Grow Your Business in 2018 With These Two Strategic Moves

Based on headlines about the changing landscape of U.S. retail during 2017, it would be easy to reach the conclusion that Amazon has created chaos and the days of brick and mortar stores are over. The reality is that chaos creates opportunity and there are many (big) retailers that are not only surviving – they’re thriving. As such, the first strategic move brands need to make in order to see growth in 2018 is “pick a winning partner and get behind them.”

Sporting goods giant, Dick’s will open 150 stores by 2018 and general merchandise retailer Burlington has seen positive same-store sales growth since 2012; most recently with 4.5% YoY comps in 2016.

This is not to say that all brick and mortar retailers should (and will) be seeing growth this year. Some retail giants have made questionable decisions and overextended themselves in a difficult time (i.e. Toys “R” Us bankruptcy), but clearly Dick’s and Burlington have found a winning formula. They are proving that the strong – and smart – horses will win the race and stand the test of time in a chaotic and changing landscape.

Yes, Amazon is huge. Yes, Amazon will keep getting bigger. But the reality is that online retail accounts for only 10% of total sales in the U.S. According to a 2017 study by eMarketer, consumers still prefer to shop in-store vs. online in most categories.   

Find a retail partner that has positioned itself to weather the storm, by creating a unique experience for its consumers that cannot be replicated online.  Pick a winning partner and get behind them in 2018.

The second strategic move brands need to make in order to see growth in 2018 is “think globally.”

For many years the U.S. has been the leading market for consumerism. We have been the single largest retail market in the world, while 95% of the population lives outside our borders. But that is about to change. The Diplomat recently reported that China is forecasted to become the largest consumer market in the world from now, until at least 2030.

China’s driving force for this growth is their sheer volume of buyers. It is estimated that by 2020 China will have 400 million “mainstream consumers”. That’s more people than the entire U.S. population - with disposable money and looking for ways to spend it. 

But China isn’t the only market where brands should be focused. Increased wealth, growing eCommerce, and improved logistics networks will make markets like Europe, the Middle East, India, and South America more accessible and more enticing to U.S. brands.

Yes, you should be focused on “winning at home” with a strong strategy for the U.S., market, but there is massive opportunity outside our borders. This year, think globally and you’ll stand a better chance to see long-term growth, as well as short-term gains.

For more advice on how to design the right strategic sales plan or build your business outside the U.S., contact Castus via email (hello@castusglobal.com) or contact us via our website: http://castusglobal.com/contact/

 

 

Emerging Markets Have A Strong Outlook For The First Time In A Long Time

For many, the expression "Emerging Markets" is nothing more than a buzz word. A snazzy term used by people to sound informed. The reality is that for many years (while emerging markets have struggled) people have tried to find a more descriptive label, but few alternatives have gained popularity.

The good news is that “Emerging Markets” are actually emerging for the first time in a long time. They are emerging from a period of stagnant growth. They are emerging as real expansion and strategic growth opportunities.

Before we can expand on why these markets have a stronger outlook for global companies, we need to define and align. We must define what an emerging market is, and align on which ones are most important.

Define: For the most part, emerging markets are defined as markets that have established business sectors, like those of developed regions, but lack the robust supporting infrastructure that exists in highly developed countries. Think about China’s retail sector for a moment – incredibly busy, and flush with new brands, products, and services – but the supporting infrastructure of brick and mortar stores (and their complex logistics network) rarely exists outside tier two cities.

Align: Analyst opinions differ when asked to identify all of the world’s emerging markets, but the following markets are widely regarded by all top analysts to be the Big Emerging Markets (BEM’s): China, Brazil, India, Mexico, Philippines, Russia, South Africa, and Turkey.

If we look at these countries as a group, there are three consistent trends that clearly highlight the fact that emerging markets are on an upward trajectory.

Year over Year growth: In 2017, the economies of Brazil, Russia, Turkey, and South Africa have all showed annual GDP growth rates above the previous year. In fact, during the middle of 2017 the Wall Street Journal projected that some Emerging Markets could grow by as much as 4.7% in 2017.

