07 Oct 2014

International Expansion Key to Future Growth

Businesses are advised to look abroad for expansion opportunities.

Consumer purse strings in the UK are set to tighten even more over the coming years – which is bad news for business.

The average take-home pay of £18,852 back in 2008 is expected to plummet to £17,827 in 2017, according to a recent survey by EYItem Club, resulting in less disposable income for households to play with.

It means growth outlook for western markets is still sluggish. Brands therefore need to consider their international marketing strategies in order to achieve growth over the course of the next decade or so.

Here we take a look at the different growth markets for different industries.

State of play

The Item Club claims annual wage growth is likely to remain well below the 4.5% to 5% rises seen before the financial crisis, due to the record numbers of people in work – currently 30.6 million – acting as a brake.

Consumer spending growth is predicted to be 2% over the next two years, compared with the annual average growth rate of 3.7% witnessed during the pre-crisis decade, representing a dramatic slowdown.

So, despite the fact that total household incomes in the UK have expanded and strengthened because of the growing number of people in employment, individuals still do not have extra money in their pockets.

The so-called ‘squeezed middle’ – households containing neither highly-skilled nor low-paid workers – will continue to be hit hard as pay rises remain below the 1.5% rate of inflation and competition for jobs remains strong.

Young people also face increased pressure on spending as unemployment among those in their 20s and 30s remains above the national average, and the cost of getting a foot on the property ladder soars.

All this is hurting businesses at home – both small and large – so it’s time to explore opportunities overseas.

Industries to watch

Different industries present different challenges, especially internationally, so where is best to invest your money?

Ecommerce

Business to consumer ecommerce sales are expected to hit $1.5 trillion this year, according to market research firm eMarketer, representing a 20% jump on the total value of sales recorded in 2013.

The majority of this growth will come from the rapidly expanding online and mobile user bases in emerging markets, increases in mcommerce sales, and advancing shipping and payment options.

Consumers in the Asia-Pacific region will spend more on ecommerce purchases than those in North America – $525.2 billion versus $482.6 billion – making it the largest regional ecommerce market in the world.

Massive gains in China, India and Indonesia will drive this growth, while the likes of Argentina, Mexico, Brazil, Russia, Italy and Canada will also play their part, not to mention, of course, the United States.

Finance

The finance industry is one that is particularly divergent depending on where abouts in the world you are.

Returns are down in both Europe and North America at present as continued credit losses and restructuring costs, not to mention regulatory fines and higher capital minima, have a detrimental impact.

On the other hand, Latin America and most of Asia Pacific – outside Japan, Korea and Taiwan – remain high-return markets for the time being. But, as a whole, the sector has experienced little by way of premium or valuation growth over the last decade.

Publishing

Information firm MarketLine predicts the global publishing market will be worth more than $252 billion by the end of 2014 as demand for magazines, newspapers and books enjoys a renaissance through online and digital forms.

Books, which make up almost 42% of the overall global publishing market, are expected to hit almost $108 billion this year.

The UK is the number one publishing nation in the world, according to the UK Publishers Association, producing 120,000 new books each year, while the EU represents 42% of the overall worldwide publishing industry in terms of market share.

Retail

The global retail industry is going through a period of change, says professional services company Deloitte, as technological innovation continues at pace around the world, including the most far-flung destinations.

Revenues for the top 10 largest retailers on the planet reached $1.3 trillion in the last financial year – a 2.9% rise on the previous 12 months, indicating modest growth that is expected to continue for the foreseeable future.

Half of the top 10 are based in the US. But, for the first time ever in the list, a large number of grocery businesses are clustered just under the $100 billion annual revenue mark, while the average size of the top 10 exceeded $129 billion.

Global retail sales are expected to grow by 4.1% in 2014 and eventually by 4.2% in 2016, so there are plenty of opportunities for businesses of all shapes and sizes to jump on the bandwagon and reap the rewards.

Technology

The technology market is expected to demonstrate modest growth in the coming years, according to research firm Forrester. This sadly means that a return to the massive growth rates of the late 1990s is not on the horizon.

It predicts 5.5% global growth in information technologies purchases in 2014, slightly up on 4.3% growth the previous year. A stronger growth rate of 6.9% is anticipated in 2015, however, with the market in the US doing the best.

The global technology market will be worth $2.22 trillion this year between software, hardware, and IT services.

Major tech market growth is predicted in Brazil and Mexico, at 11.6% and 10.1%, respectively, while China and India are also expected to grow 7.7% each, although all of them are coming off fairly weak years.

Travel

The global travel industry is set for a period of sustained growth over the next decade, claims forecasting group Oxford Economics for Amadeus, outstripping global GDP by growing as much as 5.4% a year.

China’s share of global outbound travel reaching 20% by 2023 will be one of the biggest influences, if not the biggest influence, behind the surge, replacing the US as the largest outbound travel market.

In fact, the number of Chinese households able to afford overseas travel is poised to more than double.

Large emerging markets such as Russia, Brazil, India, Indonesia and Turkey will also average more than 5% annual growth each over the next 10 years as a direct result of rising wealth and changing consumer habits.

These reports highlight the importance of expanding into international markets in order to achieve growth and increase profits.

But expanding internationally is challenging and will require businesses to research their target markets and develop their marketing strategies with local consumers in mind – translating their marketing material and website content into the local language of their target customers.



 
 

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