London is number one target for international retailers
London has reclaimed number one position as the most targeted market for international retailers, according to the 2012 edition of How Global is the Business of Retail? by leading global property adviser CBRE.
CBRE’s annual survey - now in its fifth year - mapped the global footprint of 326 of the world’s top retailers across more than 200 cities to identify trends in global retail expansion at national and local levels. The report found that retailers expanded into a wide range of markets in 2011, with 74% of the countries in the survey seeing at least one new retailer enter the market last year. The overall global footprint of retailers grew 2.1%, similar to the previous year, demonstrating that retailers continue to grow their cross-border businesses in spite of a challenging consumer environment.
London (55.5%) reclaimed the outright number one position after sharing top spot with Dubai last year. London benefited from a mini-boom in 2011 as tourist spending boosted a relatively robust local economy, and remains a key hub for retailers looking to expand into Europe.
While Dubai (53.8%) still holds considerable global pulling power, it drops into second position due to a handful of retailers exiting the market. New York (43.9%) remains in third position, while Moscow (43.7%) moves up the rankings following a number of new market entrants in 2011 to join Paris (43.7%) in fourth position ahead of Hong Kong (40.5%). Kuwait City (39.5%) was another big mover, rising to eighth position from 12th place last year. The remainder of the top 20 comprises a mix of traditional and emerging markets, providing an indication of how global the international retail business really is.
When looking at the most targeted countries by global retailers, the UK holds onto first position in the rankings closely followed by the United Arab Emirates (53.1%) and the United States (50.3%). Spain is in fourth position (47.5%) closely followed by China (47.2%), with France and Germany (46.9%) joint sixth in the rankings. Russia (44.5%), Italy (43%) and Saudi Arabia (41.1%) make up the remainder of the top 10.
North American retailers are by far the most global, with 73% present in all three regions (Europe, Middle East and Africa; Asia Pacific; The Americas), compared with 44% of European retailers and 23% of retailers from Asia Pacific. London is the number one target for American retailers, with 64.7% operating at least one store there, closely followed by Dubai (61.2%) and Kuwait City (49.3%) in third position.
Peter Gold, Head of EMEA Cross Border Retail, CBRE, commented:
“US fashion retailers are expanding beyond their own borders with renewed vigour and are increasingly focusing on Europe - building on the highly successful entries of brands of several major brands in recent years. Some big names are expected to make their presence felt in the coming years.”
Further CBRE research into the number of new store openings in the past year reveals that Europe was the most targeted region at city level accounting for 48% of new entries, followed by the Middle East and North Africa with 22%, and Asia with 14%. North America, Pacific, and Latin America attracted 8%, 6% and 1% respectively.
lmaty (Kazakhstan) was by far the most sought after new city last year with 18 new retailer entries. This was largely down to major infrastructure improvements, the delivery of new shopping centre space and the arrival in 2010 of the Inditex Group, which operates brands such as Zara, Pull & Bear, Massimo Dutti and Bershka, and has encouraged other new entrants to the market. Other factors include the growth in average income levels, major infrastructure improvements and participation in the Customs Unions with Russia and Belarus.
The east European cities of Moscow (11 new entrants), Kiev (9) and Warsaw (6) were also key targets in 2011, as retailers focused their expansion plans on those markets with the most robust economies and best growth prospects.
Peter Gold added:
“In response to the ongoing economic uncertainty, retailers are showing more flexibility in approaching the European marketplace. In the past, market entry tended to follow a model of London flagship followed by build-out in the UK, then the opening of further corporately-owned stores in France and Germany. While London remains the number one target, global retailers are thinking more in multi-channel terms, exploiting e-commerce technology in markets such as Scandinavia, where there is strong take-up of online shopping, or adopting a wholesale strategy in markets such as Germany that are dominated by the department stores.
“Retailers are responding to increased competition by devising new concepts and generating excitement through flagship stores that boost their public profile. In turn this has led to something of a resurgence of prime high street locations. Less headline-grabbing, but equally important has been the emergence of the high street as a viable environment in several eastern European countries – notably Poland and Croatia – that have till now been dominated by shopping centres.”