H&M and Starbucks setting up shop in Sub-Saharan Africa

2015-08-14 | by Smollan

Top retail brands, H&M and Starbucks, are setting up shop in Sub-Saharan Africa with their first full-format stores opening in South Africa in 2015. They are the most recent international retailers to enter Sub-Saharan Africa, following a surge of global brands extending their footprint into developing markets, with more expected to follow.

As growth slows in developed markets, retailers are looking for opportunities to expand and grow their businesses elsewhere. H&M have an aggressive expansion plan, in which emerging markets are set to play a key role. The retail-clothing company are aiming to open 400 new stores in 2015, including ventures into India, Peru, South Africa, China, Poland and Taiwan.

Starbucks has also invested in expansion into key emerging markets including India, Russia, Brazil, Chile, Vietnam and China. The 2015 GRDI shows China, Latin America, Eastern Europe and parts of Africa making an appearance in the ranks of the top 30 most attractive countries for retail development.

The fragmentation of non-traditional markets in developing countries will pose some challenges for international retailers who have previously had a presence solely in developed markets. Their strategy and tactics will have to be tailored to suit the significant differences in labour law, market maturity, complexity, infrastructure, culture and geopolitical tensions etc. posed by these markets.

Despite these challenges, about 70% of the world’s growth is likely to come from emerging markets, making these markets extremely attractive. Asia in particular will begin to eclipse developed markets as a breeding ground of cultural and retail market influence. Those willing to set up shop in non-traditional places and adapt to meet the market needs will reap the rewards in the years to come.

 

References:

Khanna, (2015). Strategies that fit emerging markets. Harvard Business Review. [Online]. Available on https://hbr.org/2005/06/strategies-that-fit-emerging-markets [Accessed on 3 August 2015].

Kollowe, J. (2015). H&M plans further international expansion. The Guardian. [Online]. Available on http://www.theguardian.com/business/2015/jan/28/h-and-m-international-expansion-china-us-poland-germany [Accessed on 3 August 2015].

KPMG. (2014). Indian retail: The next growth story. KPMG. [Online]. Available on https://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/BBG-Retail.pdf [Accessed on 3 August 2015].