International expansion has traditionally been seen as an opportunity to take advantage of exciting new territories and the growing consumer economies of emerging markets.

International expansion has traditionally been seen as an opportunity to take advantage of exciting new territories and the growing consumer economies of emerging markets. That hasn’t changed and the potential of developing economies is huge. But it’s becoming clear that overseas operations today perform the even more important function of reducing retailers’ reliance on the mature and pedestrian UK market.

Consumer spending is flat at best and is not likely to change significantly this side of Christmas. That’s a massive headache for retailers like Home Retail whose only avenue for growth and recovery lies at home.

Retailers including Tesco, Carphone Warehouse, Mothercare and Kingfisher have shown recently the benefits to be gained from expanding into new markets, not just emerging economies but established ones too.

While Best Buy’s big-box foray into the UK has clearly failed, what gets less attention is the extraordinary success of Carphone Warehouse’s Best Buy Mobile venture in the US, where it has introduced the States to a whole new genre of retailing and been rewarded with a profit share of nearly £100m this year.

Not everything will work, and while Tesco will trumpet successful ventures in countries such as Thailand, Korea and the Czech Republic, it still hasn’t worked out how to make money in Japan or the US. But growing into markets with capacity still has to be a better idea than the crazy race to put down more space in the UK grocery market.

The UK is one of the most competitive retail markets in the world. And while it might not mean you can make it anywhere, if you can make it here there’s a very good chance you can make it somewhere else.

Fuel for thought

When supermarket sales are analysed, the contribution of petrol is usually stripped out. But Tesco and Sainsbury’s updates this week both showed that the astronomical cost of petrol is having a profound impact on spending.

Excluding petrol, Tesco and Sainsbury’s like for likes were 3.4 % and 4.8% respectively. Add in petrol, and those figures decline to 1% and 1.9%. The supermarkets are capitalising on petrol poverty to drive footfall, but the conclusion has to be that because customers are spending more on filling up their cars, they’re spending less on everything else. That’s a big problem for retailers.

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