Global retailers target Asia, Middle East

03 May 2010

LONDON: An increasing number of the world's biggest retailers are seeking to enhance their position in key emerging markets in Asia and the Middle East.

CB Richard Ellis, the real estate specialist, assessed the current reach of 294 multinational retailers, and based its findings on 69 countries across the globe.

It reported that 58% of these companies had established a presence in the United Kingdom to date, as the country retained its pre-eminence on this measure for the third successive year.

The United Arab Emirates followed in second on 54%, climbing one place from the same poll in 2009, a trend which worked against the negative impact of the financial crisis on the domestic fiscal climate.

"Despite the much-publicised economic challenges in the Middle East, this region is fast becoming a prime spot on the global retail map," Peter Gold, head of EMEA cross border retail at CB Richard Ellis, said.

By contrast, the US dropped one spot to third on 51%, having also experienced a sharp drop off in consumer confidence during the downturn.

France took fourth on 50%, while China entered the top five for the first time on 47%, rising two positions having attracted heightened attention from major players in almost every category in 2009.

The dominance of Western Europe was demonstrated by the presence of Spain, Germany and Italy in the top ten, although they were joined in this group by Saudi Arabia and Hong Kong.

Kuwait and Russia were the other countries to deliver a penetration rate of over 40%, falling to 39% for Japan and 38% for Singapore.

More broadly, 49% of the retailers featured in the report were active in Europe, Asia and North America, although their individual footprints "varied widely".

The most expansive operators were running outlets in at least 60 countries and 170 cities, while those with the most concentrated networks were present in ten nations and 15 cities.

By sector, luxury retailers continued to extend their reach in Asia last year, a trend that applied across almost all different formats in this region.

Apparel, luxury and business-orientated chains showed the most interest in the Middle East, with Dubai being one specific target for many brands.

By contrast, the majority of new openings in Central and Eastern Europe were made by value and mid-range retailers, CB Richard Ellis reported.

"Emerging markets ... continue to play a critical role in the global expansion strategies of international retailers," said Gold.

"The inherent medium-term growth potential of many emerging markets remains a key strategic magnet, helped by the fact that in some cases these markets have as yet only been targeted by relatively few international brands."

One obstacle to further growth, Gold added, was the slowdown in the development of new retail space and shopping centres in many countries following the onset of the recession.

Data sourced from CB Richard Ellis/Financial Times; additional content by Warc staff