Dynamic Processes of Territorial Embeddedness in International Online Fashion Retailing

Abstract

Global retail expansion involves dynamic relations between retailers and variegated institutional, competitive, and consumer-based demands across different spatial scales. Economic geographers have framed these processes through the interrelated concepts of territorial, network, and societal embeddedness of store-based retailers, but with a neglect of online retail transnational corporations, which might enter overseas markets with minimal risk and sunk cost. This research assesses the relevance of concepts of embeddedness in the light of virtual retail networks by assessing how knowledge from the home market mediates any perceived need to localize within host-market consumer cultures and institutions to achieve legitimacy, and, in turn, whether these activities might occur as a virtual or physical process. We undertook extensive case study research within five leading international online fashion retailers headquartered in the UK, involving fifty-five semistructured interviews with chief executives, and with managing, operations, buying, and merchandising directors. Our findings reveal market entry to be dominated by an inward-looking societal embeddedness approach with limited investment in overseas physical infrastructure and personnel, since the management of product ranges and pricing, along with merchandise fulfillment, typically reside in the home market. Yet, with international experience, we conceptualize a staged and currently limited investment in territorial embeddedness through local subsidiary offices critical to realizing network embeddedness with the fashion media and the reorganization of fulfillment within some key host countries and wider supranational regions. Such developments demand increased investment and a decentralization of authority that will, in turn, likely necessitate significant reorganization of these emergent international firms.