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U.S. retailers lead expansion to new markets

by Released

Retailers’ expansion into new markets increased by 2 percent in 2016, down from 3.1 percent, according to CBRE Group Inc.’s 10th annual study of international retail expansion, which surveyed 166 cities across 51 countries regarding how many international retailers had debuted in their markets in 2016.

U.S. retailers were the most active by a wide margin, aided perhaps by the dollar’s strength relative to other currencies. Of all expansion at the city level, 21 percent was by U.S. retailers. The next most aggressive were Italian retailers at 12 percent, followed by French retailers at 11 percent.

The report cited retailers’ adjustment to the growth of e-commerce and shifting exchange rates as being behind the overall decline in global expansion.

“As e-commerce grows, retailers have become more deliberate and meticulous about how many stores they open and where they do so,” said Anthony Buono, chairman of CBRE’s global retail executive committee, in a statement. “Their global expansion favors the tried-and-true global gateway markets where they get the most exposure for their brands and access to huge populations with disposable income.”

The report revealed that Europe has expanded its dominance as the preferred new destination for expanding retailers. Forty-three percent of retailers’ global expansion into new cities in 2016 took place in Europe, up from 36 percent in 2015. Asia accounted for 28 percent of international retail expansion last year. The Middle East and Africa claimed 12 percent, and North America 11 percent.

CBRE attributed Europe’s strong showing to the fact that European retailers prefer to expand to countries within their home continent rather than in markets where currencies have become expensive, such as the United States.

In other key findings from the report:

  • Globally, coffee shops and restaurants are the hottest retail category for expansion into new markets, with retailers in that category accounting for 22 percent of all expansion at the city level. Next in line were specialty clothing stores (18 percent) and mid-range fashion stores (17 percent).
  • On the city level, Hong Kong remains the most popular destination for expanding retailers. Hong Kong’s retail rents are receding from their recent highs, allowing new entrants more affordable access to its retail real estate.
  • Toronto is the only North American city to crack the top 10 most popular destinations for expanding retailers, aided by its proximity to the United States and the underlying strength of its economy. Of the retailers who made their first foray into Toronto last year, 43 percent were from the United States.
  • New York City was the 27th most popular destination for expanding retailers, with 17 new entrants.

The top 10 cities that attracted the most new retailers in 2016 according to the report are listed below.

 

City

International Retailers Debuting in 2016

Hong Kong 87
London 65
Dubai 59
Doha 58
Tokyo 48
Singapore 46
Paris 36
Moscow 33
Toronto 30
Vienna 29

 

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