Branded retailer expansion on a continent-sized emerging market

The purpose of this paper is to identify patterns for the intra-market expansion of international branded retailers on a continent-sized emerging market using the network approach.

A multiple-case study design of four foreign branded retailers that have expanded onto regional markets in Brazil is used.

The intra-market expansion process shares similarities with the cross-market expansion process; is influenced by the relationships of foreign branded retailers with local competitors and shopping mall firms; and market selection, mode of operation and store location decisions are interrelated and conjointly taken, instead of forming a three-stage process. Additionally, the importance of relationships with host market shopping malls firms is highlighted.

This paper advances a conceptual model of the intra-market expansion process, which comprises a system of interrelated decisions – (regional) market selection, mode of operation and store location – influenced by several network effects.

Managers of foreign branded retail suffer from liability of foreignness when undertaking intra-market expansion. Although Brazil is a large market, the retail community is highly connected because of managers’ personal relationships. Brazilian shopping malls dominate suitable store locations, and represent a valuable source of knowledge and resources for the foreign branded retailer.

This paper addresses two under-researched aspects of international retail: branded retailers – manufacturers that develop brands and operate stores – and intra-market expansion (i.e. to geographic regions of a given foreign country). It also discusses the challenges of intra-market expansion in continent-sized emerging markets, with considerable regional diversity (culture, infrastructure and institutions).