amazon, were developed by graduates only just out of university, he revealed.

“Some of the very best engineers in the organisation have been engineers for about 20 minutes, and they have no fear,” he commented. “They are open to learning, but how do we bring them on? We bring them on whenever we have a senior leader they can pair with, to learn a bit from, but we then get out of the way and let them try things.”

He added: “You don’t need to wait six years. It’s not like attorneys, it’s not all about experience – it’s about talent and application and you get huge value out of new developers really, really quickly.”

Action points – what to do next

  • Retailers need to invest now or risk falling behind
  • A fresh approach to content is required for these largely audio platforms
  • Recruit the right talent and create a nurturing environment where they can test and learn

Continue reading about this emerging trend

The right social media marketing strategy can make or break retailers

Having a strong global social media presence is becoming an increasingly important way for organisations to generate global reach – and, crucially, it allows relatively small retailers and brands to direct shoppers to their websites.

How can I convert social followers into customers?

However, it is not simply a case of setting up Facebook, Twitter, Instagram and Pinterest accounts, then watching sales fly. Success only comes when a retailer has a clear understanding of their brand and target audience and can then leverage these platforms accordingly.

One of the new entrants in this year’s index, Gymshark, was only founded in 2012 but has seen sales rise 128% over the past three years to reach £130m in 2018, with an operating profit of £20.2m. The company has used social media to gain a cult-like following, utilising well-connected influencers to spread its message and amplify its brand.

Social media is also used to generate a huge buzz around Gymshark’s sales periods, and it enjoys high levels of engagement across its platforms

Social media is also used to generate a huge buzz around Gymshark’s sales periods, and it enjoys high levels of engagement across its platforms. Such activity is giving the company, which has a presence in 11 countries already, a base on which to grow even further on an international scale. It is targeting 25 international online stores by 2020.

Gymshark’s social savviness

When Gymshark was just starting out in 2012, the company – led by founder Ben Francis – decided it would send free clothing to influential figures in its audience demographic, namely bodybuilders and fitness experts.

The likes of Lex Griffin and Nikki Blackketter were given items in the hope that they would talk positively about the products to their large numbers of followers on YouTube and Instagram. And that is exactly what happened. Their user-generated (UG) content helped drive its annual revenue growth and rapid expansion.

Gymshark recognises social media’s impact on its success, stating that the business’s growth can be attributed to creating innovative and effective products, and “an ever-expanding social presence”, as well as aligning all it does to a clear company vision of utilising key fitness influencers to spread its message and drive awareness.

Its Instagram page, which has 3.4 million followers, showcases inspirational gym shots containing branded clothing, and its Twitter account – which spreads motivational messages, and asks questions and runs regular polls to drive engagement – has more than 226,000 followers.

GymsharkTV on YouTube has more than 217,000 subscribers, with some of the fitness demonstration videos receiving more than 100,000 views. Many of the videos are related to Gymshark’s live events in different locations around the world, tagged with #LiftSydney, #LiftFrankfurt or #LiftManchester, for example, to make it easy for people in different geographies to find the most relevant content.

The brand’s Facebook page, which combines all the above content formats with a continual churn of new releases with buy buttons, has a community of more than 1.6 million.

In a YouTube video (naturally), Francis explains he was “absolutely obsessed with YouTube” as a teenager at the time he was forming the idea that led to Gymshark’s creation. He used to watch videos by famous bodybuilders around the world.

At the time no-one else was doing this. Now it’s called influencer marketing but at the time it just came totally natural to us – we were just fans of the guys.

“As massive fans, we decided to send them the products,” he says. “At the time no-one else was doing this. Now it’s called influencer marketing but at the time it just came totally natural to us – we were just fans of the guys.”

Griffin’s Lex Fitness YouTube channel has more than 530,000 subscribers and Blackketter’s has more than 763,000, highlighting the widescale influence these figures can have on Gymshark’s target audience. It is also worth noting that ClikZ forecasts influencer marketing will become a $10bn (£8bn) industry by 2020.

