EMEA region accounts for more than half of the top ten destinations for international retailers : CBRE

 

London is Europe’s most sought after Shopping Destination

Moscow is the 7th among global cities in the top 10 target markets with 39 new entrants.

European cities are the preferred new destination for international retailer expansion attracting 43% of new retail brands in 2016, up from 36% on the previous year. This is largely attributed to European retailers redirecting their focus on expansion in their home continent rather than in locations where currencies have become more expensive.

On a city level, Hong Kong has retained its position as the world’s most popular destination for retailer expansion in 2016 attracting 87 new retailers, according to CBRE’s annual report ‘How Global is the Business of Retail?’. Hong Kong is closely followed by London which has witnessed the second highest presence of new retailer entrants, with a total of 65 international retailers opening stores in London for the first time in 2016. Retailers such as Nars, New Balance, and Dyson all opened new stores in London last year helping London to maintain its position as a global retail powerhouse.

London is followed by Dubai who welcomed 59 new entrants. Doha moved up six places from last year’s new entrants ranking to take fourth place with 58 new retail brands and Tokyo being the fifth most sought after market with 48 new entrants to make up the top five most targeted retail cities globally. Notably, Paris has jumped to 8th place (from 20th last year) attracting 36 new retailers as the French capital continues to attract international retailers due to its strong tourism market and stable economy. 33% of the new retailers to Paris are specialist clothing retailers such as Jordan, Rip Curl and Athlete’s Foot who are all targeting the large number of Parisian millennials. Moscow and Vienna also featured in the top 10 target markets with 39 and 29 new entrants, respectively.

The latest CBRE report which tracks and identifies the target cities for international retailers in 2016 found that the majority of the new retail brands that have opened in London originate from the United States, demonstrating that London continues to be a magnet for international retailers who want to establish their brand before expanding into Europe, Middle East and Africa (EMEA). 2016 also set a record for the amount of money invested in retail property in London with £2 billion being spent by the end of last year.

David Close, Senior Director, Cross Border Retail – EMEA, CBRE, commented:

“The current economic climate has led to retail brands targeting tried-and-tested retail locations. Retailers are increasingly looking at the traditional strongholds of London, Paris and Hong Kong and stores in the most prominent cities remain a strategic opportunity to attract consumers, build brand loyalty and generate sales off-line and on”.
CBRE’s latest study found that international retailers targeted a wide range of new markets in 2016. Of the cities surveyed, 89% saw at least one new international brand. Retailer activity increased by 2% in 2016, a decline from 3.1% registered in the previous year, and indicating a slight slowdown in retailers’ global expansion plans. The vast majority of the top 15 cities targeted by retailers for the first time last year were mature markets with only one up-and-coming market, the Croatian city of Split, ranked among the top destinations for expanding retailers last year.
Natasha Patel, Director, EMEA Research, CBRE, said:

“Global expansion has started to slow as retailers consider the right mix of bricks and clicks, and are more strategic about their physical store networks. As in previous years, U.S retailers continued to be the most active in their expansion. However, significant industry and macroeconomic challenges remain for retailers and may force some brands to be more cautious in their expansion plans.”

Globally, the report revealed that coffee shops and restaurants to be the hottest retail sector for expansion into new markets, with retailers in that category accounting for 22% of all expansion at city level. Next in line was specialist clothing stores (18%) and mid-range fashion stores (17%).

Despite the economic uncertainty in Russia, a number of global retailers are actively entering and expanding their chains both in Moscow and regions. With 39 new international brands in the Moscow market in 2016, the city is among top ten target destinations for global retailers. The majority of these brands entered the market via local partners but nine brands entered the market directly which is 30% above average and reflects well on the increasing transparency of Russian business in general. New retailers include Rolex, Laduree, Superdry, Victoria’s Secret, Urban Decay, Wycon, Charlotte Olympia with fashion, cosmetics and F&B accounting for about 70% of new entries.

Magomed Akhkuev, Analyst, Research Department of CBRE in Russia, said:

“Factors encouraging international retailer to enter Moscow include giant population of over 12 mln people (2nd in Europe after Istanbul), massive retail sales volume (over 70 billion dollars) and a bigger negotiating power. The latter includes lower dollar-denominated rental rates as a result of Ruble depreciation, switching to turnover-based rents, opportunity to get a refund on capital expenditures to some fashion operators. Another important reason is the increased number of new sites for retailers’ development as the end of development cycle in 2014-2016 resulted in a huge volume of new quality retail space delivered in Moscow (1.6 mln sq m.).”

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