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The 250 most renowned retailer brands and their presence across the key European cities
Foreword
Our 2009 report, Cross Border Retailing in Europe, explored the international expansion of retailers into country markets. This report examines, for the first time in detail, the expansion and presence of international retailers in the key, leading European retail cities. Using our unrivalled knowledge and insight into retail markets, in conjunction with our network of local offices, we have analysed the presence of the 250 leading international retailers across Europe. Our research covers 55 key European markets, as identified within our 2011 Retail City Profiles, and two new retail markets in Eastern Europe (Belgrade and Bratislava). International retailer road mapping is becoming increasingly focussed on cities, as cross border barriers fall and as retailers chase diversification and growth. Whilst retail is becoming increasingly international, at the same time, retailers are under growing pressure to improve profitability and margins, which often means rationalising portfolios and sifting out non-performing stores. Expansion remains firmly on the agenda however. Factoring in the continuing challenging economic conditions for retailers across Europe (with little sign of the headwinds abating), and the structural changes to the industry resulting from the rise of multi-channel retailing, it is clear that any expansion needs to be careful, considered, and selective. The relative attractiveness of cities to international retailers is based on a combination of numerous complex factors; market size, maturity of market, resilience and growth prospects, adjacencies and market familiarity, competition, real estate transparency and risk. This puts a premium on expert advice from professionals that live and breathe retail, and have access to the scale and breadth of data to enable them to provide accurate, holistic advice across Europe and beyond. Jones Lang LaSalles pan-European Retail team now consists of 1,000 dedicated retail staff, across 76 corporate offices in 31 countries. The goal of each is to provide a truly integrated service across the EMEA region, creating a competitive advantage for our clients, applied directly to their individual real estate decision-making needs, through the use of accurate data, market knowledge and forward-focused thinking. We hope this report proves to be useful and insightful, be you retailer, investor, developer or landlord. Whilst retail undoubtedly faces challenges, clear new opportunities are still emerging. James Dolphin James Brown Head of EMEA Head of EMEA Retail Retail Agency Consulting and Research
Westfield Stratford City
Mainstream
Premium
Luxury
1 2 3 4 5 6 7 8 9 10
London Paris Moscow Milan Madrid Rome Munich St Petersburg Prague Barcelona
235 217 196 174 168 151 146 142 140 138
London Paris Moscow Milan Madrid Rome Munich St Petersburg Prague Barcelona Istanbul Berlin Hamburg Vienna Amsterdam Frankfurt Athens Antwerp Warsaw Lisbon Dsseldorf Brussels Zurich Kiev Stockholm Dublin Cologne Valencia Budapest Bucharest Zagreb Lyon Copenhagen Manchester Bilbao Marseille Turin Seville Glasgow Stuttgart Bordeaux Lille Liverpool Belgrade Oslo Birmingham Ankara Bratislava Luxembourg Leeds Helsinki Cardiff Belfast Gothenburg Nottingham Edinburgh Malm
1 2 3 4 5 6 7 8 9 10 11 12 13 14= 14= 16= 16= 18 19= 19= 19= 22 23= 23= 25 26= 26= 28 29 30 31 32= 32= 34 35 36 37= 37= 37= 40 41 42 43 44 45= 45= 45= 48 49= 49= 51 52 53 54 55 56 57 0 50 100 Index 150
Average
2. Retailer Presence
London tops the international retailer league
London is the most attractive location for international retailers, based on the presence of the top 250 international retailers in the key European retail markets. The UKs capital is differentiated by its retail market size and maturity, as well as the high degree of market transparency, which together have resulted in a long history of success for international retailers. This year we have seen a number of new brands coming to London, from Rag and Bone and Victorias Secret from the US, to Bosideng from China. Major European cities are first ports of call for international retailers, and London, which is a particularly retail friendly market, leads for many as the springboard to Europe. Other European cities successfully attracting international retailers include the core established retail markets of Paris, Milan, Madrid, Rome and Munich. A pick-up in retailer expansion has also been observed recently in other regional cities in Germany and the Benelux countries. After entering core major markets, retailers are selectively expanding into regional cities, then into growth markets. Borders are becoming less of a barrier, and retailers are capitalising on new growth opportunities. We have also observed the burgeoning success of the emerging growth markets of Moscow, St Petersburg, Istanbul, Prague, Warsaw and Kiev. With a patchy and subdued growth outlook for some Western and Southern European markets, Eastern Europe provides some attractive expansion opportunities for retailers with established and successful retail businesses. Further down the rankings, there are still plenty of strong retail markets across Europe, in particular some of the larger UK regional cities and the Scandinavian markets, which despite market opportunity remain relatively untapped from an international retailer perspective. The trend towards increased penetration of international brands across Europe will accelerate over the coming years, as expansion strategies for many retailers focus on top tier cities. Retailers with a strong and translatable proposition should explore international expansion, whilst appreciating and mitigating the risks. For now, however, London remains number one, Paris is in second place, but Moscow in particular, is catching up fast.
