John Lewis Takes the Low-Risk Approach to International Growth

Here's a topical example of how a business can expand into international markets using a relatively low-risk approach.

This article in Retail Gazette explains how UK retailer John Lewis is expanding into Australian using a "concession" approach with its chosen retail partner there.

A concession is best described as a "shop within a shop".

Step into any Debenhams, House of Fraser or other department store format and you'll come across concessions.

Put simply, a concession involves a retailer providing store space to another retailer or brand who then trades from that space. Concession agreements can be complex, but they usually involve the host retailer gaining a percentage of the sales made by the concession (typically around 20-25%).

In this example, John Lewis has chosen Myer's as its host retail partner. Why? Because the kind of customers visiting Myer's is most likely to match those who will want to buy from a John Lewis concession. As the article quotes:

“There is a real synergy between Myer’s customer base and ours, and we believe they are the perfect partner for our first Australian shop-in-shops.”

With the opening of the Australian concessions, John Lewis will have around 30 concession stores in international markets.

This approach to international expansion looks pretty low risk, particularly when compared with the risks of opening standalone John Lewis stores in Australia. The investment required will be substantially lower and John Lewis will benefit immediately from the existing retail locations occupied by Meyer's.