Global retail expansion: key recruitment and HR considerations for brands that are taking on the world
International expansion has been high on the shopping list for retailers and other consumer-centric firms in the last decade.
There have been huge successes, for example with the bricks and mortar and franchise strategy of luxury group Burberry, the concession model of department store John Lewis and the global e-commerce drive of ASOS boosting group sales.
Despite caution arising from the Brexit vote in June, retailers still have the desire to spread their wings. “The UK retail market is flat. If you want real organic growth then looking abroad is more important than ever,” says Paul Martin, managing director of Boxwood Insight at consultancy KPMG Boxwood
Nick Croucher, manager, Commerce and Industry, at Frazer Jones, would add. “Retailers are certainly looking to expand their customer reach and looking at entering new markets. However, the UK market remains an attractive market for further growth”.
Planning for growth
So what can retailers do to make their moves a success, whether within Europe or beyond? The British Retail Consortium recently held a conference entitled ‘International Retailing – Delivering Growth Strategies in Global Markets’. It looked at the importance of choosing the best expansion channel, customer interaction and people when launching abroad.
Karl McKeever, managing director at retail consultants Visual Thinking, explains why these are the key issues. “As the world becomes more connected it has never been easier for retailers to move into new overseas markets. However, a brand’s success and reputation when they do so hinges on their ability to deliver a consistent and positive customer experience and this requires investment in people and practices to ensure standards are as high as in their home market,” he states.
“You need to make sure there is the necessary level of training, support and communications to embed best principles and reflect cultural differences to achieve global consistency, just as Apple and Burberry have done.”
However, Martin of Boxwood fears that this focus on recruiting talent and managing HR functions, is often overlooked by retailers.
“Retailers have spent most of their efforts around where they are going to be located and the business model they are going to use but have not invested the time and money in working out operational structures including recruitment and HR,” he says.
Croucher supports this view: “Global ‘one-size-fits-all’ solutions don’t exist. Many organisations are trying to rationalise or group countries into regions but these structures are rarely fit for purpose and can stifle growth.”
Local or expat recruitment?
Lisa Shepherd, head of global recruitment at global business services group TMF, also believes that both a micro and macro perspective is required: “Businesses don’t always look at the range of skill-sets they are going to need or the cost of recruitment.”
She says the nature of the business model can determine what recruitment needs a firm will have. “If you are acquiring a business or have a franchise partner, the skills tend to be already there. But if you are starting from scratch building a store you need to predominantly recruit locally to have that customer and client knowledge,” she argues.
Martin picks up this local versus expat point. “There are three things which will help an international store succeed – location, product and people. Inditex, as an example, has centralised products but local offices that have the knowledge around customer tastes and best locations. With their people they may have an expat general manager who has a very detailed understanding of that market but local store managers who do the day to day running of the firm. It is about getting the blend right. You don’t do what Walmart did in Germany and stuff every role with US expats. If you are looking for expats ensure they are versatile with good cultural and language understanding.”
Martin says determining how best to approach recruitment is business case specific including how mature a firm is in its international drive. “If you have a couple of markets then it will usually be run centrally but when you get to a certain critical mass you need to start developing local structures. You can only go so far running a Chinese e-commerce site out of London. At some point you need to get a local recruitment or marketing team in place to get deeper market penetration,” he adds.
“If you don’t have a local HR and recruitment team it is hard to understand local regulations, employment legislation and culture. You end up spending an awful lot of money on third parties such as lawyers.
Employee rewards and packages are also very local specific. “Bonus cultures differ from country to country as well as approaches to fixed salaries, holidays and medical provisions,” he states.
Croucher’s experience at Frazer Jones supports this view: “We’re seeing less reliance or appetite to hire expats as it can be a very expensive way to recruit. Businesses prefer to source locally based talent, ideally with international organisation experience. There’s a big push on internal transfers to help knit the proposition together. We’re also seeing that key hires are searched for in multiple locations and countries and can now work in a more virtual way.”
Brand maturity can be key to recruitment
“For a brand opening in a market for the first time it is very important that its DNA is not lost in translation. So it is important that there is expat support in the early stages,” explains Ben Jobling, international franchise and wholesale director at shoe firm Dune. “At the same time and in certain key roles such as marketing, finance and HR, there must be local lead team members who know the market. Over time you must ensure that the ownership of the brand is held locally.”
When it comes to relocated or expat talent, Jobling says previous international experience or cultural closeness to a specific country or region is not crucial. “If the brand is operating its own stores then that experience is not necessary. Of more importance is that the person has the right attitude and is always setting the right example,” he states.
“If working as part of a partnership with another business then the expat must understand that the local business also has a way of working and therefore they may need more flexibility in how they approach certain issues. The most common mistake has been that an expat goes to work abroad and fails to grasp that they are going out to a country to work, not to have an extended holiday!”
Regarding recruitment Jobling believes setting up a local recruitment structure is vital. “By doing so you will better understand not only the market regulations, language and cultural challenges but also the personas of the people you are looking to recruit,” he states. “The challenge from a brand perspective is to ensure that these recruiters understand what the brand requirement is. Having the right set of skills on paper is great but sometimes the personality of the person is key as well.”
The final word goes to Croucher at Frazer Jones who suggests three key considerations when building a HR structure to support global expansion.
“Ensure you examine your brand through a lens, globally as well as regionally. Assess engagement scores internally and ask targeted questions to gain further insight."
“Be sure to use talent globally. Safeguard against the perception that any part of the organisation operates from within an ivory tower. Many organisations now have globally dispersed boards which helps counter this problem."
“When recruiting for a role, ask a few key questions: does the role need to be based here, where in the world could benefit most from having this hire, where are the talent gaps, and what’s the succession plan for the post?”
Global expansion of retail businesses is set to continue as disruption across global economies creates many opportunities as well as challenges. It is clear that considering the full recruitment and HR picture is a key element in ensuring successful international growth.