Global Trade: Exports represent a larger share of emerging market output when compared to developed economies, making them more reliant on trade. And total world trade in goods accelerated to an average of 4.4%, in volume terms during 2017, an increase from 1.3% in 2016.

Weakening USD: The USD slid as much as 12% against major currencies like the Euro in 2017.  And while a weakening USD may hurt the purchasing power of US-based companies, it means companies outside the US will have increased buying power. For example, the Russian Ruble ended 2016 at an exchange rate of 61 / 1 against the USD. The Ruble did not see a rate this high during all of 2017 and it sits at 57 / 1 against USD as of Jan. 3rd.  

Of course, not all of the future for emerging markets is bright. There is still significant geopolitical uncertainty and instability that could wreak havoc on these growing, and subsequently fragile, markets. Russia’s continued military assertions in Eastern Europe, Korea’s saber-rattling throughout Asia, and the US administration’s protectionism theme could all manifest in economic earthquakes.

Whatever the beginning of 2018 brings, we’re hopeful that after these insights “Emerging Markets” are less confusing and more enticing to those in the business of global trade. It’s a big world out there and the opportunities are endless.

Eurozone Consumer Confidence Is High....Really High.

As reported by Trade Economics, the consumer confidence indicator in the Euro Area increased to 0.1 in November 2017 from a downwardly revised -1.1 in the previous month, beating market expectations of -0.8. According to a recent article by the Wall Street Journal,  the steady rise in confidence over the last 12 months has been driven by greater optimism about the outlook for the eurozone economy, which has experienced a tumultuous decade as first the global financial crisis and then the currency area’s debt troubles caused two periods of contraction.

What does this mean for US brands looking to tap into the region's buying power, that includes four of the top ten consumer markets in the world? One word - opportunity. As eCommerce surges in developed economies and boarders become more blurred, companies who view the world as a cohesive global marketplace will reap the benefits of strategically planning expansion into areas like the EU.  Those who continue to view international markets as "unreachable" or "non-strategic" are destined to be left behind.

Consumer Confidence in the Euro Area averaged -12.08 from 1985 until 2017, reaching an all time high of 2.20 in May of 2000 and a record low of -34.60 in March of 2009.

Consumer Confidence in the Euro Area averaged -12.08 from 1985 until 2017, reaching an all time high of 2.20 in May of 2000 and a record low of -34.60 in March of 2009.

How Much Does the "Holiday Shopping Season" Really Matter to Retailers?

It's no surprise that many retailers rely heavily on the "Holiday Season" to generate a significant percent of annual sales. But does this trend impact all categories and all types or retail the same way? Assuming sales were distributed evenly throughout the year, November and December would account for 17% of total sales for all retailers. So you might be surprised to learn that online retailers only generate 23% of their yearly sales during November and December - a mere 6% increase. It's a pretty interesting point given all of the buzz about online retailers being "brick and mortar killers". The reality is that many shoppers still prefer to experience a purchase in person. Retailers that give shoppers a reason to visit physical stores, by offering a unique "experience", will continue to survive - maybe even thrive.

chartoftheday_11979_holiday_season_retail_sales_n.jpg

Another eComm Giant Makes the Omni-Channel Move

The Wall Street Journal reported today that eCommerce giant, Alibaba, will buy a 36% ownership stake of Sun Art Retail Group. Like Amazon's recent acquisition of Whole Foods, this marks a strategic expansion from online only to online + brick and mortar.  One major difference between the two transactions is that Alibaba has said it wishes to "co-exist" with retailers, where as Amazon is seeking to go head-to-head. What are you thoughts? Which strategy is better? Will customers know the difference? Will they care?

Click to read the Wall Street Journal article

Click to read the Wall Street Journal article

Go Big or Stay Home! Castus was featured in Global Trade Magazine.

We spent time talking with Global Trade about how Castus was formed, what type of partnerships we seek, and how our process works. It's been a humbling and exciting ride so far, and we are thrilled to share some of our experiencs. Thanks to the Global Trade team for the incredibly well written story! Click the image below to read the full article.

