Summary

• Expanding into new markets presents significant growth opportunities but requires careful consideration of local preferences and market dynamics.
• Understanding consumer behavior and preferences through data analysis is crucial for successful market entry and expansion.
• By leveraging AI-based technology, retailers can facilitate informed decision-making and mitigate risks associated with market expansion.
• Customize product offerings, pricing, and marketing to improve market expansion with local knowledge for better results and efficiency.  

Introduction 

There are many ways to grow your retail business. You can expand your product range, form partnerships, sell on different platforms, or enter new markets or locations. 

Expanding into a new or emerging market can significantly benefit retailers looking to expand their business. And, while there are ample opportunities to break into several markets, there are also great risks associated with this horizontal expansion.  

Understanding Local Preferences: The Indian Market Example

Take India as a prime example of a growth market opportunity. Statistica reports that revenue in the Indian apparel market is projected to reach $105.50 billion in 2024. Simultaneously, though, the apparel business remains largely unorganized, with formal retail only expected to account for 45% of sales in 2025. [1]   

Still, this projected growth, paired with a burgeoning middle class with disposable income and growing consumer demand for Western clothing, makes India an attractive market to many brands.  

However, there are many nuances to consider in order to enter this, or any, new market effectively.  

One of the main challenges for international brands is capturing and translating consumer preferences into their assortment.

Tushar Ved, President of Apparel Group India, states, “Entering the Indian market requires careful planning, thorough research, and flexibility. By building a strong understanding of the market, employing effective entry strategies, and adapting to local preferences, Apparel Group plans to introduce new international brands and capture a significant share of the growing Indian retail market.” [2]

Shyam Prasad, CEO of Brand Studio Lifestyle, explains that one of the key investment areas it’s focusing on in order to perform well in the market in the coming year is AI-based tools to help drive growth for various aspects of the business. [2]  

To meet these challenges, it is essential for brands to have access to the right data – both market and consumer insights.  

Utilizing Technology as a Window Into the Market

The India example can be translated into other emerging or growth market opportunities. 

In order to effectively enter any new market and mitigate risk, you need to have a deep understanding of the culture, the consumer, and the competition. Here, market research is critical, but doing so manually is time consuming, and, without people in these spaces, it can be difficult to get a full picture. 

Gaining data from retail competitive analysis to understand what other local and global players are doing and, how they are differentiating their assortments and pricing architectures, can give you a realistic window into what’s working. 

Technology allows you to quickly get up to speed and understand local nuances, rather than relying on assumptions from similar markets or taking a cookie-cutter approach. 

Creating a Successful Market Expansion Strategy

Businesses can incorporate retail technology to allow for a smoother and more profitable experience expanding horizontally.  

1. Data vs. Trial and Error  
   • Rather than solely relying on trial and error, accessing data-backed insights allows for a more informed approach, enabling businesses to identify opportunities faster and with reduced risk. 
   • By layering market data over your own research, you gain an understanding of what strategies have proven successful for other retailers in the target region, and can mitigate uncertainties and capitalize on opportunities that you might have otherwise overlooked. 
2.  Marketing Opportunities
   • Communication is key when entering a new market and appealing to local customer preferences. Take Diwali, for example. By analyzing important cultural events and how they are marketed, you gain an understanding of what promotional tactics work to localize your messaging more effectively and authentically. 
   • This approach saves time and resources compared to traditional trial-and-error methods, as well as de-risk the change of inappropriate or inauthentic messaging, as insights from established players provide valuable guidance on how to resonate with the target audience.
3.  Seasonal Ranges
   • Understanding the unique seasonality of a certain market is important to building ranges that sell. You can’t assume that the same range that works in one location will perform well in another. By using weather and historical customer data, you can develop a data-driven strategy regarding what and when to launch an assortment. 
   • You can also create specialized offerings tailored to regional preferences and purchasing patterns, or offer products exclusively on certain regional websites.  
4. Commercial Viability 
   • Pricing may look very different depending on the market. For example, the Indian Market is highly price-sensitive. 
   • With a retail intelligence platform, you can consider price points, competitor discounting models, and the average price point in key categories before entering. This information is crucial to determining whether your brand’s strategy can compete against local players. 

Conclusion

Retail technology can provide retailers with advanced market analysis tools that gather and analyze data on consumer behavior, preferences, demographics, and spending patterns in the target geographical market. 

This data helps retailers understand the local market dynamics and tailor their product offerings, pricing strategies, and marketing campaigns accordingly. 

Learn how to localize your market expansion strategy across geographies with EDITED’s Retail Intelligence Platform. Book a meeting here.

Sources: 

1. https://www.mckinsey.com/industries/retail/our-insights/how-indias-ascent-could-change-the-fashion-industry
2. https://www.indiaretailing.com/2024/01/11/where-the-fashion-industry-is-headed-in-2024/#:~:text=Bengaluru%3A%20In%202024%2C%20the%20Indian,better%20employee%20engagement%20and%20more