Jason Hawkes
St. Petersburg
Moscow
1 19= 9
Paris Prague Warsaw
23=
Kiev
2
Milan
Munich
Madrid
Rome
11
Istanbul
London
RANK 1
Paris
RANK 2
London ranks as the most attractive location for international retailers in Europe. It attracts international brands for a number of reasons, including: size, maturity and transparency of the retail market, in addition to the track record of retailers who have successfully opened here. The four main shopping areas, Oxford Street, Regent Street, Bond Street and Covent Garden, collectively form the largest concentration of retail in Europe. The opening of the two Westfield shopping centres has also been the catalyst for a number of new entrants into the London market, which continues to dominate the UK retail market, driven in part by tourist spend. London is a retail friendly market and will continue to act as an entry point to Europe for international brands. This year we have seen a number of new brands coming to London, from Rag and Bone and Victorias Secret from the US, to Bosideng from China.
Paris is the second most attractive location for international retailers in Europe. Paris is one of the worlds leading tourist destinations and, along with London, one of the strongest global retail locations. It continues to attract the biggest international and national brands that inevitably look to the city to open flagship stores, in particular the premium and luxury brands. Both shopping centres and high streets are attractive to the city shoppers, with centrally-located Parisians preferring areas such as the ChampsElyses, Opra and Boulevard Haussmann, while those living on the periphery tend to migrate to suburban shopping centres Rosny 2 or Velizy 2. The Champs-lyses, the most expensive retail location in France, has recently welcomed such new tenants as Abercrombie & Fitch, Marks & Spencer, and Banana Republic. Other recent new entrants include Calzedonia, Forever 21, Aldo and Intimissimi.
Rome
RANK 6
Milan
RANK 4 Milan is the fourth most attractive location for international retailers in Europe, and is the industrial, commercial and financial capital of Italy, with an economy dominated by the service sector. Milan is also one of the worlds most famous fashion centres, and is a particularly strong premium and luxury retailer market. The city centre boasts a large retail floor space, although there are no shopping centres in the central areas of the city. The city centre comprises two distinct but very affluent shopping areas; the first, with a very upmarket emphasis, is located around Via Montenapoleone, the second is the more mainstream area around the Piazza del Duomo, including Vittorio Emanuele II. Recent entrants to the market include Cos, Agent Provocateur and Just Cavalli.
Rome is the sixth most attractive location for international retailers in Europe. The Italian capital attracts millions of tourists every year, and the retail market has been dynamic in recent years. Several large out-of-town shopping centres have opened recently, but the high street has maintained its pre-eminence for both local and international shoppers. The areas around Piazza di Spagna and Piazza del Popolo in the old town are traditionally the most sought after. Via Condotti and Via del Babuino are also considered prime locations. In terms of shopping centres, Porta di Roma (North Rome) and Roma Est (East) remain the best performing schemes and each feature some important flagship stores. Recent international retailer market entrants include Superdry and Deichmann.
Madrid
RANK 5 Madrid ranks as the fifth most attractive location for international retailers in Europe. Being the capital and largest city in Spain, Madrid draws upon a large consumer base, which is among the most affluent in the country. It is also a transport hub, and as such a magnet for tourist and business travellers. The Madrid retail market appeals to a wide audience and many of the top fashion brands have their flagship stores here. Preciados is the prime high street, and the most famous retail location in Spain. The main city centre shopping centres are La Vaguada and Parquesur. The stretch of Ortega y Gasset between Serrano and Velazquez Street is the prime area for luxury brands. Recent international retailer market entrants include Tiger of Sweden, Hollister, Apple and Agent Provocateur.
