Retail brands continued to open new stores in a wide range of cities globally in 2017, indicating that the physical store remains fundamental to retailers’ omnichannel strategies and are increasingly important to retailers’ success in international markets, according to CBRE’s annual report How Global is the Business of Retail?
CBRE’s latest report identified that 123 cities had at least one new global retail brand open for the first time and of the brands expanding into new markets, 41% targeted more than one city.
Global retailer expansion across the EMEA region was mainly dominated by Coffee & Restaurants (F&B) and Mid-Range Fashion retailers such as Arket, Reserved and Tim Hortons.
Globally, the coffee & restaurant category was a key driver of global retail expansion in 2017, and accounted for 25% of new market entrants, up 17% from 2016. Activity in F&B sector has been driven by the evolution of consumer shopping habits and a preference for experiential retailing. This has been a key driver of expansion as landlords continue to diversify their tenant mix with more experience-orientated brands.
Hong Kong has once again claimed the top spot as the most targeted city for new retail entrants attracting 86 international retail brands in 2017. Dubai follows Hong Kong with 59 new entrants, with Dubai also taking the coveted top spot to become the number one city for the most international retailers present with 62%. Dubai also remains a key stepping stone for global retail and consumer brands entering the Middle East region.
RPA Perspective Despite the uncertainty associated with Britain’s decision to leave the EU, the UK featured third with 54 new retail brands opening a store for the first time in 2017. London reinforced its continuing global retail appeal and attracted 49 new retailers, which saw London take the top spot as the most sought-after retail destination amongst the European cities, and ranked fourth in the top 20 global cities for new global and consumer retail entrants.
Two major global brands to open in London last year were Canada Goose and Sonos. F&B and luxury brands were the biggest drivers of new store openings in London and accounted for 33 of the new retail entrants.
Taipei (52), Tokyo (46) came in third and fifth place respectively to make up the rest of the top five most attractive cities for new retailer openings.
David Close, Head of Retail Occupier EMEA, Advisory & Transaction Services, at CBRE, said: “Retailers have approached expansion with caution and as a result this has led to a slowdown in growth in some markets. Expansion is still key but many retailers are reviewing their store portfolios and consolidating their stores before focusing on international expansion.
“The retail sector has evolved and the way consumers shop has changed but physical store expansion remains a key element to a retailer’s success. In today’s evolving retail world, retailers must create a seamless integration between consumers’ online and offline experiences. Having a comprehensive online strategy is also a significant factor for many retailers and omnichannel strategies can help boost the need for a physical store and many pure play retailers have signaled this through their expansion into brick-and-mortar locations.”
The report also reveals that European cities are the preferred destination for global retailer expansion attracting 41% of new retail entrants in 2017. This is largely attributed to European retailers continuing to focus their expansion plans in their domestic region.
Natasha Patel, Director, Global Retail Research, added: “Innovation in technology and economic changes are continuing to have an impact on the retail industry. As retailers look to raise their brand profile, they are still looking to expand and having a global store network remains crucial to their success. Mature markets remain at the forefront for retailer expansion despite concerns about some of them experiencing distress. Although expansion has slowed, these tried and tested global locations will remain high on retailers’ agenda for expansion.”
