A Geographically Isolated Economy's Experience of the International Expansion Of Retailing

Abstract:     
International expansion in the retail sector is still a relatively rare strategy. Many of the world's largest retailers operate solely domestically, or in a narrow range of countries. Retailers have struggled to transfer their firm-specific advantages across international borders. In the international context, macro-level national differences in buying preferences and considerable supply-chain variation, coupled with micro-level location advantages, play into the hands of domestic incumbents - those that were early movers in securing real estate and introducing retailing processes. For a geographically isolated country such as Australia this has lead to very limited engagement with the rest of the retailing world. I explore the constraining effect of Australia's location on both inward and outward foreign direct investment (FDI) for the largest retailers. I identify and analyze several smaller-scale Australian retailers who have successfully internationalized in recent years. These firms are shown to have developed appropriate ownership advantages and expansion strategies to overcome the distance hurdles. Particular attention is drawn to the strategic initiatives taken to surmount supply chain issues. In a broader sense, the paper highlights the interaction between industry structures, location differences and firm strategies that lie at the heart of international business theory and research.

Keywords: Retail, International Business, Australia, Foreign direct investment

JEL Classifications: F23, L81

Working Paper Series