Evolution of International Retailing

One of the significant features that is inherent and defines the International Retailing is the aspect of time spanning across all the activities and processes especially with reference to the markets. The time taken from design to the market, the time taken to serve the customer and the time taken to react to the trends in the fashion market and industry determines the success of International Retailing. The ongoing challenge faced by the International Retailers always is to manage the aspect of time with changing styles and seasons in the market.

It is this concept of time that plays an important role in the decision of the company in arriving at their strategy to ‘Make’ or ‘Buy’. The Companies have developed efficient Supply Chain Management Strategies as a trade off to be able to gain competitive advantage in the market by establishing offshore procurement supplier bases and co-ordinating the extensive processes of consolidating and managing multi level supplies, finding economies of scale and using faster and more expensive mode of international transportation to be able to reach the goods and service the customers at the right time.

The International Retailers in Europe as well as US began the trend of reviewing their manufacturing and procurement processes two decades ago and found the need to overhaul the entire system to be able to create increased efficiencies. At the same time several developments in the external environment were found to be conducive for adapting new supply chain strategies and moving away from the traditional mode of operations. One of the significant factors was the emergence of Supplier bases and networks in South Asian countries and in China. Malaysia, Thailand, China, India and Hong kong which emerged as strong supplier bases equipped with modern technology, skilled and cheaper labour and sufficient capacity. Secondly, the availability of IT Solutions in terms of EDI, Scanning and data transfer capabilities made it possible for the Companies to co-ordinate and work with the offshore suppliers on real time basis. Data sharing, multi-media communication capability coupled with CAD design software etc changed the way the Fashion Retailing manufacturing and procurement processes worked and reduced the elaborate lead times that were hereto required.

The International Retailers realised that the only way to remain competitive in future was to concentrate on offshore procurement and regularly review supply chain solutions. The development of stable supply chains involved identifying competent and reliable as well as professional suppliers, working with them to setup and improve their processes as well as Quality Management and other aspects of production. Besides they also realised the importance of getting involved in building the multi level supplier chains and creating two tier supplier networks. The outlook of the Companies and the relationship between the Buyer and Seller changed to that of being partners and working to achieve common objectives. The International Retailers realised the importance of being closely involved with and controlling the entire process of production including raw material supplies and quality. Collaborative working styles began to emerge with the Companies that made foray in the offshore buying.

The emergence of new strategy and outlook towards supplier networks lead to rationalisation of Suppliers. Companies began to evaluate their supplier and sourcing models that lead to rationalisation of supplier base where the Companies began to shrink the number of suppliers that they were working with and chose to concentrate on and work with fewer suppliers in a collaborative manner. Investing in Supplier relationship, identifying key suppliers and growing fruitful partnership as well as taking interest in augmenting supplier capabilities were the important lessons learnt by the International Retailers that shapes their procurement strategy even in the current times.

On the logistics front, the Companies began to work with different models and third party logistics players to consolidate the ware at local areas and at a country level before shipping the products in bulk. Hong Kong emerged as the consolidation centre for South Asia and more over the Companies began to airlift the ready garments without waiting to ship the same. The higher cost of air freight was set off against the lead time in reaching the market and inventory holding costs.

Now we see that the differentiation between the International Retailers is through the Supply chain Networks. Whichever company has a better and stronger Supply chain network gets to win the season in the market. Essentially the competition is between SCM networks.