Overall brand growth remains mostly dynamic in 2019. But as financial reports show, growth rates have decreased for many. Be it in the US or in Europe, especially domestic-bound retailers and brands stumble.
Global expansion in sales and distribution competence has become a lifesaving strategy feature, but allow me a personal question first:
Is your reporting of sales and distribution in global expansion mostly focused on sales and profits? Yes? Now, when you travel abroad, do you still use a road atlas to find your way? No, that would feel a little last century, wouldn’t it?
By the same token, why would you still use last-century KPIs to determine success in international sales and distribution? As you might know, this turns a blind eye on the potentials you leave out.
We have 2019, and it’s time to get on board with newer ways of measuring success in sales and distribution growth. Let’s have a look at three typical annual business situations and how new ways of addressing international expansion leads to different growth priorities.
A New Way of Reporting Sales and Distribution
Let’s be honest, most of us measure success based on sales and sales growth. Because that’s the way our shareholders measure us. Our reports show large distribution countries as most important, and fast-growing countries as the most successful ones. So 95% of our sales discussions concern our ‘as is’ instead of our ‘could be’. We look at yesterday’s achievements in global expansion instead of tomorrow’s potential, and overlook that the revenue potential of a small sales unit is often far larger than that of our largest sales units. If we don’t see it, will we address it in our annual strategic planning?
Tip 1: Start reporting market potentials and your market shares. Yes, reporting market shares may be uncommon in the lifestyle industry. But is there a more motivating way to report your upside potential in a market? And if you lack benchmarks, just pick the country with your strongest market share to advance the others. If we can do it in country X, what do we need to follow suit in other countries?
And there is more to market share reporting. When you see that five large distribution countries have a similar market share as your home country, you know you are international expansion ready.
A New Way of Studying Sales and Distribution
How you do find your relevant market potential and the biggest market? The global expansion of the most successful lifestyle brands has passed 100 countries, some are even close to passing 200.
That’s nice to know for your sales and distribution strategy, but no orientation on where you should go next in your own international expansion. What are the most attractive markets that perfectly fit, how do you find them, and how do you enter those markets?
Tip 2: Last century you read (biased) retail real estate reports or bought retail studies to learn about the next big countries for global expansion. Do you remember the BRIC hype and the myriad of studies proclaiming future growth? Are India or Brasil big in your portfolio, and did you grow or shrink Russia since then?
The new way of studying a potential market is to analyse POS growth of your peer group and competitors in store locators, Google Maps and other online sources.
Analyse your peers’ and competitors’ online appearance, social media, and store locator growth, and you will know more about what’s happening than the best study can tell you: In other words, get the full picture of global expansion. All that information is freely available. And if customised for your brand, it tells you more about expansion potential than any third-party study can. One annual report and you know what is happening in your peer group and where to go next. You will see perspectives and upside potential in sales and distribution rather than just your status quo.
Invest in Global Expansion ‘Adventures’
I have been involved in around 50 brand growth planning processes, the first one for Levi’s in Asia 1995. Many things have changed since then, but one thing hasn’t: planning is a process where managers come together, share their financial achievements and ‘battle’ for investments in ‘their’ market to secure next year’s growth.
In the weeks that follow, the finance department and the board review sales and distribution plans and decide who gets a thumbs up, who needs to wait another year, and who is sent to consolidation street. The new investment strengthens sales muscles in global expansion that were strong already. That is very logical, because whoever delivered on their plan last year is likely to deliver next year too.
The only problem with that approach: If you continue to train well-developed muscles instead of underdeveloped ones, you expand around your own church tower. You risk turning into a very unbalanced organisation – likely one of those mostly domestic-bound brands that tend to stumble. And over time, you forget how to challenge yourself and take a risk.
Tip 3: Reduce big investments where you are already successful and dedicate a small but meaningful share to little adventures abroad. Instead of making country managers fight for their investment share and having nothing left when you budget, decide upfront what amount to put aside to secure strategic market investment. You’ve done this for years for your infrastructure, to develop your logistics, IT and online. Do it for markets and international expansion too. So this year, instead of investing 90% in already successful countries, spend 1/4 to uplift existing markets with low market share and high potential.
Join the New Century in Living International Expansion
I have been studying global expansion and travelled project-wise to many countries physically and virtually – 43 just in the last six years. I was lucky to witness many small and big best practices, and if there is one thing I have learned: focusing on sales and distribution reports to judge about a local brand organization is like judging a person’s health by the kilos on the scale– you just see the volume, not the whole picture. You do not understand the true state of global expansion. Wherever you can, stop ‘sales-only’ reports, and demand smart qualitative information before.
Encourage your organisation to become smarter in information on global expansion gathering. Next time somebody is asking to buy a study, ask for online profiles and brand store overviews of your peer group first.
But above all, involve your good sense and management talent, by travelling abroad, meeting people, learning on the ground. At least one new country every six months. Travel there alone, with your management team, or call and we travel together. But most importantly, travel.
Trust me, this will give your brand’s growth and international expansion so much more in return.
About the Author
Guido travels far on his global brand and retail mission, but his two absolute favourite destinations, Oman and Laos, are unfortunately not a brand expansion priority yet. He loves those countries, especially for being global brand latecomers. Contact him to prepare your growth travel or connect with him on LinkedIn.