December 7, 2007
Retailer Uses Internet to Test Potential Overseas
Casual Male Retail is interested in exploring overseas expansion but rather than open stores in the markets it is considering (France, Germany, Italy, the Netherlands, Spain and the U.K.), the specialty retailer has chosen to open online shops instead.
Dennis Hernreich, chief operating officer of Casual Male, told the Financial Times that opening online rather than physical stores makes sense because, “It will enable us to size up the market… without a huge investment in either infrastructure or inventory.”
The company currently operates roughly 500 stores in North America along with one in London (open since 1994).
Casual Male’s approach is similar to Lands’ End. The division of Sears Holdings has operated solely as an e-tailer in Germany and the U.K. since 2000. According to the Financial Times, Lands’ End closed online operations in France, Ireland and Italy.
Michael Rubin, chief executive of GSI Commerce, the company that is operating the Casual Male sites and handling fulfillment, said, “I think there’s a trend in that big U.S. retailers want to take their businesses international and are looking at the web as a great way to get into the market.”
Discussion Questions: What do you think of Casual Male’s approach to overseas expansion? Do you see this as a trend that others will follow? Do you expect physical stores to follow e-tail operations for Casual Male and others or do you think U.S. retailers will stick to strictly e-commerce operations in Europe and other markets overseas?
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This is a great strategy, and a perfect way to enter a new market while allocating limited capital investment. If the online businesses prove successful, it will be easy for the company to then enter into the market slowly with bricks and mortar locations. On the other hand, if the brand meets with resistance, it is easy for the company to shut down the online operation, having spent a limited amount of money on the expansion.
Great strategic thinking on the part of Casual Male. It will be interesting to watch the progress on this move.
This approach is certainly attractive on the surface. But much of our discussion on this site revolves around the importance of integrating multiple communication and availability channels to be effective. Simply putting up a French or German language site may not be a true test of market potential at all. How are they planning to drive traffic to the site? How will it be announced? Will there be any print, radio, TV, direct mail, etc?
This sounds convenient and efficient–but I’m not sure how compelling and effective it will be as a market test.
Assuming that consumers in those markets want American products, this approach can work. However, it is about as much commitment to an overseas market as sending excess product there to sell. The only thing the retailer has going for it is selling American products with American sizing. However, in terms of risk all the retailer needs to worry about is choosing a freight forwarder and/or delivery company that represents their company well.
However, there is no effort to learn about the consumers, to adapt the product to the consumers, or to understand the business culture in another country.
IF consumers interested in American clothes use the Internet, IF those consumers regularly purchase products over the Internet, IF those consumers feel comfortable using their credit cards on the Internet, IF consumers can figure out the different sizing process, IF the consumers choose the right size, and IF the consumers are willing to pay the shipping charges to return items if they make a mistake on the sizing, then the company will be successful as long as those consumers are interested in American clothes.
At the same time the company has learned little about the market in that country or about the business practices in that country.
I think Mark is right. Clearly it mitigates risk. The trick is knowing exactly when to follow up with a brick and mortar strategy.
Opening international online shopping should be viewed as good market research. Billions of people around the world want American products. Teens especially want to dress like American teens.
As history has shown us, not all American ideas translate well into foreign cultures. For example, we have Wal-Mart’s foray into Germany. To test merchandise appeal, all one needs is a web site and distribution center. These are relatively inexpensive to set up. Keeping the distribution center in stock may not be so easy.
Being new to a country, I recommend total customer support and an open return policy. No reason to create a bad name during a market test. Fact is, more retailers should be testing the waters this way.
It’s a lot less risk for Casual Male to use its online capabilities to test new markets, versus building a large store network abroad. The conundrum: many folks believe that a few stores would reinforce the likelihood of success. Perhaps the clusters of online buyers’ addresses will help Casual Male locate a few stores in a future phase.
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This is a great strategy, and a perfect way to enter a new market while allocating limited capital investment. If the online businesses prove successful, it will be easy for the company to then enter into the market slowly with bricks and mortar locations. On the other hand, if the brand meets with resistance, it is easy for the company to shut down the online operation, having spent a limited amount of money on the expansion.
Great strategic thinking on the part of Casual Male. It will be interesting to watch the progress on this move.
This approach is certainly attractive on the surface. But much of our discussion on this site revolves around the importance of integrating multiple communication and availability channels to be effective. Simply putting up a French or German language site may not be a true test of market potential at all. How are they planning to drive traffic to the site? How will it be announced? Will there be any print, radio, TV, direct mail, etc?
This sounds convenient and efficient–but I’m not sure how compelling and effective it will be as a market test.
Assuming that consumers in those markets want American products, this approach can work. However, it is about as much commitment to an overseas market as sending excess product there to sell. The only thing the retailer has going for it is selling American products with American sizing. However, in terms of risk all the retailer needs to worry about is choosing a freight forwarder and/or delivery company that represents their company well.
However, there is no effort to learn about the consumers, to adapt the product to the consumers, or to understand the business culture in another country.
IF consumers interested in American clothes use the Internet, IF those consumers regularly purchase products over the Internet, IF those consumers feel comfortable using their credit cards on the Internet, IF consumers can figure out the different sizing process, IF the consumers choose the right size, and IF the consumers are willing to pay the shipping charges to return items if they make a mistake on the sizing, then the company will be successful as long as those consumers are interested in American clothes.
At the same time the company has learned little about the market in that country or about the business practices in that country.
I think Mark is right. Clearly it mitigates risk. The trick is knowing exactly when to follow up with a brick and mortar strategy.
Opening international online shopping should be viewed as good market research. Billions of people around the world want American products. Teens especially want to dress like American teens.
As history has shown us, not all American ideas translate well into foreign cultures. For example, we have Wal-Mart’s foray into Germany. To test merchandise appeal, all one needs is a web site and distribution center. These are relatively inexpensive to set up. Keeping the distribution center in stock may not be so easy.
Being new to a country, I recommend total customer support and an open return policy. No reason to create a bad name during a market test. Fact is, more retailers should be testing the waters this way.
It’s a lot less risk for Casual Male to use its online capabilities to test new markets, versus building a large store network abroad. The conundrum: many folks believe that a few stores would reinforce the likelihood of success. Perhaps the clusters of online buyers’ addresses will help Casual Male locate a few stores in a future phase.