The demographics of emerging markets present a compelling argument for international expansion. But in order to gain a slice of that potentially lucrative market share, retailers must first win the battle to secure prime real estate and draw customers into those stores.

“We believe there are enormous opportunities in Asian markets, especially in China. But, opportunities will only come when you identify correct strategies,” says Peter Lau, chairman of Giordano International in Hong Kong, a specialty apparel retailer with more than 2,700 stores globally. Those strategies cannot be defined simply by opening big stores or attracting new hires with the highest pay.

Successful cross-border expansion for retail businesses means honing strategies on every aspect of the business. In order to be effective, international retail strategies need to be tailored to the nuances of the local market and account for a myriad of factors ranging from securing top real estate locations to accurate price points and good supply chain management.

Despite inherent risks, international retailers are stepping up expansion in emerging markets across Asia in countries such as Indonesia, Hong Kong, Singapore, India and China. China is experiencing some of the most explosive growth. Over the past 15 years the country’s retail industry has been transforming from a sector dominated by family-operated stores and state-run department stores to a broad range of neighborhood centers and urban retail that contain a mix of both local and international brands ranging from hypermarkets to luxury retail.

“Our observation is that Chinese customers are like children, eager to try new things and explore their identities,” says Lau. “Therefore, relatively speaking, they are low in brand loyalty.” That is good news for the growing number of domestic and international restaurant and retail companies that are competing for those consumer dollars.

China is home to a host of domestic brands, such as Metersbonwe, China’s leader in casual wear apparel, that have expanded nationally. International luxury retailers such as Burberry, Gucci and Louis Vuitton also have accelerated store openings across China. In fact, greater China has overtaken Japan as the world’s number two luxury market after the U.S., while activity from mid-market and fast fashion brands are on the rise, according to Cushman & Wakefield. Burberry has opened more than 50 stores in China, while brands such as H&M, Zara and Uniqlo are becoming staple tenants in China’s better shopping centers.

Veterans pave the way

International retailers can learn from the success of veterans such as Giordano, a Hong Kong-based apparel brand with more stores in greater China, South Korea, Southeast Asia, Australia, India and the Middle East.

Certainly, it is challenging for international retailers to enter Asian markets and establish a strong customer base amid existing local competition. “Never underestimate the sophisticated and the dynamic landscape of Asian markets,” says Lau. “It’s often the case that existing practices or strategies prove to be good in your market may not work well in Asia.” In order to generate long-term profit, managing local strategies are just as important as a retailer’s global strategies, he adds.

In order to facilitate its growth in China, Giordano completely revamped its management structure. In September 2011, Giordano appointed five general managers to direct operations in Beijing, Shanghai, Wuhan and Guangzhou, as well as the company’s e-commerce site. “This started quickly to invigorate the regional team and significant improvements were seen in various areas such as local marketing and merchandising, franchisee consolidation and new store expansion programs. Each region is moving at a faster pace than before,” adds Lau.

Giordano also is promoting greater autonomy and flexibility in each region. “We encourage entrepreneurship and empower local teams to adopt locally focused strategic/longer term decisions for running the business,” says Lau. “This also enables (managers) to react to market change and local needs swiftly and effectively.”

Adapting to new markets

International retailers are deploying a variety of strategies when entering Asian markets ranging from emphasizing Internet marketing and sales to adapting stores and specific products to fit in with local cultures.

One strategy for many retail brands has been to secure a strong local partner to help pave the way for international growth. For example, New York-based J.Crew Group Inc. has entered into a partnership with Hong Kong-based specialty store operator Lane Crawford to expand in Asia. Beginning in October, a selection of the J.Crew fall 2012 women's ready-to-wear and shoes, men's apparel and accessories collections will be available at select Lane Crawford stores in Hong Kong and China. The partnership will debut at the Lane Crawford in the IFC mall in Hong Kong and at the Seasons Place store in Beijing. This is the first time J.Crew goods will be sold in a retail environment outside of North America.

Those international retailers that have little disparity between price, product and service from country to country have outperformed peers that lack that same consistency, notes says Hannah MacDonald, director and head of retail for Jones Lang LaSalle in Singapore. “Zara and H&M are good examples of these retailers and they do well in Singapore,” she says. “This is also why there is such a high luxury brand presence internationally as they undertake little brand dilution when going cross border.”

E-commerce is certainly a key driver in the globalization of retail. For example, Internet marketing and online sales have given international brands a boost in expanding in Singapore. “Brands come to the market often through evidence on the credit card sales, and Singaporeans are very internet savvy and are not averse to shopping internationally online,” notes MacDonald. The Internet is expected to play an even bigger role in the future as e-commerce continues to gain ground in emerging markets.

Ultimately, the success of international retail and restaurant expansion often depends on the strength of the brand and brand recognition. In Singapore, for example, there is a high recognition of U.S. and Japanese brands due to education, travel and popular culture. “The main drawback is the lack of space and finding accommodation when the brand wishes to come into the market,” adds MacDonald.