Researchers and retail companies continue to spend considerable resources on identifying geographic growth opportunities within the European Community for their retail formats. At the most general level, these are increasingly well known and retailers from the north European states are moving quickly to establish themselves in, for example, Spain, Portugal and Italy. Less well understood are the costs associated with exploiting these trading opportunities. The total cost environment for retailers is the sum of a large number of individual start-up and operating cost components, each of which vary widely between the Member States. This is illustrated in this paper by reference to shop rental levels and labour costs. There are, in addition, less apparent difficulties to developing a trading presence in each of the EC Member States and there are costs associated with researching and overcoming these difficulties. The paper reports on some of these 'hidden' costs. To avoid some of the expensive mistakes which continue to be made by retailers seeking to internationalise their trading presence, retailers must understand both the size of the opportunity and the costs of exploiting that opportunity prior to entering a new market in the EC.
Authors: Bart Nooteboom, Roy Thurik, Sjaak Vollebregt
June 4, 1986
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