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Just as all politics is local, all global brands are local. That is, they are if they want to succeed in this increasingly complicated and rapidly changing world, said Michael McBreen, senior vice president of Collective Brands.
This story first appeared in the October 12, 2011 issue of WWD. Subscribe Today.
McBreen said global brands can’t lose sight of customers in different markets. “Articulating each of our brands and being locally relevant while maintaining that global identity requires finesse,” he said. “You have to understand time lines and market needs. When are the significant holidays in each individual marketplace and how do we align our merchandise to be there at the right time? We need to link that authentic consumer experience to a global brand with local resonance.”
McBreen suggested that companies with a desire to expand beyond U.S. borders establish a set of guiding principles. “Outline a range of global market opportunity growth strategies and identify strategic risk and rewards,” he said. “Make a decision about what markets you choose to play in. Geographic, seasonal and climatic differences further drive the need for segmentation. Many consumers have nationalistic tendencies. Recognize the popularity of domestic brands. Control distribution channels and make sure the connection to the global consumer is real and authentic and sends a clear, consistent brand message with strong local elements.”
The biggest risk for global brands is the economic viability of the supply network, which includes material suppliers, factories, logistics providers, distributors and retailers around the world — as well as access to capital.
“The world is changing and the definitions of ‘source’ and ‘market’ are blurring,” said McBreen. “Today, much of the supply infrastructure is transitioning from an export economy to a domestic economy. That’s an important part of understanding not only how to grow our global businesses, but also our business in the U.S. and Europe.”
Under a classic globalization strategy model, brands sought low labor and operating costs and markets with large and growing consumer bases. But global economic forces impacted the equation, with increasing labor and operating costs on the source side, and slowing or negative growth on the markets side.
“We face a high degree of volatility in the economy,” McBreen said. “When we look at global markets, we have to resist our natural tendency to aggregate. It’s easy to think of China as one market. It’s 23 markets or 112 markets, depending upon the data you’re looking at. We need to understand the country, region, city and even neighborhood. We have to understand consumers’ wants, needs and desires and passionately meet those needs.”
McBreen told would-be global adventurers to manage their expectations. “Yes, there are seven billion people in the world, but not every one of them wants to buy your product. You should be building sustainable investments and long-term profitability. Understand the amount of investment that is required and the amount of time it will take to recoup that investment. South America and Asia have currency issues, financial crisis and volatility. It will continue and we have to be prepared for that.”
The traditional supply chain model that served so well in an export market is being reinvented. “China, India, Brazil, three of the fastest-growing economies, have their own markets,” McBreen said. “Each has to be adopted and adapted to. The global consumer will continue to demand fresh and innovative products.”