UK named most popular EMEA destination for retailers looking to expand

By

Barbara Santamaria

Published
Mar 22, 2017

The UK has taken the top spot as the most attractive retail market in Europe, the Middle East and Africa, ahead of France, Germany and the UAE, according to new research from global property advisor, CBRE.

Despite political and economic uncertainty, the UK leads the way as the most popular destination for retailers looking to expand with 65% of retailers citing the country as their target market for expansion.

France (43%) was named the second most attractive retail market, followed by Germany (38%) and UAE (24%). Spain, the Netherlands and Hungary round up the top five with 19% each.

But while these markets may offer great opportunities for expansion, the majority of retailers (57%) are concerned about rising real estate costs and lack of quality retail space (51%).

The results also reveal that businesses are taking this year a more cautious approach to their growth plans with the amount of retailers with large-scale expansion plans in 2017 expected to slow down. 70% of retailers expect to open 10 stores or less across EMEA by the end of the year, while 51% are planning to open no more than five.

“Our research shows that retailers are committed to opening new stores and that the UK remains an attractive destination for retailer expansion. However, finding quality retail space in the right location remains a challenge and this has been a consistent rental driver in some of the most prime retail areas across EMEA pushing some of the traditional European retail Centre’s to large rental growth throughout 2016. There is little expectation from retailers that this lack of quality space in key Western markets is likely to decrease in 2017”, commented CBRE head of UK & EMEA research Andrew Phipps.

Street shops and regional shopping centres remain the most popular formats for expansion with over 80% of retailers choosing these methods of growth. But the role of the physical store is changing, says CBRE, with a number of retailers believing that the growth of online retail will reduce the need for a large store network.

Despite this, retailers believe that changes in consumer shopping will allow them to generate the same level of sales with fewer stores, possibly by using stores to offer experiential retail.

In line with this, a third of retail brands said they have or are looking at implementing interactive displays and fitting rooms in store, a trend that looks set to be popular in 2017.