Emerging markets get retail excited
By Carolyn Cummins | smh.com.au | 02 June
Retailers are looking to the world's emerging markets to drive the success of their businesses, research by CB Richard Ellis shows. The trend is happening despite softening economies around the world, thanks to a weakening US retail market caused by the subprime lending crisis.
The high cost of borrowing has made expansion very difficult for many retailers in the US and Britain, hence the larger players are looking to move into overseas markets, where they can negotiate better rents by being anchor tenants in new developments.
Many countries that are trying to boost their retail offerings are willingly doing special rent and lease deals with overseas tenants to act as a drawcard to fill up their new projects. This is being embraced by retailers, who are also looking for new markets to offset falling sales in their well-established centres.
In its Global Emerging Markets Survey CB Richard Ellis says 40 per cent of retailers who responded expect emerging markets to provide their main source of growth in the next five years. Only a quarter expect growth to be concentrated in their home markets.
The survey covered 300 retailers worldwide, representing a global portfolio of 25,000 stores, and provides the latest insight into retailers' attitudes to emerging retail destinations. The survey says India is the most sought-after emerging market: 27 per cent of international retailers surveyed opened their first store there last year, or are planning to do so soon.
The head of cross-border retail at CB Richard Ellis, Peter Gold, said rising interest and growing expansion into emerging markets globally was being fuelled by rapid growth in consumer spending and the emerging middle classes in many of these countries.
"We believe India will maintain its position as a popular new location for retail expansion as further trade restrictions are lifted. And, in the same way that Ukraine is now benefiting from retailer interest in Russia, retailers will again be looking to expand to adjacent markets around other emerging destinations," Mr Gold said.
"[The survey] also showed that retailers' interest in specific emerging markets varies according to their product sector and country of origin. South Africa is currently the most important market for retailers from the Asia-Pacific region, while retailers from the Americas are now looking at Turkey more than other individual markets."
Mr Gold said more than half of the retailers surveyed based their entry into an emerging market on the availability of suitable property, compared with 46 per cent in developed markets.
First published by Smh.com.au on June 02 2008
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