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JLL announces Europe’s retail gateway cities in its latest retail report: Destination Europe 2015
London is the most attractive European location for international retailers according to a new cross-border retailer index compiled by global real estate adviser JLL.
The index, launched today in a new report entitled Destination Europe 2015 analyses the expansion and presence of 250 international retailers across 57 key retail markets.
Europe's retail powerhouses continue to surge ahead "For international retailers looking for springboards into Europe, London leads the pack. Its retail market size, maturity, high degree of market transparency and retail friendliness make it a magnet for international retailers who are willing to pay a premium for the best locations. Other major global and mature European cities with similar appeal including Paris, Milan, Rome and the main German retail cities have similarly benefitted from international retailers' thirst for growth and have attracted new brands despite continued headwinds plaguing Europe's economy," according to James Brown, Head of EMEA Retail Research & Consulting at JLL.
London has also increased its lead on Paris as the most attractive destination for luxury retailers in Europe. The report shows that there is clear water between these two world-renowned retail locations and the rest of Europe. This goes some way towards demonstrating the value luxury retailers place on having presence in iconic retailing locations and the scarcity of supply. As a consequence, retail space in New Bond Street can command the most expensive headline rents in Europe at €12,300 per sq m per year - an astonishing 42% growth on the levels achieved in 2012.
Bucharest ranks 30th in the top retail destinations
Carmen Ravon, Head of Retail Agency at JLL in Romania said: "Destination Europe 2015 study places Bucharest on the 30th place among the most attractive cities in terms of the interest of international retailers for expansion outside their home country. It is considered a city with high growth potential and is ahead of cities in the region such as Bratislava, Zagreb, Belgrade and Ankara and at very short distance behind Budapest. The top is led by London, followed by Paris and Moscow.
When referring to the origin of brands that are expanding in Europe, USA come first (with brands like Tommy Hilfiger, Timberland, Foot Locker, Claire's, Starbucks), followed by Italy (Benetton, Diesel, Max Mara, Geox, Calzedonia), UK, Germany, France and Spain.
In terms of retail coverage, Zara and H & M are present in all the 57 key countries under analysis, including Romania. Top 25 of the brands with the largest network in these countries is dominated by brands considered mass-market or mainstream (such as those mentioned above as well as Mango, Desigual, Tommy Hilfiger, Benetton, Timberland)" says Ravon.
As regards to luxury brands, Romania occupies an honourable place 25 in terms of their interest to have stores in Romania, says Carmen Ravon. "The top includes retailers that are already present but also those with potential to enter Romania with mono-brand stores: Louis Vuitton, Max Mara, Emporio Armani, Gucci, Mont Blanc, Hermes, Burberry, Cartier, Longshamp, Chanel, Prada.
As a conclusion, given the encouraging predictions related to the medium-term sales growth in CEE, including Romania, we have witnessed an increase of the number of new international brands entering the market in the last two years, whether they came directly or through a franchise. We are now discussing with other mass-market retailers, or from luxury and food sectors, that are considering expanding in Romania in 2015-2016, "said Carmen Ravon.
Retailers looking for new points of entry
James Dolphin, International Director, EMEA Retail Agency at JLL said: "Opportunities for expansion and entry into European markets are not limited to the global and mature markets; Moscow is growing and catching up fast, and may reach parity with Paris in the medium term in regard to international retailer presence."
The transitional markets of Moscow (3rd) and Istanbul (7th) have become Europe's retail success story - no two cities have attracted as many new entrants over the past two years. Despite the increased levels of geo-political risk, Moscow's retail market is thriving upon its sheer market size, fast rising levels of disposable incomes and rapidly growing shopping centre stock. Istanbul's retail market is also revolutionising at great speed. Attracted by its modern high quality shopping centre stock such as the Zorlu Centre and the announcement of Galeries Lafayette anchoring Emaar Square, an increasing number of retailers are considering Istanbul as a first point of entry to Europe.
"Further down the rankings, there are still plenty of strong retail markets which, despite healthy fundamentals and market opportunity, remain relatively untapped from an international retailer perspective. Examples include some of the larger UK and French regional cities and the Scandinavian markets," adds Dolphin.
Retailers show appetite for expansion
In comparison to Destination Europe 2013, a shift has occurred whereby mainstream and premium retailers have generally expanded at a faster rate than established luxury retailers, and therefore have moved up the rankings. H&M joins Zara as the joint leaders of the retailer coverage league, with 100% presence across the 57 key European markets. They are followed by Mango and The Body Shop in the rankings.
The US, driven by expanding premium retail brands, has overtaken Italy as the largest exporter of cross border retail fascias in Europe. The most expansive retailer in our sample is the American premium retailer Michael Kors, followed by Superdry, Cos and 7 For All Mankind*. In addition, many European retailers have also shown impressive expansion in the past two years, including Ecco and Hugo Boss. Looking to the future, an influx of brands is expected to enter the European market from the Asia-Pacific region.
Commenting on the outlook for retailers in Europe, Brown observed: "While the recovery is certainly multi-speed in nature, Europe's retail sales growth outlook is the brightest since the start of the decade. We expect international retailer expansion to continue its momentum across the key European retail markets; however physical expansion is more careful, more considered, and more selective than ever before, as sweeping structural changes further redefine retail and retail places. A consequence of this is considerable churn in retail stores in the European market. As a general rule, in the last two years, for every two stores opened, one store has closed down as retailers seek to work their stores harder and smarter."
Head of Retail Agency
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