Retail Doesn't Cross Borders

Retail Doesn’t Cross Borders Here’s why and what to do about it.

by Marcel Corstjens and Rajiv Lal

104 Harvard Business Review April 2012

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Marcel Corstjens is the Unilever Chaired Professor of Marketing at Insead.

Rajiv Lal is the Stanley Roth Sr. Professor of Retailing at Harvard Business School.

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ILLUSTRATION: KLAS FAHLAN

lobalization’s lure is almost irresistible. With the U.S. economy struggling to expand and Europe on the brink of recession, fast-growing markets in the developing world o er the best opportunities for boosting revenues and profits today. Many companies in the developed world are keen to follow in the wake of corporations in a variety of industries—such as Boeing, Coca-Cola, DuPont, General Electric, Hewlett-Packard, IBM, Oracle, Unilever, and Disney—that appear to have succeeded in going global. Globalization is no panacea, however. Success abroad varies widely, and it’s often tough to boost profits by investing overseas. Because most studies look at cross-industry patterns to draw lessons about how to succeed at globalization, they can be

misleading. When we focused on one industry—grocery retailing—we found that, with a few exceptions, globalization’s bene ts had not accrued to retailers. In contrast to other industries, grocery retail is still dominated by local players in most countries. International players are almost entirely absent from even the largest retail markets. And every grocery retailer that has ventured overseas has failed as often as it has succeeded. Moreover, our research shows that on average, the extent of internationalization does not have a signi cant e ect on retailers’ revenue growth rates or their pro t margins. Some industries clearly can’t travel across borders as well as others. A few grocery retailers have succeeded in globalizing by developing strategies that take into account the idiosyncrasies of their industry—and have found

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