Click the image to read the full article.

Click the image to read the full article.

Pittsburgh Business Times Highlights Our Work With Petco

The Pittsburgh Business Times recently highlighted Castus' partnership with Petco. Castus has been leading International Business Development efforts for the Pet Care retail giant since last year and it's been a truly rewarding experience. We're excited to continue this partnership and look forward to more successes!

Click the image to read the full article.

Click the image to read the full article.

Opportunity among unrest

In an age where the next terrorist attack could come at any moment, or civil unrest might disrupt major markets there is still a trend of optimism among many executives.

In a recent study by McKinsey, respondents reported that they are as bullish on the global economy as they were three months ago. Nearly half said global economic conditions have improved in the past six months.

This 4th of July be patriotic, but look abroad too.

Patriotism is especially pertinent this holiday week, but for business owners large and small, there is more opportunity abroad than ever. A weakening US dollar means oversees customers can afford to purchase more and invest in your brand.

The Wall Street Journal reports that emerging markets are projected to grow by 4.7% this year, which is more than double the U.S. and Europe.

Photo by Bill Oxford/iStock / Getty Images
Photo by Bill Oxford/iStock / Getty Images

Castus was featured in "Chronicle: Only in Pittsburgh"

We are honored to be featured among some of Pittsburgh’s most innovative companies and leaders as part of WTAE's focus on regional growth.

Chronicle: Only in Pittsburgh showcases the key role this city will play in shaping the world over the next several decades. From the investment of cutting-edge companies to groundbreaking medical advancements, Pittsburgh is poised to lead the charge to future innovation.

Thanks to WTAE, Andrew Stockey, and Ascender for the opportunity to be part of a great story. And congratulations to all of the local businesses who are working hard and seeing success!

You can watch the full feature online by following this link. (Castus is featured at the 26min mark).

 

That time in Russia I was famous

Anyone that has traveled for work knows it's not actually glamorous. Long flights, small hotel beds, stuffy conference rooms, and sketchy WIFI. Sounds awesome, right? Sure, there are ways to make it more enjoyable and there are some amazing sightseeing opportunities (sometimes) but it's never quite like being "home". So I often look for ways to pass the time and enjoy myself whenever possible. More often than not, this results in me engaging in dialogue with the locals.

On one such occasion, I had just landed in Moscow at the end of a very long travel day. I was tired and a little punchy. After exchanging hand signals and some broken English with a taxi driver, I found myself headed to my hotel in the backseat of a car that smelled like a washroom. We were only a mile into our trip when the driver and I met eyes in the rear view mirror.  I smiled, he said "where from?" To which I responded "United States....Pittsburgh". "Oh...Pittsburgh?" he says. Thinking quickly for some relevance, I followed "Yes.....Pittsburgh Penguins. Hockey. Evgeni Malkin?" There was silence. The driver was digesting my fragmented sentence and train-wreck of thoughts. Then, in an instant, his face lit up. Almost swerving the car from the road, he turned around and shouted "Evgeni Malkin.....you, Evgeni Malkin!"

Before I could respond honestly, I realized the absurdity of the situation. How could I be mistaken for Evgeni Malkin?? I don't look Russian, I don't speak Russian, and I have as much experience playing hockey as I do playing the ukulele. I'll never know if it was the jet-lag or the fact that I knew I would never see this guy again, but I slowly said "No......I...PLAY with Evgeni Malkin".

We arrived at the hotel; my driver jumped out, opened my door, grabbed the bags, and eagerly dove back into the front seat. He re-emerged with a scrap of paper and a pencil. In a moment that can only be described as pure hilarity, my new biggest fan handed me the writing utensil and said "Please sign!"  There was really only one thing left to do...

I scribbled my name, wrote "#28" next to it, and gave him a firm handshake.  After checking into the hotel I strolled to the elevator and texted my (much more sports-minded) brother, "Who is number twenty-eight on the pens?" As the elevator door closed...."Nobody. That number is not on the roster this year" came the response.

-DC