1 Aug 2008


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Strategic entry is key.

The Global Emerging Markets Survey was released by property service company CB Richard Ellis at the World Retail Congress in Spain. Some 80% of global retailers responding to the survey would reconsider whether or not to enter an emerging market like China and India if their preferred real estate format - whether shopping centre or stand-alone store - is not available.

Around 56% of those retailers base their entry into an emerging market on the availability of suitable property.

Bryn Davies, executive director for retail services with CB Richard Ellis in Greater China, pointed out that the quality of real estate is the most important issue for a retailer to consider when preparing to enter an emerging market.

For example, said Davies, Japan's Isetan chose to open its new store in Beijing's Xidan district while South Korea's Lotte chose Wangfujing. Prime commercial locations are always the first choice for international retailers.

In fact, good retail properties are rare commodities, with rentals surging in Beijing and Shanghai.

The report reveals that more than 30 international retailers surveyed opened their first store on the Chinese mainland over the past year or are planning to do so imminently.

The Mainland ranks eighth on the list of most active emerging markets with a new retailer entry rate of 11%.

India ranks top, with 27% of the canvassed international retailers opening their first store in that country over the past year or are planning to do so imminently.

According to CB Richard Ellis, the rate of international penetration is slowing down on the Mainland because it already has a much higher penetration of international retailers than countries like India and Thailand.

A report entitled How Global is the Business of Retail? by CB Richard Ellis, shows that the Mainland has 40% of the world's international retailers and is the only country in the Asia Pacific making the top 10 list, surpassing the US and Japan.

Ukraine and Russia, with penetration rates at 24% and 22% respectively, are the second and third most sought after destinations.

According to the Global Emerging Markets Survey, retailers will take neighbouring countries as natural extensions after entering "primary" emerging destinations like Russia. This is an emerging development trend in international retailing.

South Korea and Brazil, with an international penetration of only 6%, fail to make the top 10.

"Rising interest and growing expansion into emerging markets globally are being fuelled by rapid growth in consumer spending with an emerging middle class in many of these countries" said Davies.

The Global Emerging Markets Survey explores the views of some 300 retailers worldwide, representing a global portfolio of 25,000 stores. It reveals that 40% of retailers expect emerging markets like India, Russia and China to provide their main source of growth over the next five years.

from Eileen Zhu, Hangzhou Office


URL : http://info.hktdc.com/imn/08080101/retail193.htm
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