Munich
RANK 7 Munich ranks as the seventh most attractive location for international retailers in Europe. The Bavarian state capital is the top retail location in Germany, and retailers are queuing up for units in good positions. Retail spend per capita in Munich is among the highest in Europe, and a strong tourist market also helps to buoy the local economy. Kaufingerstrasse, Neuhauser Strasse and the area around Marienplatz are the prime high street locations, with the best performing centrally-located scheme being Fnf Hfe. Maximilianstrasse is the home to most luxury retailers in the city. Recent international retailer market entrants include Tory Burch and Woolrich.
Cross Border Retailer Index Rank vs. Retail Sales Growth Forecast
Source: Jones Lang LaSalle, Oxford Economics (Belgrade data unavailable)
Milan
Madrid Rome
St Petersburg
Barcelona
Athens
Dsseldorf
Cologne
Bucharest
Manchester Glasgow
Seville Stuttgart
Turin Bordeaux
Lille
Key: Country Level Retail Sales (2011)
Oslo Ankara Helsinki Luxembourg Cardiff Belfast Nottingham 0 10 Gothenburg Edinburgh Malm 20 30
Leeds
Under 50bn
50bn 100bn
100bn 200bn
200bn 300bn
300bn 400bn
Over 400bn
-20
-10
Moscow
RANK 3
Prague
RANK 9 Moscow ranks as the third most attractive location for international retailers in Europe. Russia is predicted to become Europes leading retail market, with disposable incomes increasing rapidly and a burgeoning middle class. Moscows high overall ranking in our Index is due mainly to the high penetration of mass retailers in the city. There are over 80 shopping centres in the Moscow region (with a further estimated 320,000 sq m in the pipeline), in addition to some prominent areas of high street retail. Tretyakovsky Proezd is the main luxury street, whilst the GUM and TSUM areas, in addition to Petrovka and Stoleshnikov Lane, also host luxury brands. The main streets for local and international mass market brands are Tverskaya, Novy and Stary Arbat. Recent entrants into the market include; American Eagle, Victorias Secret, American Apparel, Ben Sherman, Koton, La Senza, Mac Cosmetics, Marlboro Classics, Okaidi and Warehouse. Prague ranks as the ninth most attractive location for international retailers in Europe. The Czech Republic capitals retail market is dominated by shopping centres. Nov Smchov shopping centre is located on one of the busiest transport hubs in Prague, helping make it the best performing centre in the city. The prime high street locations are concentrated in two places; the area around Na Pkop provides the mass retail offer, and includes four shopping galleries. Pask Street is home to luxury brands such as Louis Vuitton and Herms, and offers a smaller number of shops in a more intimate atmosphere. Recent entrants into the market include Carpisa, Aldo, T.M. Lewin, Desigual, Tiffany & Co, Jimmy Choo and Parfois.
Istanbul
RANK 11 Istanbul is the eleventh most attractive location for international retailers in Europe. Turkey is the seventh largest organised retail market in Europe, with a total leasable area of 8.3 million sq m across 332 shopping centres. Approximately 2.6 million sq m of leasable space is currently under construction, with Istanbul accounting for almost half of this total. The huge market of approximately 13.3 million consumers in Istanbul is viewed by many retailers as the perfect gateway to the Middle East and Caucasus region. Istanbuls retail market is revolutionising itself at great speed, with significant quantities of modern shopping centre stock coming online. The importance of shopping centres in the market is growing, with the likes of Forum Istanbul and Istinye Park trading particularly well. This will be further fuelled by the huge development pipeline, and in particular the imminent opening of several landmark schemes, including the Zorlu Center and Emaars Boulevardi. Istanbuls retail culture is still mostly dominated by the high street, however, with Istiklal Street the dominant mass market location on the European side, along with Niantai district, which caters for luxury brands. On the Asian side, Bagdat Street is the most well-known and popular area, featuring a range of local and international brands. Recent entrants into the market include Aeropostale, Carluccios, Zadig&Voltaire, Promod and Gymboree.
