Poland is key target for Retailers in 2011

Research in global retail expansion unveiled at
CBRE’s Central and Eastern Europe Retail Seminar, Warsaw

Warsaw, 12 April 2011 – Poland was the only country in Europe to escape recession in 2010 and remains an attractive market for international retailers, according to the latest edition of How Global is the Business of Retail? by leading global real estate adviser CB Richard Ellis (CBRE).

CBRE’s annual survey - now in its fourth year - mapped the global store footprint of 323 of the world’s top retailers across 73 countries to identify trends in global retail expansion at national and local levels. The report found that although the global economy pulled out of recession in 2010, it remains a testing time for retailers, with consumer spending subdued in many markets and fewer new shopping centres making it more difficult for retailers to access prime space.

Despite these challenging conditions, global retailers have continued to grow their store networks in a wide range of international markets. Poland experienced strong growth in retailer presence, with 32% of all retailers now located there, up by more than 1.5%. With GDP expected to reach 3.4% it remains an attractive market for non-domestic retailers.

Occupier demand was highest in Warsaw where the amount of new space is limited and left some retailers frustrated in search for suitable space. Krakow directly benefited from this lack of available retail space in the capital, with eight new store openings in 2010 to rank joint third in CBRE’s top 10 of new entrants by city.

Magdalena Frątczak, Director of Retail at CBRE, commented: “Poland is a natural target for expanding retailers and saw a high number of new store openings in 2010, with retailers attracted to the high spend per head relative to other CEE markets. The biggest issue for retailers in 2011 will be accessing prime space as the pipeline slowed dramatically last year. With this in mind, some developers are now actively looking to redevelop and upgrade existing space to entice new retailers to the market.”

The United Kingdom (UK) maintained its position as the world’s most international retail market for the fourth year running, attracting 58% of all international retail brands surveyed. The UK is closely followed by the United Arab Emirates (UAE) with 54%, and the US with 50%.

Europe continued to dominate CBRE’s rankings of the most highly penetrated global retail markets, with the continent’s five largest economies all featuring prominently in the top 10 international retail destinations: UK (1st), France (4th), Spain (5th), Germany, (6th), Russia (8th), and Italy (10th). However, the top 20 is increasingly global as retailers target key emerging markets in addition to established retail destinations. Turkey experienced the largest growth in retailer presence in the past year, with 39% of all retailers surveyed now located there, up by 2.2%. Poland, Belgium, Egypt, Vietnam, Brazil and Mexico also saw retailers increase their presence by 1.5% or more.

International expansion remains a key strategy for retailers throughout the world, with 40% of new openings occurring outside the retailer’s home region. Even though the pace of expansion has slowed, with the overall store footprint increasing by 2% in the past year compared with 4% in 2009 and 12% in 2008, some 21 countries saw five or more new retailer entrants last year.

Peter Gold, Head of EMEA Cross Border Retail, CB Richard Ellis, commented: “Although the pace of growth slowed in 2010, retailers continue to grow their store networks in a wide range of international markets, targeting both mature and emerging countries. While it is clear that the globalisation process is ongoing, two factors will limit the rate at which retailers expand in coming years. Firstly, a limited pipeline of new space in many markets will restrict access to prime retail locations, and as a result, more retailers may look to grow their business via online platforms rather than expanding their physical store network.”

Looking at CBRE’s research into the online capabilities of retailers, 87% of retailers in Poland now have an online catalogue that can be browsed (joint 2nd position); however, just 24% of retailers can deliver to consumers who have bought goods online.

Magdalena Frątczak commented: “There are still significant opportunities for international retailers to increase their internet sales across Europe, particularly in the emerging online markets of the CEE region. Retailers are recognising the importance of a strong online presence to support their overall growth strategy. Many retailers have embraced online shopping and now view it as a key to optimise their turnover potential. The ability to buy goods online in Poland, in particular, is already well established, but there is plenty of scope for further growth.”

All the above trends and topics will be discussed at the CB Richard Ellis Central and Eastern Europe Seminar held in Hotel Intercontinental, which takes place on April 12 and is attended by leading managers representing retailers, developers, and investors.