Amazon partners with Snapchat

The number one retailer on this list, Amazon, is also one of the most innovative when it comes to its use of social media. A partnership with Snapchat on a visual search feature allows customers to use the Snapchat camera to scan an object or barcode that then provides information on that item including title, price, thumbnail image, average review score and prime availability.

The Snapchat functionality recognises artwork, packaging, logos and other unique identifying characteristics to provide the right information. A click-through then takes customers to the product page on Amazon to make the purchase.

Social media’s impact on retail has been significant, in particular in fashion and beauty, and it is expected to continue disrupting the industry in the months ahead – in a more direct commercial form.

Earlier this year, Instagram launched in-app checkout functionality in the US via its Checkout on Instagram tool, which allows customers perusing the pages of selected brands to make instant purchases by clicking on the images on the social site. Uniqlo, H & M and ZARA were among the 23 brands partnering with Instagram for launch.

Meanwhile, other retailers (not on this list) are investing in shoppable videos on the platform, with the likes of Yoox Net-a-Porter, Ted Baker and Harvey Nichols doing so. The commerce opportunities of Instagram are enormous, as some of the platform’s statistics highlight – one billion active monthly users; 80% of all accounts follow a business profile; 64% of 18- to 29-year-olds use Instagram; and, particularly relevant, videos receive 38% more engagement than static posts.

The plan is for this form of social commerce on Instagram to arrive in the UK soon, and analysts expect it to roll out to other key international retail markets.

Action points – what to do next

  • Create a community using social platforms
  • Have a diverse strategy that incorporates multiple platforms
  • Actively drive sales through social selling and visual search tech

Discover more about social marketing

A new online battleground is emerging globally – speed of fulfilment

Speedy, convenient fulfilment has become one of the critical battlegrounds in ecommerce.

How can I ensure an on-time delivery?

Of the total volume of online orders delivered to UK consumers in June 2019, almost 62.5% were sent through specified-day or next-day delivery services, according to the IMRG MetaPack Delivery Index.

By contrast in Germany, delivery is less competitive. Of its top 100 retailers, 70% do not allow customers to select their desired shipping service, just 11 offer same-day delivery and only 38 provide free shipping when a minimum order is reached, research from ParcelLab found in 2018.

In the US, 75% of consumers expect free shipping, while nearly 40% want online orders to arrive in two days, according to a survey by the National Retail Federation.

Influenced by the roll-out of rapid, same-day delivery or pick-up options offered by the likes of Amazon worldwide, Argos in the UK and Alibaba in China – and with consumers now looking to fit their shopping activity into their seemingly increasingly busy lives – there are rising expectations of the wider retail industry to offer such services. This can clearly be seen at Walmart, which announced plans to roll out next-day delivery on 220,000 of its most popular items in May. By the end of 2019, this service will be available to 75% of Americans.

Across the globe, there are examples of innovation in last-mile logistics in response to what IMRG describes as a fight to create demand and competition for market share through named day and speedier delivery.

Waitrose can now deliver goods into people’s properties when they are not at home, using technology connecting smart Yale locks to a mobile app, which enables consumers to remotely grant home access to delivery drivers. Meanwhile, a tie-up between Amazon and the automotive sector in the US – via use of its Amazon Key app – allows its drivers to deliver goods to people’s parked cars, using location data. None of these new delivery developments were included in the metrics used to create the ranking in this report, owing to legal differences in the ability to implement in certain markets. They do, however, highlight the innovation and the scale of opportunity in this area.

Whether it is Co-op food delivery via autonomous robot in Milton Keynes or drones fulfilling orders for online marketplace Aha in Iceland, the push for greater speed in online delivery is growing – and it is filtering into international cross-border commerce.

The famous five

Out of the 30 retailers in the Retail Week and Loqate study, three-quarters offer express one-to-two-day delivery in their home ecommerce market, but only five provide that type of speed of service across borders.

Out of the 30 retailers in the Retail Week and Loqate study, three-quarters offer express one-to-two-day delivery in their home ecommerce market, but only five provide that type of speed of service across borders.

