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International Retail Expansions That Did Not Pay Off

With the rise of international flights, highly sophisticated worldwide logistics and the connecting power of the internet, the world can sometimes feel like a village and much closer than it perhaps has ever been before.

Because of this, some retail chains have endeavoured to take a brand that is successful nationally and try to translate it into an international success with the help of local retail maintenance services.

The results can be mixed, and whilst some retail chains such as McDonalds can live up to their goal of providing a “universal” (albeit slightly nuanced for different regions) experience, other companies with the same ambition have fallen into the same trap.

Here are some notable examples.

Australian-Style DIY Burns To Ashes In Britain

There are many examples of brands failing to carry the magic that made them successful over to another country with a very different market, but the one that perhaps highlights this the most is the story of when Wesfarmers bought the Homebase chain of home improvement superstores to turn into their Australian Bunnings Warehouses.

They removed what had made the original store work, such as soft furnishings, sold products based on the product lineup of their Australian mother base, such as swimming pools in winter, and attempted to face long-established market leader B&Q head on.

After huge losses, Wesfarmers sold to turnaround specialists Hilco, who managed to return the store to profitability largely by changing the stores back to the way they were.

Tesco Trips Themself Up

The story of Fresh & Easy Neighbourhood Market is one that will forever be written about in business textbooks as a shining example of how international expansion can go wrong.

Part of the problem was not leveraging the Tesco name, as well as having stores that, whilst relatively large by European standards were a third of the size of typical US supermarkets.

They also failed to appreciate US customer habits such as bulk buying and large-scale purchases by car rather than repeated smaller trips, and this alongside the global financial crisis ended the Fresh & Easy experiment before it started.