Retailers eye expansion in Asia-Pacific despite slowdown
Up to 85 per cent of luxury fashion retailers are looking to expand and open shops in the Asia-Pacific region this year despite uncertain economic prospects, the CB Richard Ellis (CBRE) report, "How Active are Retailers Globally", said.
Apart from luxury fashion retailers, up to 67 per cent of coffee and restaurant operators are also interested in setting up operations in this region.
Physical stores remain the destination of choice for consumers, and in recognition of this, retailers are opening stores in different locations. Asia-Pacific has recently become one of the popular regions for store openings, and up to 43 per cent of the retailers are planning to set up shop in this region by the end of this year.
Jonathan Hsu, CBRE Asia’s head of occupier markets research, said that given the new challenges retailers face, from cost escalation, successful delivery of omni-channels and changes in consumer behaviour, it is increasingly important for them to have a strong network of stores to effectively represent their brand. The cost of opening a new store remains prohibitive, especially in prime areas, due to tight availability. However, rental growth will be slower this year, as retailers remain relatively cautious and take longer to make decisions on leases.
The new study reveals that Germany has retained its No 1 position globally for the second consecutive year as the most popular retail market in the world, with 40 per cent of retailers planning to open a store there in 2015. China with 28 per cent comes in fourth, while Hong Kong ranks sixth with 22 per cent of retailers targeting the region. Japan, South Korea, Australia and Singapore are also in the top 20 global destinations. Compared to 2014, retailers’ interest is more focused on developed economies in Asia Pacific.
However, retailers are most concerned about cost escalation and unclear economic prospects. Joel Stephen, CBRE Asia’s head of retailer representation, said retailers are selective in new openings in view of the rising costs of operation and occupancy costs. A more strategic approach towards portfolio management is needed and they are recommended to look for locations with a proven trading history, or well-located new projects developed and operated by reputable experienced landlords.
