Background: The internationalization of the retail industry has been treated by the authors in the literature as one of the most significant trend that influences the operations of a retailer. The impact of the internationalization can be seen as a need of reconsideration of the logistics practice and the distribution network. Grocery retailers that expand on new markets need a detailed consideration of the factors that influence the process of distribution network design with focus on the number and location of facilities/distribution centers, as well as on the vehicles routing and the consolidation of the deliveries from the distribution centers to the stores.

Purpose: This paper is explanatory and aims to illustrate the impact of certain factors concerning the decisions on the distribution network design when a grocery retailer seeks to expand on new markets.

Methodology: The thesis is a case study with quantitative and qualitative research approaches obtained by in-depth interview. Furthermore, the authors use positivisim and the whole workflow of thesis can be designed as deductive. The sampling selection is non-probability that is combined with pattern matching as the method of data analysis.

Conclusion: A model for a distribution network design that can be used by grocery retailers that seeks to expand on new markets is developed. The model is consisted of four steps: a qualitative analysis of factors, determination of a precise number of distribution centers on each market; determination of a precise location of the distribution center on each market, and determination of the vehicle routing and the consolidation of the deliveries. The model is based on the following factors: strategic factors, macroeconomic factors, regional (forecasted) demand and number of stores need to be served and economy of scale, competitive environment, infrastructure, customer response and local presence and sourcing decision.