They are Amazon, ASOS, Boohoo, Gymshark and Paul Valentine – their ability to get product to international customers so quickly it is perhaps no surprise these businesses feature so high in this year’s rankings.

In 2018, ASOS’s Beighton highlighted the fact that the company’s drive to improve fulfilment speed and convenience is not just reserved for London shoppers. For example, it has launched same-day delivery in Birmingham and Berlin and extended next-day delivery cut-off times for orders in the European Union to 4pm. Click and collect is now available to ASOS customers in Russia, which at year-end had more than 3,000 pick-up points located across the country, while the buy online, pick-up elsewhere proposition was extended in Finland, Sweden and Poland.

Boohoo’s growing fashion portfolio – it has acquired PrettyLittleThing, Nasty Gal, MissPap, in the last three years and more recently Karen Millen and Coast – is helping it penetrate new markets via an array of different product types and tailored brand messaging. However, fundamental to its success in getting products delivered quickly to consumers around the world is continuing investment in its UK warehouses. It recently completed work to its central Burnley distribution centre – included the implementation of a significant amount of automation – which is expected to enhance productivity and efficiency.

A Sheffield facility has also opened to support PrettyLittleThing’s growth – and Boohoo describes its two northern UK sites as “significant stepping stones” in its stated journey to create “a distribution network capable of generating £3bn of net sales globally”.

With their ability to get products to international customers so quickly it is perhaps no surprise the famous five feature so high in this year’s rankings.

Location data’s role in CX

Analyst group Gartner’s top eight supply chain trends identified for 2019 include the greater use of advanced analytics. It’s a broad term covering predictive analytics, prescriptive analytics and the Internet of Things, but Gartner says all types of data are increasingly now used to “anticipate future scenarios and make better recommendations in areas such as supply chain planning, sourcing and transportation”.

Commenting on advanced analytics, Christian Titze, research vice-president at Gartner, says: “They will help organisations become more proactive and actionable in managing their supply chains, both in taking advantage of future opportunities and avoiding potential future disruptions.”

Sitting within this broader area of development within retail supply chains is location data. The growth in popularity of on-demand service apps such as Uber for hire cars and Waze for travel information highlights a consumer thirst for real-time location information – and the technology is becoming part of people’s everyday lives.

Retailers are identifying that location data must be reflected in online fulfilment too, with industry surveys suggesting there is demand for transparency, such as regular updates on parcel location, and flexibility in the form of post-purchase delivery location changes.

Retailers in this year’s International Retail Index, such as new entrants Paul Valentine and Gymshark, are growing around the world with the support of location data solutions from Loqate that verify consumers’ addresses and helps reduce delivery errors.

“Our company is focused on global growth, so to have a solution like Loqate’s address verification that works for over 245 countries is vital,” explains Fabian Baumann, business development manager at Paul Valentine.

Baumann continues: “We currently validate addresses in over 100 countries, including Germany, the UK and the US, and can offer our customer a faster checkout process worldwide through the use of Loqate, which always ensures the correct code for shipping label production.”

The buzz around location intelligence

In April 2018, Loqate commissioned a survey by Forrester into market attitudes to data from both a brand and consumer point of view, Location Intelligence Drives Competitive Edge in the Digital Age.

James McCormack, principal analyst at Forrester said: “The Forrester report looks at how digital disruption is essentially challenging firms in this age of the consumer and how they should turn to a more customer-obsessed perspective of the world – so trying to understand customers in their use of information like location, and their attitudes towards these consumers towards the brands using that location.”

Two key findings from the report relate to how critical this intelligence will become to businesses and what consumers expect to reap from the exchange of data.

For retailers, the importance of location data is driven by the uptake of mobile apps and services. With 68% already tuned into the value of this information, in the next three years, almost all (92%) say it will become critical to their operations. And the top three areas where they expect to add value are operational efficiencies, revenue and customer conversion.

However, the study – which surveyed 253 companies from a variety of industries – also found that many were struggling to leverage their information, from a lack of understanding of compliance to how to implementing the best processes to manage it.

