Retailing - Challenges

Challenges

To achieve and maintain a foothold in an existing market, a prospective retail establishment must overcome the following hurdles:

• Regulatory barriers including
  • Restrictions on real estate purchases, especially as imposed by local governments and against "big-box" chain retailers;
  • Restrictions on foreign investment in retailers, in terms of both absolute amount of financing provided and percentage share of voting stock (e.g., common stock) purchased;
• Unfavorable taxation structures, especially those designed to penalize or keep out "big box" retailers (see "Regulatory" above);
• Absence of developed supply chain and integrated IT management;
• High competitiveness among existing market participants and resulting low profit margins, caused in part by
  • Constant advances in product design resulting in constant threat of product obsolescence and price declines for existing inventory; and
• Lack of properly educated and/or trained work force, often including management, caused in part by
  • Lack of educational infrastructure enabling prospective market entrants to respond to the above challenges.