Destination Europe 2013 | 17 |
St Petersburg
RANK 8 St Petersburg is the eighth most attractive location for international retailers in Europe. St Petersburg is the second largest city in Russia, and a major financial and industrial centre. Consumer spend is divided between out-of-town regional shopping centres and the city centre, which is skewed towards mass-market and premium brands. Nevskiy Prospect is the historic centre of the city and the most popular street, providing a large variety of mass market shops. Premium brands are found mainly in multi-brand chain stores. 2010 brought long-awaited large new schemes to the market, Galeria and Nevskiy Centre, and there is a further estimated 425,000 sq m in the pipeline. Recent entrants into the market include Chanel, Guess, Mac Cosmetics, Marlboro Classics, Sephora and Trussardi Jeans.
| 16 | Jones Lang LaSalle
Warsaw
RANK 19=
Warsaw ranks as the equal nineteenth most attractive location for international retailers in Europe. The retail landscape in the Polish capital is dominated by shopping centres, a reflection of the shopping patterns of Polish consumers, who prefer covered schemes to exposed streets. Nevertheless, high street locations are gradually gaining in importance and capturing retailers interest. The prime high street locations are concentrated in Marszakowska Street, along with the renovated Wars and Sawa Junior department stores. This area is the most sought-after pitch for popular mass market brands. Warsaws shopping centres continue to perform strongly, in particular the Zlote Tarasy scheme. Recent entrants into the market include Gap, Cos, American Eagle, Victorias Secret, Bath & Bodyworks, Carpisa and Marco Polo.
Kiev
RANK 23=
The Ukrainian capital is the equal twenty-third most attractive location for international retailers in Europe. After a long period of uncertainty resulting from the financial crisis and political instability, Kievs retail market activity has picked up markedly. The recent European Football Championships stimulated significant infrastructure and commercial real estate development, but Kiev still lags behind most European capitals in terms of quality of shopping centre stock and provision per capita. The main shopping streets in Kiev include Kreschatik, Krasnoarmeyskaya and Sagaidachnogo home to the international brands. Upmarket brands traditionally prefer the prestigious area around Passage and Gorodetskogo. There are several shopping centres in the city centre with quality tenant-mixes, including Globus and Mandarin Plaza. The reconstructed TSUM is expected to be opened on Kreschatik St in 2015. Recent entrants into the market include Diesel, Oviesse, Valentino, Prada, Dolce & Gabbana, Mac Cosmetics and Trussardi Jeans.
240
London
3. Rental Analysis
Retailer appetite for the best space across Europe remains strong. Many top-tier retailers will accept flagship space (often in the form of brand pavilions, which are effectively showroom style stores that showcase the brand) in iconic locations, and nothing less. This is maintaining or, in some instances, putting upward pressure on rents in super-prime locations, while more secondary locations are seeing higher vacancies and reduced demand for space. Looking at the rental levels commanded by international retailers (luxury rents are explored later in the report), there is a clear correlation between the number of international retailers present in a market, and the prime rents paid by international retailers, as demonstrated opposite.
220
Paris
200 Moscow
180 Milan Madrid 160 St Petersburg 140 Prague Istanbul Barcelona Berlin Hamburg Athens 120 Lisbon Warsaw Amsterdam Antwerp Brussels Kiev Frankfurt Dsseldorf Zurich Cologne Rome Munich
100
Stockholm Budapest
Dublin
80
Under 50bn 50bn 100bn 100bn 200bn 200bn 300bn 300bn 400bn Over 400bn
Amsterdam Valencia Copenhagen Zagreb Lyon Bucharest Manchester Turin Stuttgart Glasgow / Bordeaux / Lille / Marseille Leeds Belgrade Oslo Luxembourg Helsinki Cardiff Edinburgh 1000 2000 3000 4000 5000 6000
International Prime Rent (/sq m/year)
Bilbao
Liverpool Seville
60
Nottingham 40 Malm
| 20 | Jones Lang LaSalle
7000
8000
25
St Petersburg 20 Ankara Bucharest Warsaw Stockholm Malm Nottingham Gothenburg 10 Luxembourg Birmingham Belfast Leeds 5 Bratislava Marseille Copenhagen Bordeaux Antwerp Lisbon Brussels Helsinki Budapest Edinburgh Oslo Manchester Istanbul Glasgow Lille Cologne Amsterdam Vienna Frankfurt Stuttgart Berlin Dsseldorf Rome Madrid Barcelona Milan Munich Kiev Moscow