And this conversion into meaningful outcomes for customers is very much a part of why location data is becoming critical for retailers to better understand and engage with consumers. From the 1,500 consumers surveyed, it was found that people are increasingly willing to give up data in order to see value for themselves and receive a more personalised experience. But they expect this to be within a trusted relationship.

McCormack said: “There are particular points within the customer lifecycle that brands need to be aware of and then be more sensitive to when leveraging this kind of information.”

Action points – what to do next

  • Speedier delivery is in demand and has become critical for investment
  • Location data will play a crucial role in the future of international trade
  • Investment in data strategy – cleaning up data and achieving greater visibility - integral

Learn more about on-time delivery

Retailers are looking east to Russia and China’s retail titans

The 30 retailers in this year’s Retail Week and Loqate International Retail Index provide examples of best practice of overseas expansion strategy in the key US, UK, Benelux, DACH and Nordics markets, but what about influential players in other territories?

How can I reach more customers in the Asian market?

China, for example, continues to grow its presence on the global commerce stage. Although sales in its home territory still dominate, the country’s largest retail and business conglomerate, Alibaba Group, has grand plans to expand its worldwide reach.

In Russia, meanwhile, the ecommerce market is still very fragmented and there is no dominant player. However, this could be about to change with online multi-product retailer Wildberries gaining ground.

China’s Alibaba

Alibaba has made significant investment in it's delivery and logistics capabilities. It is working on ways to fulfil goods within 24 hours in China – in as little as 15 minutes in some areas – and within 72 hours anywhere in the world. Its AliExpress division provides the group with a global distribution network, but investments in etailers, such as general merchandise etailer Lazada in Southeast Asia and fashion etailer Trendyol in Turkey, highlight its desire to own more of the global commerce market.

If Loqate's International Retail Index was to score Alibaba across the same metrics as the 30 retailers in the list, it would beat Amazon to first place with a score of 85

And with statistics from research company eMarketer predicting that China is on course to overtake the US as the largest retail market in the world by 2021, the likes of Alibaba are worthy of focus.

David Lloyd, general manager for the UK, Netherlands and Nordics at Alibaba Group, says: “We largely exist as a platform; we’re a technology and data company – and one that facilitates trade.”

In terms of being a company that inspires, Alibaba is doing things that European retailers and businesses from other continents will be doing in the future, according to Lloyd.

“The way people are shopping online and in [Alibaba’s grocery store chain] Freshippo, or the way people in China engage with influencers gives you a really good learning opportunity about how to serve consumers,” he states.

“We’re increasingly seeing people coming to visit us and understand what they can learn from us.”

Indeed, many businesses are visiting China to see how the country’s commerce titans, Alibaba and JD.com, operate. In some cases, they are partnering with these businesses, learning, and then tweaking their propositions in home markets as a result.

Starbucks, for example, tested coffee delivery with Alibaba’s Ele.me in China and its learnings from that project have been built into the proposition it now runs in association with Uber Eats in the US.

Alibaba has formed thousands of other partnerships like this with international businesses around the world, but much of its success – as is the case with JD.com – is underpinned by developing a multifaceted commercial ecosystem backed by investment in artificial intelligence, social media, data science and logistics.

Whether it’s stores that resemble part warehouse and part supermarket, or its digital channels that comprise marketplaces, social media and payment solutions, Alibaba is providing comprehensive services across both physical and digital retail.

As Alibaba pursues its global ambitions in the coming years, we predict it will become the benchmark that international retailers look to, follow and potentially partner with to ensure their own internationalisation strategies remain on course.

Russia’s Wildberries

Wildberries.ru is one of Russia’s largest etailers, and in 2019 generated $1.9bn in sales and attracted two million daily visitors. A Forbes analysis estimates the company is worth $1bn in 2019. The founder of Russian online retail business Wildberries, Tatyana Bakalchuk, became Russia’s second-ever female billionaire earlier in 2019 – and the rest of Europe is about to hear more from her in the months ahead.

