Large scale expansion is still on the agenda for international retailers next year, in spite of the challenging consumer environment and an increasing share of shopping being done online, according to new research from CBRE. Nearly three quarters of international retailers (71 percent) are planning to open more than five stores in the Europe, Middle East and Africa (EMEA) region by the end of 2012, with 20 percent of retailers looking to open 40 stores or more in 2012 compared to 18 percent in 2011. The CBRE's annual research report titled “How Active are Retailers in EMEA?” showed that retailers are targeting a wide range of countries in both mature and emerging markets in 2012, but are largely focused on opening stores in countries where they already have a presence - a similar strategy to that adopted in 2011. The Middle Eastern markets of Saudi Arabia, Kuwait and Qatar have seen a significant increase in retailer interest compared to last year, with 15 percent or more of the surveyed retailers targeting these countries in 2012. High levels of wealth, more robust economies than those in Europe, and a relative lack of international brands are proving an attractive combination for retailers looking to grow their businesses. New shopping centre development is also allowing retailers to realize their expansion ambitions. Although retailers have been targeting a wide variety of markets they are still seeking to minimize risk. More than half of retailers (52 percent) are aiming to open stores in new cities, but in markets in which they already have a presence - a similar proportion to last year. The number of retailers planning to open additional stores in existing cities is also up from 9 percent last year to 17 percent this year, as retailers focus on the markets they know best. In spite of this caution, almost a third of retailers (30 percent) intend to enter new markets in 2012 - a similar proportion to last year's survey. Peter Gold, Head of Cross-Border Retail - EMEA, CBRE, said: “Retailers have had to cope with a more challenging consumer market than expected in 2011 and adopting a cautious approach to expansion has proved to be sensible call. The eurozone crisis has affected investment decisions in all industries, with retail no exception; however, this has not stopped retailers seeking new opportunities in 2012. Far from it, expansion plans for 2012 are just as extensive as they were in 2011. “More than ever, retailers are prepared to cross borders to grow their business, seeking out the best locations in the major cities - the country is arguably less important. This is partly a result of current economic challenges, with retailers focusing almost exclusively on prime locations, but it also suggests that retailers have confidence that their brand can succeed in a range of diverse markets. While economic uncertainty persists, occupier demand remains firmly focused on prime retail space and there is little evidence that this will extend to more secondary locations. With virtually no vacancy in prime retail locations, and little new development, the challenge for many retailers is accessing the space they require.” For the first time, Italy leads the way as the most targeted country for retailer expansion moving up from eighth place in last year's rankings. Italy is followed by Germany, Russia, Spain and France, to make up the top five 2012 retailer hotspots, with more than 30 percent of retailers targeting each country. In recent years, retailers have focused on Germany, the United Kingdom, France and Spain, but many are now searching for new opportunities. Although the prospect for consumer spending growth in Italy is modest, there is a clear opportunity for retailers to expand into a market that is under-represented in terms of international brands and where a considerable amount of new retail development is taking place. Germany's relatively strong economy continues to attract new retailers, while Russia has moved up from sixth position to third on the back of a strong economy and the prospect of further growth in consumer spending. Value and denim is the most active sector, with retailers aiming to open an average of 36 stores in 2012 (up from 30.3 last year). Faced with falling disposable incomes, many consumers are choosing to trade down and value retailers are taking advantage of this situation to grow market share. Despite the turbulent economic times, the luxury & business fashion sector is also doing well and the sector is planning to open an average of 15.1 stores in 2012, representing a slight increase over their plans for 2011. Retailers such as LVMH (which includes the Louis Vuitton brand) and Burberry recently announced strong sales growth and the sector as a whole is increasingly targeting major cities in emerging markets. In contrast, consumer electronics retailers were the least expansive, and are planning to open half the number of stores compared to last year. This is no surprise as consumers cut back purchases on large ticket items.