15
Prague Cardiff
Zurich
Lyon
Zagreb 0
-5
-10
Retail Sales Growth Forecast (5 yr %)
Liverpool Athens
-15
Bilbao
-20
| 22 | Jones Lang LaSalle
1000
2000
3000
4000
5000
6000
7000
8000
UK
3rd
GERMANY
Retailer Rank The Body Shop 3rd = Lush 6th Burberry 31st = Karen Millen 37th = Marks & Spencer 64th =
4th
Retailer Rank Adidas 16th = Hugo Boss 19th = New Yorker 24th = Deichmann 27th = Puma 27th =
USA
2nd
FRANCE
Retailer Rank Timberland 7th = Tommy Hilfiger 7th = Foot Locker 9th = Claires 16th = Starbucks 19th =
5th
Retailer Rank Louis Vuitton 19th = Petit Bateau 37th = Escada 37th = Cartier 47th = Herms 53th = ITALY
1st
SPAIN
6th
Retailer Rank Benetton 3rd = Diesel 11th = Max Mara 13th = Geox 16th = Emporio Armani 37th =
Retailer Rank Zara 1st Mango 3rd = Massimo Dutti 11th = Bershka 31st = Desigual 31st =
Top 20 Retailers
% Coverage of Europes Key Markets Source: Jones Lang LaSalle City Rank Zara H&M The Body Shop Benetton Mango Lush Tommy Hilfiger Timberland Foot Locker G-Star Diesel Massimo Dutti Max Mara Jack Jones Gant Geox Claires Adidas Starbucks Louis Vuitton Hugo Boss 1 2 3= 3= 3= 6 7= 7= 9 10 11= 11= 13= 13= 13= 16= 16= 16= 19= 19= 19=
60
65
70
75
80
85
90
95
100 Luxury
Mainstream
Premium
6. Luxury
0 50 100 Index
| 32 | Jones Lang LaSalle
150
200
250
300
350
400
400
Cross Border Luxury Retailer Index
Paris London
350
Moscow 300 Milan Madrid 250 Munich Istanbul St Petersburg Barcelona Kiev 150 Athens Prague Hamburg Frankfurt Berlin Rome
Zurich
Vienna
Lisbon
Brussels Amsterdam
Dsseldorf
100 Valencia Budapest 50 Warsaw Cologne Antwerp Stockholm Copenhagen Turin Lyon
Bucharest Bordeaux Seville Bilbao Zagreb Lyon Helsinki Ankara Belgrade Belfast Bratislava 0 Malm Gothenburg 1000
Stuttgart Marseille Lille Luxembourg Oslo Dublin Nottingham Liverpool Glasgow Edinburgh Cardiff Leeds 2000 3000 4000 5000
6000
7000
8000
9000
200
Italian luxury brand, Max Mara, has the highest presence amongst luxury retailers, with 75% coverage of all markets. Louis Vuitton is the only other luxury retailer with over 70% coverage. Other luxury retailers with over 50% coverage are; Burberry, Mont Blanc, Emporio Armani, Cartier, Herms and Gucci. Expansive luxury retailers include Tory Burch, Bottega Veneta and Mulberry.
7. Conclusion
Looking ahead, the numerous challenges facing retailers operating internationally will persist. As will the ever changing competitive environment that forces retailers to consider shorter-term, domestic opportunities with longer-term opportunities in developing markets. The top retailers in the next decade are likely to be those that focus on a portfolio of markets, with different levels of risk (core and growth), at different levels of maturity and with distinct consumer profiles. There are undoubtedly significant expansion opportunities for retailers across Europes key city markets. The key is for retailers to fully understand and maximise current store portfolios, before assessing the detailed risks and benefits associated with international expansion. And above all, to partner with knowledge and experience to achieve strategic, profitable and long-lasting growth. What is becoming increasingly clear, is that borders are becoming irrelevant, and the internationalisation of retail is gaining unstoppable momentum.
Methodology
The analysis looks at the presence of brands in the specific cities, as well as retailers which are opening imminently, focusing solely on retailers own shop networks, including franchises. Retailer concessions are excluded as are second-line brands, multi-label stores and branded shops within department stores, due to the lack of transparency. Geographically the study looks at the downtown area of each individual city, concentrating on its well-known shopping areas, supplemented by surrounding areas and out of town malls in prime locations. Prime rents represent the top open-market rent that could be expected to be paid by international and/ or luxury retailers for a notional unit of the highest quality and specification, in the most prime location in a market.
Contact
James Dolphin Head of EMEA Retail Agency +44 (0)7921 944 355 james.dolphin@eu.jll.com James Brown Head of EMEA Retail Research & Consulting +44 (0)7860 408 863 james.brown@eu.jll.com Colin Burnet Associate Director, EMEA Retail Research & Consulting +44 (0)203 147 1185 colin.burnet@eu.jll.com
www.joneslanglasalle.eu
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