Since 2017, Wildberries – which sells a range of goods from fashion to electronics, and books to beauty – has been classed as the largest ecommerce player in Russia, but local press reported in August that it has now also become the country’s biggest seller of clothing – ahead of some of the nation’s longest-running fashion chains.

According to reports, Wildberries – which counts clothing and shoes as the largest part of its business – overtook multichannel operator Sportsmaster in terms of fashion and footwear sales

The company has a physical presence in Russia – home to its headquarters, which are in Moscow – as well as in neighbouring Belarus, Kazakhstan, Armenia and Kyrgyzstan. Its growth and rise to $1.9bn (£1.6bn) annual revenue is supported by a network of circa 3,700 pick-up points – which it calls stores – in all those countries.

The company is now looking to expand from Russia and its nearby countries into Europe, according to Bakalchuk, who spoke at the World Retail Congress 2019 in Amsterdam.

“We think we can bring into Europe a new experience, because we combine online and offline, as buyers can try clothes on in our small stores and don’t have to pre-pay,” she said.

Wildberries sells around 15,000 brands – including well-known names in global fashion, sportswear and beauty – and attracts 2 million daily visitors. Bakalchuk, who established the business from her Moscow apartment while on maternity leave in 2004, calls the business a “different model” to anything else currently in operation in Europe.

Action points – what to do next

  • Chinese etailers such as Alibaba and JD.com are innovating with new technologies such as AI and using data to maximum effect to better communicate with customers and offer speedy delivery
  • Russian etailer Wildberries.ru is driving sales by combining online and offline, offering customers the ability to try on clothes in small pick-up stores – a model that could work for other international retailers by easing delivery and returns pressures.

Read more about expanding in Asia

Five key areas to focus on – and those to avoid

For retailers considering the next steps to exploring commerce across borders, there are many best practices highlighted in this second annual International Retail Index from businesses that have struck out and succeeded. From practical considerations of localisation, such as languages and currencies, to the less tangible concepts of inspiration and expectation, here we list the top takeaways – as well pitfalls to avoid.

Top five Dos:

  1. Treat international development as an opportunity. The rules of globalisation have been rewritten – even relatively small or early-stage retailers can reach a global audience more quickly and with lower investment than ever before.
  2. Instil confidence and usability for international shoppers by offering language and currency options, as well as address verification.
  3. Develop a global social media strategy that identifies the key platforms, the differences between them and how engagement can be built and maintained across them. Explore opportunities with fast-growing platforms such as TikTok.
  4. With consumers increasingly expecting some level of personalisation, look to develop ranges and offers tailored towards local markets or even each individual shopper.
  5. Look for best practices outside of your usual peers. Shoppers’ expectations are evolving at a rapid pace and they are increasingly being exposed to and influenced by global trends. There is a growing need to look to the latest developments of the leading global digital ecosystem operators (Amazon, Alibaba, Google, JD.com) – they are raising the bar and their global ambitions mean you could well be competing, or partnering, with them soon. Include mobile as a key component of your online ecosystem.

Top five Don’ts:

  1. Don’t be trapped by thinking local. The reality is that some of your biggest competitors of the future may never actually have a physical presence in your market. Recognise that shoppers in your market may be interacting and influenced by experiences and brands from anywhere around the world.
  2. Don’t expect the pace to slow down. If anything, plan for even faster rates of disruption as new technologies and players emerge. Staying agile and flexible, and being willing to adopt a test and learn approach will be crucial.
  3. Don’t bet on customers doing the work for you. Shoppers expect ever greater convenience, usability and experience, and will desert retailers unable to offer a seamless or frictionless journey both instore and online. Every capability or service you add must make shoppers’ lives easier.
  4. Don’t expect international shoppers to wait. Speed of delivery is becoming a crucial differentiator. Customers are increasingly demanding same- or next-day delivery for domestic orders and in the future are unlikely to wait for one or two weeks for international orders.
  5. Don’t be scared to experiment and embrace failure. The most successful retailers are those willing to take risks, even if they fail to learn from them. It is better to be proactive and agile than be too cautious and get left behind.