A survey of leading retailers by CBRE paints a fascinating picture of their global expansion plans.
The CBRE research - How Active Are Retailers Globally? – shows that brands are targeting a wide and diverse range of markets with core Western Europe at the top of the agenda.
This seventh edition of the report canvasses the views of more than 150 international retailers based in the Americas, Asia Pacific and the EMEA regions. Despite worries about the Chinese and US economies, retailers still see potential in these markets and are looking to make inroads there in the coming year. They are also looking further afield this year to try to gain market share, with markets such as Colombia, Egypt and the Philippines being targeted.
CBRE’s Executive Director of EMEA Research, Andrew Phipps, comments: “This year we expect global economic recovery to continue at a steady pace, with modestly-improving growth in many mature markets. However, there are potential headwinds on the horizon: rising interest rates in the US, a depreciation of the Chinese Yuan and a financial crisis in one or more emerging markets”.
Within this setting, albeit cautiously, retailers continue to expand their physical store networks despite the ongoing challenges of increasing costs, unsteady economies in some markets and the challenges and opportunities that come with technology. Cautious optimism seems to be the prevailing attitude with the vast majority of retailers (67%) looking to open no more than 20 stores this year.
However, 17% of those surveyed have larger scale ambitions, and are targeting more than 40 stores this year. Largely, this segment of the market tends to be driven by North American or European brands.
In terms of factors that could impact expansion plans, the two biggest risk factors cited by retailers were ‘cost escalations’ and ‘unclear economic prospects’. Lack of quality space was also a significant factor especially for food and beverage retailers. Retailers from Asia Pacific were particularly concerned about changes in consumer behaviour although 83% of retailers felt that the growth in online shopping would not directly impact their need for physical stores in 2016.
For the small proportion who suggested online retailing would impact their need for physical stores, “changes in consumer behaviour” was the most common reason given. In addition, some retailers also felt that they would be able to generate the same level of sales from fewer stores or that their online capability was such that they needed fewer physical stores.
High street and shopping malls are unsurprisingly the most common formats for expansion but as Andrew Phipps notes: “Interestingly, travel hubs are also being targeted by a fifth of retailers from the Americas and EMEA as an emerging format”.