Growth of International Sourcing

International sourcing is one of the key features or characteristics defining International Retailing. Retailing got its impetus for expansion from the customer demand for fashion especially of well known brands. As the brand power and customer loyalty increased, the reputation of the brand grew by word of mouth and this phenomenon was not limited to domestic market alone but it spread in other countries as well. The customers began to associate brands with particular fashion design range as well as with quality. Thus the brand power demanded that the manufacturers continue to supply the expected quality products and in many cases customers demanded products made in a particular country too. International retailing originated largely in Europe and US and slowly spread to other countries too.

Today most brands have become global brands and are available across the world. With increase in the demand for branded products the retailers were under constant pressure to source products in time and at the right price.

Several factors contributed to and were responsible for the internationalisation of sourcing. The local or domestic supplier network was not sufficient to augment the supplies to meet the required demand. Lack of sufficient capacity for production as increasing cost of production meant increased cost which the retailers could ill afford. As the retailers started expanding their product designs and fashion, they needed to find manufacturing sources where the required raw materials were available. Besides the industry needed suppliers who had access to modern technology with bulk production facilities as well as new design adaptation capability. Ability to produce new designs and creations in bulk at the required low cost with committed supplies was the need of the day.

Extending sourcing and establishing supply lines from other countries was inevitable for the international retailers. Therefore retailers like Marks and Spencer’s and many more began to formulate and action an international sourcing strategy for their products and this phenomenon of international sourcing began to gain momentum in the 1990s. Thus began the international sourcing trend which has become the order of the day. Most of the developing economies including China, India, and Asian countries including Hong Kong, Thailand etc have become major supplier hubs mainly to Europe and US.

International retailers choose several modes to operate and implement their sourcing strategies. International trade shows and fashion shows play a major role and provide the ground for retailers to meet suppliers. Most of the international retailers also employ buying agents and commission agents in several countries who act on behalf of the principles and co-ordinate with the identified suppliers to ensure quality and timely shipments. In countries where the key suppliers are located, the buying houses prefer to set up their buying office to control and monitor supplier operations. Design development, sample approval, Quality control as well as production supervision and shipment deliveries are monitored and controlled by the buying office. Going forward the trend is likely to evolve into supplier group or networks and network or global procurement which is facilitated by technology.