Retailers often start out with one location that caters to local consumers. Once this storefront is successful, merchants make the decision to expand to new regions in the hope of capturing new business and offering products and services to additional audiences. Sometimes, opening more stores in their domestic markets is not enough for companies and they then enter foreign regions to reach consumers in these areas.

Now, a trend has emerged among American retailers – many are deciding to focus on developing countries as part of their expansion to new markets. While some merchants may be hesitant about opening up in these types of regions, the fact is that many brands are seeing success as these markets are proving to be lucrative for their operations.

South American retail is growing
According to the latest Global Retail Development Index by A.T. Kearney, many U.S.-based companies are making the move to developing countries, with South American markets being a particular focus for many brands. Nations like Brazil, Chile and Uruguay are especially valuable for merchants that want to expand, as these three countries made the top of the index lost. Brazil garnered a score of 100 on market attractiveness, while Chile received a 95.6 and Uruguay got a 92. These regions are still developing, but for retailers that want to try new markets, these were found to be the most lucrative.

China ranked fourth on the Global Retail Development Index, but its market attractiveness score of 62.1 was significantly lower than that of the top three South American nations. However, China has rising consumer demand for a variety of products and services, so opening up new locations in this region could prove to be successful for many brands.

European retailers hesitant about expansion
While American merchants are eager to expand to foreign markets, those in Europe are still showing signs of hesitation when it comes to launching operations in new countries. ChannelAdvisor reported that although many retailers have developed plans for expansion in the coming years, a majority feel that their domestic markets present the best opportunities for their operations. There are several challenges related to expansion that European brands are facing, including various government regulations and currency issues.

To overcome these obstacles, companies can adopt a retail management software solution that processes all payment forms and currencies as well as serves as a single platform for all operations, both domestic and in new markets.