Tokyo is the world’s hottest market for retail expansion, attracting 63 new brands last year as leasing momentum in core areas remained strong, despite mixed signals in the economy and an increase in the sales tax to 8% in April 2014, according to the latest report from CBRE Group Inc., “How Global is the Business of Retail?” Toronto stood out as the hottest market in the Americas, attracting 25 new international brands in 2014.
According to the report, which tracks the target markets of new brands in 164 cities in 50 countries, U.S. retailers are the most active when it comes to expanding into new global markets. In 2014, U.S. retailers accounted for 26 percent of cross-border expansion. Primary expansion targets for Americas retailers are Asia (41%) Europe (33%), and the Middle East and Africa (12%).
Italian retailers were the second most active, accounting for 14% of cross-border expansion, followed by U.K.-based retailers (11%) and French retailers (10%). Globally, Europe accounted for 42% of retailer expansion, followed by Asia with 39% and the Middle East and Africa with 10%. North America was only a target for 3% of retailers.
“The core elements of globalization, technology and demographic change, continue to have a dramatic impact on the business of retail. Demographic shifts in many countries have resulted in changes in both spending power and shopping habits. Technology enables retailers to enter markets and evaluate performance more swiftly,” said Brandon Famous, senior managing director of Retail Occupier Advisory & Transaction Services for CBRE. “Consumer traveling patterns mean that many brands are well known before they even enter a market and the pent-up demand for the chance to purchase locally creates a ready-made market before entry.”
Among the most active retail sectors globally, midrange fashion retailers led the field, accounting for 21% of global expansion, followed luxury/business retailers, with 20%, and coffee/restaurant and specialist clothing, each with 16%. When it comes to expansion into the Americas, luxury/business retailers were the most active at 26%, followed by midrange fashion representing 20% of total activity, and specialist clothing representing 14%.
“Consumers continue to view the physical store as their preferred mode of purchase and perhaps more importantly, as a point of social interaction,” Famous added. “Consumers view shopping as a leisure activity and the continued expansion of brands and the development/improvement of shopping locations gives them the opportunity to embrace this.”