The Brits are abroad again. Last week, Waitrose revealed plans to open 20 stores in the United Arab Emirates by 2010 under a licensing arrangement with local player Spinneys Dubai.
The move makes it the latest in a string of UK grocery operators including Tesco, Marks & Spencer, Iceland and Costcutter to head overseas. But history is littered with the failed international ventures of British retailers (see right). So why are so many suddenly empire-building again? And have they learned from past mistakes?
One of the factors that have kick-started retailers' global ambitions is the maturity of the domestic market. "It's driven by the fact we all trade on an island of 62 million people and there is limited scope to grow in the UK," says Waitrose MD Mark Price. "The logical conclusion has to be that once you've maxed out in market share you want to move abroad."
That certainly seems to be the thinking behind Tesco's strategy. Besides the launch of its Fresh & Easy US chain last autumn, it now has stores in 12 countries outside the UK, including China, the Czech Republic, Turkey, Thailand and Japan, which account for 1,400 stores and 60% of its selling space.
Tesco was, of course, one of the retailers to have a torrid time in its first foray abroad when it entered France in 1993. What has made its second stab at things more successful is its greater focus on new and emerging markets - or, as in the US, new formats.
In the past, too many retailers tried to make a mark on mature markets, says Hana Ben-Sharat at consultancy AT Kearney. These days activity tends to focus on developing markets, which promise entrants rapid growth opportunities and less established competition.
Costcutter, for instance, is currently in Ireland and Poland and eyeing licensing opportunities in India and Pakistan. "We've looked at a number of countries, such as Malta, Russia, Dubai and Libya," says MD Nick Ivel. " We can see massive potential in expanding the brand to countries such as Pakistan and India."
Whether they're targeting established or less mature markets, UK retailers are also working much harder to adapt their formats so they're fit for purpose.
Tesco makes a play of tailoring its offer to local markets, offering a more sophisticated food offer in some and a stronger non-food offer in others. Marks & Spencer, which has 257 stores in 36 countries including Taiwan and the Ukraine and soon China, focuses mainly on its clothing offer - though some stores stock ambient food. This allows it to leverage its strong international supply chain infrastructure.
Other retailers see opportunities in the rising numbers of expats. Waitrose and Iceland are targeting ex-pats in the Gulf and Spain, respectively, with offers that largely mirror those back in the UK. Iceland has just opened a second store, under licence, on the Spanish mainland, and plans another four in the next 18 months. These will be in addition to two already on Tenerife.
Not only are UK retailers targeting the right markets and moving away from simply trying to duplicate their British operations, they're also being a lot wilier about the amount of risk they expose themselves to. Last time round, too many took the risky ownership route. This time, most are erring on the side of caution and expanding mainly via licensing and franchising deals, the notable exception being Tesco, which either owns or co-owns its stores.
Franchising suits companies that don't want to invest too much in a foreign country at the outset and reduces the financial and risk involved, though, says Ben-Sharat: "You do have to make sure your brand is presented properly and that service levels are maintained."
Waitrose chose its Gulf partner carefully, stresses Price. "Spinneys is already a premium brand in that part of the world. It caters for a customer profile close to Waitrose's. It's not a case of a downmarket retailer going upmarket."
Not everyone thinks overseas expansion should be a priority. Jonathan Pritchard, analyst at Oriel Securities, believes retailers - particularly smaller ones - should think twice. "This year is going to be tough. Managements have enough on their plate and overseas expansion can be a distraction," he says. "A big company like Tesco can afford to stretch its management but some of these smaller guys should stick to the knitting."
Whether they will heed such advice when the lure of foreign expansion is so strong is another matter.ntop of the flops
International ventures can go horribly wrong. Even Tesco bit off more than it could chew when, in 1993, it bought Catteau, a French supermarket chain.
The deal turned out to be a disaster. Tesco said it struggled to achieve scale for the business because of high property prices and difficulties securing planning permission for new stores. Sir Terry Leahy pulled Tesco out of France in 1997, having been appointed chief executive the previous year.
Meanwhile, Sainsbury's flopped in Egypt. Entering the market in 1999, it ran a 100-store business for a troubled two years. The chain faced opposition from Islamic activists, who urged a boycott of the store because they believed it had links with Israel. Sainsbury's pulled out of the country in 2001, blaming a poor trading environment.
The early noughties weren't good for retailers. It was also in 2001 that M&S announced it was to close all 38 of its branches in continental Europe as part of a bid to focus on improving its then-struggling British operation - a move M&S Stuart Rose has since admitted was a mistake.
M&S also announced plans to withdraw from America that year. It owned a chain of 26 supermarkets that traded under the King's fascia. It offloaded the business in 2006.
Sainsbury's also failed to make a mark in the States with the Shaw's supermarket chain, which it bought in the 1980s and sold off in 2004.