Unfazed by e-commerce, retailers expand

04 Mar '16

4 min read

Growing online sales will not deter retailers’ physical store expansion plans in 2016, according to global real estate services company CBRE. Its report in its seventh edition of ‘How Active Are Retailers Globally?’, is based on a study of over 150 major international brands based in Americas, Asia Pacific and EMEA.

European countries dominate the target destinations this year, but China is the top target market in APAC and the fourth most popular globally, with 27 per cent of retailers looking to expand there. This is followed by Hong Kong in sixth position (24 per cent), Japan in seventh (22 per cent) and Singapore in ninth (21 per cent). The top three globally were Germany (35 per cent), France (33 per cent) and the UK (29 per cent).

While China and Hong Kong maintained fourth and sixth place, respectively, Japan (seventh), Singapore (ninth) and Australia (11th) all rose higher in the ranking, up from 13th, 18th and 15th positions, respectively

Most APAC markets saw increased interest for 2016 vs 2015, with the exception of China and South Korea which softened somewhat Meanwhile, interest in Southeast Asia surged, with Malaysia (10 per cent), Indonesia (9 per cent), Thailand (8 per cent), Vietnam (8 per cent) and the Philippines (8 per cent) all receiving more than double the interest they saw in 2015, when all markets secured between 1-3 per cent.

When questioned about the risk factors for them in the coming year, brands indicated that real estate cost escalation (56 per cent) and unclear economic prospects (42 per cent) continue to be on top of their minds.

“We’re seeing more of a challenging economic environment, and concerns such as high operating costs and a lack of quality space means retailers are somewhat more wary this year. However, even as markets such as China and Hong Kong are seeing a slowdown, we see increasing numbers of opportunistic retailers looking to enter markets like Hong Kong, supported by strong underlying consumer demand. Japan and Australia remain attractive, while Southeast Asia showed strong growth due to opportunities for retailers around an expanding middle class and stronger economic growth,” said Dr Henry Chin, CBRE’s Head of Research, Asia Pacific.

“There are still opportunities for retailers to grow their business in the Asia region - as underscored by the region having four of the top ten most popular destinations worldwide. The goal now for all brick and mortar retailers is to build an engaging offer that encourages people to stay longer and spend more,” said Joel Stephen, Senior Director and Head of Retailer Representation, Asia at CBRE.

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