Moscow, St Petersburg and Prague top list of retailer destination.

11 Dec, 2007, London

The results are part of the 2007 International Retailers Survey.

UAE and Russia come top for expansion plans.

On-line retailers are the ‘retailers’ to watch.

Cities in Central and Eastern Europe (CEE) dominate a top-20 ranking of new-destination cities to be targeted by cross-border retailers over the next five years, with Moscow in No 1 position, followed by St Petersburg and Prague.

The only Western European city in the top ten is Amsterdam, which shares 10^th position with Kyiv. This year’s risers are the capital cities of the European Union’s newest members, with Sofia and Bucharest both up two places to 6^th and 7^th respectively.

The ranking is part of the annual 2007 International Retailers’ Survey, commissioned by Real Estate Publishers (REP) in association with the International Council of Shopping Centers (ICSC), and produced by global real estate consultant Cushman & Wakefield.

The survey interviews property executives responsible for international expansion at 250 retail companies from 23 countries across Europe. The survey focuses on retailers’ views on expanding across border, their expansion plans, and the main issues affecting these plans. For the first time, retailers were also asked about sustainability (see 2007 Sustainability Retailers’ Survey and separate press release – European retailers to “lose market share” if they fail to address sustainability).

Marinus Dijkman, President/CEO of REP says: “Central and Eastern Europe, in particular Russia, is still clearly seen as the land of opportunities for many cross-border retailers. At the same time, we are also seeing retailers with their origins in CEE expanding internationally.”

On a country basis, Russia and the United Arab Emirates are in joint top position, with 9 per cent of retailers planning to expand in these countries over the next five years. Then comes Slovakia (6 per cent of retailers), followed by Bulgaria, Slovenia and Hungary (5 per cent each).

When looking at the current international representation of the retailers interviewed,

26 per cent have units in France and Spain, at the top of the list, 25 per cent in Belgium, German and the UK, 20 per cent in Austria and Italy, 18 per cent in the Netherlands and Switzerland, and 17 per cent in the Czech Republic, Portugal and Russia.

TOP 20 CITES TARGETED BY INTERNATIONAL RETAILERS OVER THE NEXT FIVE YEARS

2007 Ranking	2006 Ranking	City
1	1	Moscow
2	3	St Petersburg
3	2	Prague
4	4	Bratislava
5	5=	Ljubljana
6	8	Sofia
7	9	Bucharest
8	5=	Budapest
9	7	Tallinn
10=	-	Amsterdam
10=	10=	Kyiv
12=	-	Berlin
12=	10=	Warsaw
14=	16	Zagreb
14=	18=	Copenhagen
14=	10=	Riga
14=	18=	Vilnius
18	-	Stockholm
19=	10=	Split
19=	-	Paris
19=	14	Geneva

Source: 2007 International Retailers Survey.

Other key findings of the 2007 International Retailers Survey include:

Expansion plans …

Seventy-three per cent of retailers prefer a high street location, 46 per cent favour in-town/city centre shopping centres and 35 per cent locate in out-of-town shopping centres.
82 per cent say that a ‘direct/organic’ approach was their preferred method of entry into new markets, followed by 21 per cent saying franchise and 20 per cent joint venture with local partner.
Tallinn offers the best value for money relative to retail space, followed by Moscow and Glasgow in joint second position, and then Budapest.

Current markets …

France is the most successful market outside the home market (for 22 per cent of retailers), followed by the UK (21 per cent) and Germany (20 per cent).

Multi-channel retailing …

The use of multi-channel retailing is increasing, but it is still to make its mark in some parts of Europe, especially Central and Eastern Europe.
87 per cent of retailers have a website, and 18 per cent a transactional website.
Following physical stores, telephone ordering from paper catalogues is the next most popular sales method (35 per cent), followed by mail order from paper catalogues (25 per cent) and website purchasing (17 per cent).

Retailers to watch

On-line retailers, with no particular ones named, takes the number one position, although in CEE it is the Russian supermarket chain Pyatyorochka. Second overall comes Marks & Spencer, followed by IKEA, Carrefour, Wal-Mart, Zara and H&M in joint third position.

Retailers were also asked their main issues of concern. Top comes performance of the economy, followed by property occupancy costs, multi-channel retailing, workforce availability, consumers’ ethical concerns, venture capitalists moving in, and, lastly, sustainability/becoming neutral.

Regarding the issue of sustainability, Dr Yvonne Court, Head of European Retail Research & Consultancy at Cushman & Wakefield, says: “The low level of awareness of sustainability issues is alarming given that this is a key area where retailers could gain a competitive advantage, through lower energy costs in particular.”

On the way ahead, Ermine Amies, Managing Director of ICSC Europe, says: “The coming year will remain challenging for retailers, in particular with the rise of on-line operators, but the sector has always been highly competitive, with innovation and cost controls being the fundamentals of success.”

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