Hong Kong, March 7, 2014—Asia Pacific retailers are focused on expanding in the Asia Pacific region, a recent global report by CBRE Research has found. The How Active Are Retailers Globally? survey found that Asia Pacific-based retailers see significant potential in Asia Pacific, and that all of their top ten target destinations for expansion in 2014 are within the region. China is a target for 58% of Asia Pacific-based retailers, making it the most sought after market, followed by Vietnam (48%), Malaysia (42%), Indonesia (39%) and Singapore (35%).
“The relatively lower levels of interest by Asia Pacific retailers in expanding in American and European markets reflect a cautious attitude to expanding out of their core markets, but that said we are beginning to see a number of Asia-based brands working on strategies for global markets. For example, Chinese brand Bosideng opening on Oxford Street in London and a number of other Chinese brands looking to launch New York and Australia,” commented Sebastian Skiff, Executive Director of CBRE Retail.
Top Ten Target Markets for Asian Retailers in 2014
Source: CBRE Research
Retailers’ expansion plans in Asia Pacific are relatively modest, with 29% planning to open less than five stores and a further 26% looking to open between 5-10 stores in 2014.
“Most retailers active within Asia Pacific have tended to focus operations within a few countries, and locations are generally limited to the key or top tier cities where quality retail space is accessible. Tougher trading conditions in most markets has tempered expansion ambitions for the short term, however, over the longer term we expect economic growth and the rising middle class in Asia to spur further growth,” said Mr Skiff.
Global Retailers’ Targets
The report found that retailers globally are predominantly targeting countries with mature retail sectors, although a number of emerging markets in Asia Pacific also feature strongly. Retailers originating from Europe have shown a strong bias towards their own region with less than 15% of retailers targeting markets outside the region. Retailers from the Americas are biased towards the US, but are also targeting European markets, and in particular Germany.
China leads the way for Asia Pacific, ranking as the fifth most popular destination for global retailers, with 22% of surveyed retailers targeting the market in 2014. Singapore, Hong Kong, Vietnam, Indonesia and Malaysia also feature in the top 20 target markets worldwide. The importance of China globally cannot be underestimated, in part because of the impact having a presence there has on sales in other regions.
“China is currently a very exciting place to be as a retailer so it comes as no surprise that China is ranked fifth in retailers’ target markets for 2014. Globally speaking, the Chinese consumer accounts for a significant proportion of many retailers’ sales, whether they are registering those sales through their stores in China or London, New York, Paris or elsewhere. Having a strong presence in China is an important strategy to drive sales across a brand’s global locations, not just within China itself,” said Mr Skiff.
“Consumer sentiment is among the highest in the world and the retail sales market is expected to expand in 2014 on top of the CNY23.4 trillion achieved in 2013. The government has decided to set a target to double household income by 2020; this only adds to the attractiveness of a market that is seeing significant interest from international brands,” Mr Skiff added.
In Vietnam, middle class consumers with rising incomes and a hunger for style continue to draw retailers’ interest. Ho Chi Minh City and Hanoi were both ranked in the top 10 cities of most new retailer entrants in 2012 and 2013, according to CBRE’s Retail Hotspots in Asia Pacific report. The liberation of Foreign Direct Investment (FDI) on wholly-owned retail businesses from 2015 is expected to further stimulate this trend.
Meanwhile, the economies of Malaysia and Singapore are strengthening and as a result consumer sentiment is expected to improve in both markets. In Malaysia an influx of new supply is due over the next few years. The resulting increase in available space, and expected lower rental levels in these new venues, should provide an added incentive for international retailers wanting to expand there. In Singapore, stability in the economy and the employment market has laid a sound foundation for domestic consumption. Retail spending has also been boosted by the growth in international tourists, especially affluent ones, following the opening of major new visitor attractions. Singapore has since become one of the gateway cities for brands new to Asia. Of some concern though for retailers in Singapore is the availability of qualified sales floor staff.
Retailer appetite has also increased for Indonesia after the recent arrival of major international brands such as UNIQLO and H&M. The Indonesia Shopping Centres Association expects retail sales to grow by 15% in 2014.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
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