International expansion remains high on the agenda for retailers in 2015, in spite of uncertain economic prospects and cost escalation, according to CBRE Research’s annual “How Active are Retailers Globally?” survey. American retailers are among the most active, accounting for 16% of brands looking to expand overseas – tied with Germany and the U.K. and followed by Italy with 11%. Of those Americas brands, 43% are looking to Japan, China and Hong Kong as a top destination for expansion.
Globally, 47% of retailers surveyed 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 report reveals that Germany has retained its No. 1 position for the second consecutive year as the most targeted retail market in the world with 40% of retailers planning to open a store there in 2015. Germany is closely followed by the U.K., with 33%, and France, with 31%, of retailers. The U.S. is ranked seventh with 21% of retailers citing it as an expansion destination.
Global retailers continue to be attracted to Germany largely due to the opportunity to target more than 30 large cities with high purchasing power. The U.K. also continues to be a popular target for overseas retailers as demand for store space remains resilient, especially in London. France follows closely behind the U.K. attracting retailers due to its mature market with several strong cities and a large number of very successful shopping centers across the country.
The physical store remains the destination of choice for consumers as retailers continue to open stores in diverse locations, with 21% planning to open between one to five stores in the Europe, Middle East and Africa (EMEA) region, and 11% of retailers planning to open between one to five stores in North America 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.
“Given the ongoing challenges retailers face from cost escalation, successful delivery of omni-channel and changes in consumer behavior, it is increasingly important to have a strong network of stores to effectively represent their brand,” said Anthony Buono, executive managing director of retail services for CBRE. “Smart retailers recognize that the physical store environment delivers a culturally-important, positive experience for consumers and as such, will continue to open stores.”