Internationals still strong

BY Australian Retailers Association
09 March 2016

Growing online sales will not deter retailers’ physical store expansion plans in 2016, according to CBRE in its seventh edition of ‘How Active Are Retailers Globally?’ study of 150 major international brands based in the Americas, Asia Pacific and Europe, Middle East, and Africa (EMEA).

The survey shows that 83 percent of brands do not expect their physical store expansion plans to be affected by the growth in e-commerce in 2016, with only 22 percent of brands concerned that stiff competition from online retailing will be a threat to the market in 2016.

Out of those questioned, 17 percent have large scale ambitions, with many retailers looking to open more than 40 stores (up from nine percent in 2015). The vast majority, at 67 percent, are looking to open up to 20 stores.

Tim Starling, Pacific Head of Retail Tenant Representation for CBRE, said that despite the popularity of online shopping, a physical store presence in key locations is still seen as critical.

“Shoppers still feel a need to go into a store, physically touch a product, and enjoy the brand experience,” said Mr Starling.

“The store is integral to the shopping journey and can be used in a number of different ways, such as to click and collect, research a product or brand, or to test the product. It isn’t solely about the transactional side.”

Germany is at the top of the list for store expansion, with 35 percent of retailers looking to grow their presence there. France is next on the list for 33 percent of retailers, followed by the UK. All three countries are home to cities with good consumer spending power and steady levels of tourism.

China is the top Asian market, with 27 percent of retailers looking to expand there. Australia also ranks highly, at 11th on the global list, with 19 percent of retailers looking to grow their presence Down Under.

CBRE National Retail Director, Alistair Palmer, said current international retailer enquiry in Australia is the strongest ever.

“We believe we are only part way through this cycle. The two stand outs are the luxury and the premium fashion sectors,” Mr Palmer said.

Despite the positive headlines, retailers say they are ‘cautiously optimistic’ in 2016. When questioned about risk factors for the coming year, similar to last year, real estate cost escalation (56 percent) and unclear economic prospects (42 percent) continue to be at the forefront.

Street shops, at 76 percent, and regional shopping malls, 72 percent, were cited as the most popular formats for expansion with an increasing number of brands looking to travel hubs.

One fifth of brands surveyed, largely from the Americas and EMEA, stated their intention to expand into travel hubs in 2016 as this will give them access to high footfall, highly frequented locations.

“The challenge now is for retailers to build an engaging offer that encourages people to stay longer and spend more,” Mr Starling said.

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Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association representing Australia’s $310 billion sector, which employs more than 1.2 million people. As the retail industry’s peak representative body, the ARA works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,500 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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