As the World Flattens, Retail Goes Global: Report
- Mar 20, 2008
Retail is becoming more global by the year, and international markets present great opportunity for retailers looking beyond their home borders. That is a principal message of How Global is the Business of Retail?, a report published earlier this month by C.B. Richard Ellis Inc.’s European affiliates. “(While) there remain barriers to entry into new markets, the process of the (globalization) of retail is still in its early stages,” the study concludes. “Many more retailers will be establishing overseas operations over the next ten years.” To Anthony Buono, CB Richard Ellis’ executive managing director for retail, the survey suggests market-wide changes for a property type that in many ways has remained relatively unchanged during his 20-year career. “The reality is that retail has not matured a whole lot in that time, but it’s starting to,” Buono said. CB Richard Ellis’ survey of 226 retailers and the 61 largest retail markets with the greatest presence of international retailers found that the majority—60 retailers—operate stores in up to 15 countries. A quarter own locations in between 16 and 30 nations, and only 15 percent hang out their shingles in more than 30 countries. Among all categories, luxury retailers have the highest profile globally. Nearly 40 percent have established outlets in at least 30 countries, and 90 percent are in 10 or more markets. By contrast, only 60 percent of grocery, food and drink retailers, and 54 percent of clothing, footwear and accessories retailers, have set up shop in at least 10 markets. Meanwhile, department stores are lagging on the international front—only 5 percent are in 10 or more countries. Luxury retailers have an advantage in going global because they can succeed by opening low-volume but high-margin stores in select locations. Other retailers need multiple locations in a given country in order for the investment to pencil out, the report notes. In large part because the European Union members have lowered economic barriers and introduced the Euro as a common currency, European markets top the list of the most “international” retail locations. The United Kingdom took first place, with 55 percent of the 226 retailers surveyed. Following closely are Spain (51 percent), France (49 percent), Germany (47 percent), Italy (45 percent), and Switzerland and Austria at 42 percent. The United Arab Emirates took eighth place, with 41 percent of international retailers represented there, followed by the two rising economic powerhouses: China (40 percent) and Russia (39 percent). Despite its status as the leading retail market, the United States surprisingly only took 11th place, with 39 percent. The study explained that the strength of homegrown retailers makes it challenging for retailers outside the U.S. to establish a footprint. For U.S.-based luxury retailers, the growing wealth of Russia, China and India will make those nations natural growth markets, Buono predicted. Latin America has strong potential for growth in big box, home furnishings and value retail categories, he added.