Hong Kong is the world’s hottest retail market, attracting significantly more new entrants than any other city, according to the 2013 edition of How Global is the Business of Retail? by leading global property advisor CBRE.
– Hong Kong is top target for new retail entrants
– London retains number 1 position for overall retailer representation
– North American retailers expand most aggressively
CBRE’s annual survey, now in its sixth year, maps the global footprint of 320 of the world’s top retailers across more than 200 cities, tracking cross-border retailer movements. The report found that retailers expanded into a wide range of markets in 2012, with 81% of cities seeing at least one new retailer enter the market.
U.S. retailers are by far the most aggressive when expanding store networks globally. Traditionally U.S. retailers have focused on Asian and Western European markets; however, they are increasingly targeting the Middle East (18% of all new entrants to the region were from the U.S. last year), Central & Eastern Europe (17%), and Latin America (10%). Italian, British and French retailers are also highly active, focusing mainly on their own region, although Asia is also a key target.
Hong Kong was by far the most sought after city with 51 new retailer entries from all sectors – not just the high-end fashion brands that have traditionally targeted the market. These new entrants are principally from Europe, but also from the U.S., Japan and Korea.
Peter Gold, Managing Director – Retail, Cross-Border EMEA, CBRE, commented:
“Hong Kong provides an opportunity for retailers to capitalise on the emerging middle class population and tourists from mainland China. Hong Kong is often used as a launch pad for brands entering the region although increasingly retailers are entering Chinese cities directly. While luxury brands led the way in 2012, retailers from across the spectrum opened their first store in the city last year, including Pierre Cardin, Forever 21 and Cos.”
Mature markets dominated retailers’ expansion plans last year although six emerging markets made the top 20. Kiev was in second place with 39 new entrants, with Sao Paulo (25 new entrants), Iasi (19), Muscat (17) and Ho Chi Minh City (15) also important targets. This is the second year that Kiev has been ranked in the top 3 globally. A combination of strong growth in real incomes and a serious under supply of quality retail space in the city is driving major shopping centre development, which in turn is attracting a wide range of retailers including Prada, Camper and S. Oliver.
Berlin was in third position in terms of new entrants (28) with Frankfurt (20), Hamburg (19) and Munich (19) also featuring in the top 20. Low unemployment, rising wages and employment levels at record highs have created strong fundamentals for consumption in Germany and are encouraging retailers to target a wide range of cities. Notable new entries in Berlin include Mulberry, Hollister, Pull & Bear, and Zara Home (which also entered Munich).
Singapore (25) has quickly established itself as a regional hub, and is used as a gateway by international retailers looking to expand in South East Asia. The city has benefitted from an influx of regional tourists, to attractions such as the “Gardens by the Bay” and the “River Safari”, while new shopping centre development continues to create opportunities for global retailers to enter the market.
In terms of the world’s most mature markets (by the number of international retailers that already have a presence there), Dubai saw 25 new entrants in 2012, closely followed by Paris (24), London (23) and New York (20).
Europe was the most targeted region attracting 49% of new entries, followed by Asia with 24%, and Middle East and North Africa (MENA) with 11%. Latin America, North America, and the Pacific region attracted 9%, 7% and less than 1% respectively.
At a sector level, ‘Mid-Range Fashion’ retailers entered more new markets than any other sector last year, accounting for 22% of all new openings, followed by ‘Luxury and Business Fashion’ retailers (20%). ‘Coffee and Restaurants’ (13%) is another growth area, as international retailers expand to meet consumer demand for entertainment-based retail.
The global rankings of retailer representation has not changed significantly in the last two years, as virtually all of the 320 retailers tracked typically have a presence in the leading retail markets. London retains its number one position, with Dubai still comfortably in second place. Paris moved up one place to third, replacing New York which is now in fourth place along with Moscow. Hong Kong and Madrid remained in sixth and seventh place respectively. The only significant mover was Beijing, which moved up to 8th place from 13th.
Peter Gold added:
“In general, lack of new prime retail space globally is limiting the ability of some retailers to meet their expansion plans. This is most notable in mature markets, but also affects many emerging markets where much of the new development is in the peripheral areas of large cities, appealing only to domestic brands. Retailers are also more selective than ever – both in terms of the countries they choose and the type of space they take, with the focus firmly on the best space in the biggest cities.
“The growth of online retailing is further increasing the rigour with which retailers are analysing their portfolios. While some will downsize their store presence, the vast majority is embracing the multichannel approach – they are developing their online presence, but they are also investing in new store openings and their existing stores. For many retailers, opening stores in new markets is also a priority, underpinning our view that cross-border activity will continue at a steady pace in 2013.”
| Top Target Markets in 2012 (number of new retail entrants) | |||
| 1 | Hong Kong | 51 | Mature |
| 2 | Kiev | 39 | Emerging |
| 3 | Berlin | 28 | Mature |
| 4= | Singapore | 25 | Mature |
| 4= | Dubai | 25 | Mature |
| 4= | São Paulo | 25 | Emerging |
| 7= | Paris | 24 | Mature |
| 7= | Tokyo | 24 | Mature |
| 9 | London | 23 | Mature |
| 10= | New York | 20 | Mature |
| 10= | Frankfurt | 20 | Mature |
| 12= | Iasi | 19 | Emerging |
| 12= | Warsaw | 19 | Mature |
| 12= | Hamburg | 19 | Mature |
| 12= | Munich | 19 | Mature |
| 16 | Muscat | 17 | Emerging |
| 17= | Ho Chi Minh City | 15 | Emerging |
| 17= | Toronto | 15 | Mature |
| 17= | Moscow | 15 | Mature |
| 18 | New Delhi | 14 | Emerging |
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