International expansion still high on retailers’ agenda despite uncertain economic prospects

International expansion remains high on the agenda for retailers in 2015, in spite of uncertain economic prospects and cost escalation.

47% of retailers surveyed in How Active are Retailers Globally indicated that unclear economic prospects and cost escalation, largely due to increases in rental costs and lack of quality retail space, are the biggest concerns for 2015. However, despite these challenges appetite for international expansion remains a strong focus as retailers continue to invest in their store network throughout 2015.

The new research from global property advisor CBRE reveals that Germany has retained its number one position for the second consecutive year as the most popular retail market in the world with 40% of retailers planning to open a store there in 2015. Germany is closely followed by the UK with 33% and France with 31% of retailers.

Global retailers continue to be attracted to Germany largely due to the opportunity to target more than 30 large cities with high purchasing power. Despite the huge interest in the German market retail rents in most of the markets have remained stable or have seen a slight increase. The UK also continues to be a popular target for overseas retailers as demand for store space remains resilient, especially in London. This is evident from the strong prevailing rental growth and high premiums. France follows closely behind the UK attracting retailers due to its mature market with several strong cities and a large number of very successful shopping centres across the country. Retailers are generally attracted to the ability to get critical mass quickly, and have focussed on Paris and the Paris region before expanding into other cities. Recent changes to Sunday trading days from five to 12 per year in some areas, and the creation of Zones Of International Tourism, which will allow Sunday opening all year round is further improving the attractiveness of France to retailers.

Peter Gold, Head of Cross-Border Retail, CBRE
 “Given the ongoing challenges retailers face from cost escalation, successful delivery of omni-channel, and changes in consumer behaviour, it is increasingly important for them to have a strong network of stores to effectively represent their brand. The cost to open a new store remains prohibitive and retailers now have to look beyond key areas to traditionally less premium sites.

The positive aspect of this is seen as the growth in the quality of the retailers giving a halo effect to a wider geographical spread of stores. There is still a slight hesitancy to expand in some markets linked to either remaining or developing economic uncertainty. Retailers have recognised the overwhelmingly positive attitude that shoppers have to engaging with the physical store environment and are committed to opening more stores.  This gives further credence to the view that the retail experience remains absolutely fundamental to the shopper. "
Peter Gold, Head of Cross-Border Retail, CBRE

The physical store remains the destination of choice for consumers as retailers continue to open stores in diverse locations with 21% of retailers planning to open between one to five stores in the Europe, Middle East and Africa (EMEA) region by the end of the year. Large scale expansion plans with retailers looking to open more than 40 stores has scaled back to 9% in 2015.