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1 August, 2014

While the amount of global cross-border retailer activity is increasing, the map of target markets changes. In this scenario, both the UAE’s and Vietnam’s capitals emerge as some of the favourite destinations for the global retail business.

According to CBRE’s latest report titled ‘How Global is the Business of Retail?’ overall cross-border retailer activity accelerated in 2013 with the number of new entrants at city level up by 30%. As an increasing number of retailers are seeking to expand into new markets, Abu Dhabi becomes the fourth most sought after market globally while Hanoi (Vietnam) was the most sought after emerging market in 2013.


The globalisation of the retail sector continues, even though the pace of growth amongst the world’s leading retailers has slowed, per the CBRE report. Over half of the retailers surveyed (51%) are now present in each of the Americas, Europe, Middle East and Africa (EMEA) and Asia Pacific, compared with 50% in 2012. A further 20% are present in two regions and just under a third is present in one region only.

Retailers from the Americas are by far the most global with 80% of them present in all three regions, up from 77% in 2012. The proportion of EMEA based retailers in all three regions (48%) has not changed significantly. Nevertheless, their global footprint remains far more extensive than retailers based in Asia Pacific of which only 25% are present in all three regions.

The overall footprint of global retailers at country level grew by 1.7% in 2013. Retailers from the Americas have been the most expansive in recent years and this trend continued in 2013. The country footprint of retailers based in the Americas grew by 2.9% last year compared with 1.8% for Asia Pacific based retailers and 1.3% for EMEA based retailers.

CBRE say that the rate of growth declined slightly in all regions as many of the world’s largest retailers have now built a presence in the markets they want to be in. Nevertheless, they continue to grow their store portfolios. At city level, retailers based in the Americas were again the most expansive, growing their footprint by 2.7%.


Retailers targeted a wide range of locations in 2013 with 136 (83%) of the 163 cities surveyed seeing at least one new retailer entrant last year, the CBRE report states. The vast majority (90%) of the top target markets were cities that already have a high number of cross-border retailers. Some retailers are refocusing their expansion plans on the world’s major retail destinations, including recovering European markets and Asian and South American cities where international retailers are still under-represented.

Paris was the top target market last year with 50 new entrants, most of which were smaller European based brands. Tokyo moved into second place with an upturn in economic prospects attracting 48 new entrants, followed by Hong Kong with 43 new entrants and Abu Dhabi with 42 new entrants. Berlin was in fifth place with three other German cities (Frankfurt, Munich and Cologne) also featuring in the top target markets.


Abu Dhabi, the 4th most sought after market globally, has previously lacked a luxury shopping destination but the opening of The Galleria, a 33,000-square metre upscale shopping and dining destination, has now redefined the retail platform in the city. The Galleria’s glamorous concept and prime location within Al Maryah Island has provided the first genuine upscale retail hub in the capital, and as a result a high number of new luxury international brands have been attracted to Abu Dhabi. The new centre attracted most of the new entrants to this city in 2013 making it the fourth most sought after market globally.

“The majority of existing centres in Abu Dhabi cater to the low, middle and upper middle segments of the market. Whilst these malls do have a high-end component, still they focused towards a lower offering than is prevalent in neighbouring Dubai. With the opening of more luxury and lifestyle retail destinations, Abu Dhabi is set for retail transformation and become a leading luxury retail destination to shop, dine and unwind. The strong commitment shown by globally known high-end retail operators reflects their eagerness to have their presence in the UAE’s capital,” says Natasha Patel, Associate Director, EMEA, CBRE.


Vietnam’s capital Hanoi was the most sought after emerging market in 2013 with 27 new market entrants. Luxury & Business Fashion and Coffee & Restaurant operators were the most active sectors. Newly arrived high end retailers such as Omega, Rolex, and Ermenegildo Zegna targeted Trang Tien Plaza, which reopened in early 2013 after a major renovation. Many of the food and beverage and low-to-mid-range fashion retailers took space in Vincom Mega Mall Royal City (230,000 square metres), the most high profile of a number of centres that recently opened in suburban Hanoi.

What makes this city attractive to global retailers? According to CBRE, it’s a result of a number of factors that characterise Vietnam’s socioeconomic situation, such as stable growth of GDP, growing levels of disposable income, large and young population, and foreign direct investment relaxation on wholly-owned retail in 2015.

“Besides, more quality retail space supply is the key factor why Hanoi can rank into the top markets for new entrants,” further explains Natasha Patel.


Although cross-border retailer activity among the world’s leading retailers is slowing, CBRE’s research shows that the amount of retailers expanding into new markets is increasing, quite substantially. Given this, the internationalisation of the retail sector is set to continue apace.
Emerging markets have led cross-border retailer expansion in recent years with Asia Pacific still providing the biggest opportunities, particularly in the major cities of South-East Asia and in the Tier 2 cities in China. But the improving economic prospects in Western Europe and North America will see more retailers targeting mature markets in coming years. The evidence of this was already seen in 2013 with Paris, Tokyo, London and Berlin in the top six most sought after cities and France topping the new entry ranking at country level. Retailers are also becoming more global in their outlook.

Speaking on the highlighted top markets, CBRE predict further success for the UAE’s capital as global retail destination.

“The high per capita income, growing population and rising influence of the tourism market make Abu Dhabi an attractive and conducive place for retail operators. These are major contributory factors in the increasing propensity for retail spending. This is further substantiated by the apparent lack of retail offerings both in quality and variety of brands,” comments Natasha Patel.

Hanoi with its stable GDP growth that is expected to pick up in the near future has a promising perspective too. The overall level of cross-border retailer activity in Vietnam, which is a target market for retailers expanding into 2014, is expected to gather pace following the liberalisation of FDI in wholly-owned retail businesses in 2015.

Whilst there are many reasons to be optimistic about cross-border retailer activity in 2014, CBRE consider that international expansion is not a panacea for running a successful business. The cost of setting up in a new market is a major barrier to entry in some markets, as is the ability to access the right type of space. The global economy may be picking up, but retailers are still developing their multichannel strategies and are not about to abandon their cautious approach to store expansion. Taking time to find the right type of space will be as important as ever, conclude the analysts.