o’s Pizza Enterprises acquiring businesses that can provide a platform for expansion, and Cartridge World primarily pursuing new store franchising and conversion franchising. Domino’s Pizza Enterprises, trading as Domino’s Pizza, is the largest pizza chain in Australia, both in store numbers and revenues. The company holds the exclusive master franchise rights for the Domino’s brand from the listed American parent company and boasts a network of around 1600 stores in Australia, New Zealand, France, Belgium, the Netherlands, as well as the Principality of Monaco and Japan. Cartridge World is one of the world’s largest dedicated specialty retailers of ink and toner printer cartridges and one of the world’s fastest growing franchises. Cartridge World has more than 200 stores in Australia and 1450 stores in 56 other countries. In 2007, Cartridge World relocated its headquarters from Adelaide to the United States, two years after opening its first US store, in Atlanta, Georgia. The only other Australian retailers that have made any significant impact in the US have been the surfwear trio of Billabong International, Rip Curl and Quiksilver. While all three have struggled in the past three years, with Quiksilver now likely to be merged into Billabong International, the trio have developed global store networks of a scale that dwarf most of the Australian concepts that have ventured overseas. The US market has proved to be a graveyard for Australian retail concepts, but Cartridge World, now owned by the Australian private-equity firm, Wolseley Private Equity, is the one local retailer that has succeeded and prospered. Australian retail concepts that have failed in the US include two retailers that are currently among the best performers in Australia, Country Road and Peter Alexander, as well as Olivia Newton-John’s Koala Blue. Both Country Road and Peter Alexander are now under new ownership and are both looking again at opportunities overseas, albeit in more friendly markets. While Country Road’s foray into the New England states was based on a logical strategy, notwithstanding its ultimate failure, Inside Retail Weekly always thought Peter Alexander, prior to Premier Retail’s ownership, should have taken its concept to Asia, and especially Japan, rather than the US. The UK has not proven much more hospitable to Australian retail concepts over the years, and the publicly listed adventurewear chain, Kathmandu, has recently decided to quit its loss-making stores. Other Aussies abroad Apart from Domino’s Pizza and Cartridge World, there are a number of retailers who have built store networks overseas, including Harvey Norman, Cash Converters, Boost Juice, Coffee Club, Mimco, Bakers Delight and Bret Blundy’s Lovisa. Gloria Jean, the coffee franchise that was Australian owned and controlled for a period, also has an overseas store network, while the Michael Hill Jeweller chain has nine stores in the US after scaling back a more ambitious network in 2010. The fashion stationery chain, Kikki K, is also keen to expand globally, adding the UK and the US to its current international beachheads in Hong Kong and Singapore. Kikki K is looking for investors to support its international growth as it seeks to emulate Premier Retail’s forays into the UK and Asia with Smiggle. Spotlight Fabrics has ventured into Asia, while Hairhouse Warehouse is keen to expand into a number of markets, including the US and the Middle East. However, most Australian retailers are risk averse on overseas expansion beyond New Zealand. Indeed, even the two largest Australian retailers, Wesfarmers and Woolworths, have shown little enthusiasm for overseas expansion, tyrekicking a few opportunities over the years but never really taking the plunge. Both the major retailers have struggled in the New Zealand market with some of their retail brands, both proving to be less adept with specialty concepts such as Katies, Country Road and Dick Smith than with their mass merchandise formats. Interestingly, Coles took a long time to win over New Zealanders with its Kmart chain and actually divested its NZ supermarket chain, which is now owned by Woolworths. Woolworths’ only overseas investment outside Australia and New Zealand was a joint venture in India in an electronics retail concept that it has since exited, while Wesfarmers has not dusted off its passport to pursue opportunities outside Australasia. Former Woolworths executive, Bernie Brookes, did scout opportunities for Woolworths in southeast Asia before he headed to the CEO’s chair at Myer, and Woolworths was mulling over the acquisition of a supermarket chain in Hong Kong, but all to no avail. The failure of the two Australian goliaths to expand overseas begs a national interest issue. The reality is that their mass merchandise formats have no point of difference to other international retailers and, arguably, are not close to best of breed. However, the tolerance of competition policy that has allowed Wesfarmers and Woolworths to dominate key retail categories such as supermarkets, discount department stores, liquor, fuel, hardware and gaming would make more sense in the national interest if their considerable strength had been used to earn export dollars by expanding overseas. Many Australian retailers have adopted the view that they can safely tap consumers in other countries by developing online retail sites rather than opening stores overseas. But online sales are unlikely to amount to much. Success online for Australian retailers will depend on brand recognition, the exclusivity of the products offered or possibly any related services, new to market products, price and value propositions and, possibly, their ‘Australianness’. There are few Australian retailers who have a unique selling proposition that would underpin significant online sales into international markets. The revenues are likely to be ‘nice to have’ additional sales, but not a major source of income or earnings. Domino’s boss Don Meij Domino’s domination In the fiercely competitive fast food market, Domino’s Pizza continues to strive for a unique selling proposition using technology and customer service initiatives, as well as keen product pricing. Domino’s has one of the most effective websites and is constantly investing in new initiatives to engage with customers and to stay top of mind when they are making decisions about meals. The company has expanded aggressively through both organic store openings and acquisitions and has around 1600 stores after the acquisition this month of the French chain, Pizza Sprint. The acquisition of the 89 Pizza Sprint stores, 77 of which are franchises, expands the Domino’s Pizza footprint in France to 330 stores. Domino’s Pizza expects to increase its store network from the approximately 1600 stores it currently has, to 3250 by 2025. The European markets of France, Belgium, the Netherlands and Monaco are expected to have a footprint of 1500 stores within the next decade, while Japan’s store network will expand to 850 stores and Australia and New Zealand to 900 stores. In the 2016 financial year alone, Domino’s Pizza expects to open around five new stores each week, with between 260 to 280 new outlets this year, including the conversion of the Pizza Sprint stores. Cartridge World’s growth has slowed in recent years after growing by as much as a store a day back in 200. But the chain has the capacity to enter new markets under master franchise agreements and to potentially acquire other chains. Smiggle Australian retail’s next big export But the next big player in terms of store numbers and revenue generation looks like being Premier Retail, largely on the back of the Smiggle retail chain. Premier Retail, listed on the Australian Stock Exchange through Solomon Lew’s Premier Investments, is approaching $1 billion in annual sales, boosted by the success of the Smiggle brand. Premier Retail ventured overseas with its fashion brand, Jay Jays, in South Africa. But the real impetus for overseas expansion follows the early success of Smiggle in the UK, where there will be 30 stores trading by Christmas, and Singapore, where there are currently 19 outlets. The Smiggle game plan is to continue to grow its UK business from a current base to around 200 stores in the next five years, but also to launch in Malaysia and Hong Kong this financial year with a five-year store target of 50 outlets. Smiggle’s UK venture is profitable after just 18 months trading and is also performing strongly in Singapore, underpinning sales and earnings growth for Premier Retail, which is also mulling over another foray overseas for Peter Alexander. With Australian retailers battling an invasion of overseas retailers at home, as well as competition from international brands online, the challenge is to defend the turf or to pursue growth in new markets alone or with joint venture partners. As with the online market, success in other countries will depend on a unique selling proposition, rather than a ‘me too’ offer, and effective brand building. But Domino’s Pizza, Cartridge World, Smiggle and even the surfwear brands, Billabong International, Rip Curl and Quiksilver, have proved there are global opportunities for Australian retail concepts. Want more Inside Retail? Subscribe to Inside Retail Weekly now and get our premium print publication delivered to your door every week.