How Global is the Business of Retail?

Overall cross-border retailer activity accelerated in 2013 with the number of new entrants at city level up by 30%. This reflects the growing number of retailers that are crossing borders to grow their businesses. In contrast, the rate of expansion among the world’s leading retailers has slowed - their footprint at city level grew by just 1.8% last year.

Retailers focused on larger markets in 2013. 83% of the survey cities saw at least one new entrant in 2013 (compared with 81% last year), but the top target markets saw a 28% rise in new entrants. The composition of the top target markets also changed. In 2013, 18 of the top target markets were mature markets – in 2012 it was only 14. Some retailers are refocusing their expansion plans on the world’s major retail destinations, including recovering European markets and Asian and South American cities where international retailers are still under-represented.

Paris was the top target market last year with 50 new entrants, most of which were smaller European based brands. Tokyo moved into second place with an upturn in economic prospects attracting 48 new entrants, followed by Hong Kong with 43 new entrants and Abu Dhabi with 42 new entrants. Berlin was in fifth place with three other German cities (Frankfurt, Munich and Cologne) also featuring in the top target markets.

China remains a key target for cross-border retailers with Beijing sixth in the global ranking of new entrants and Shanghai in ninth position. However, it was the emerging markets - most notably Hangzhou - that saw the biggest increase in cross-border activity last year, with major new shopping centres providing the opportunity for retailers to enter these markets.

The most sought after emerging market globally was Hanoi with 22 new entrants, reflecting the growing popularity of Asia to cross-border retailers.

Retailers based in the Americas continue to dominate cross-border retailer activity, and are increasingly global in their outlook. Europe accounted for 40% of new market entrants by American based retailers in 2013 and Asia (35%) was not far behind. The vast majority of these retailers were from the U.S. They entered 45 out of the 61 countries in the survey and accounted for 23% of all new entrants at city level. Japan, with 9% of all new market entrants, was their main target market.

Italian, British and French retailers were also highly active last year, focusing mainly on their own region, although Asia, with China and Hong Kong in particular, were also key targets.

Michael Kors and Zara Home entered more new cities than any other retailer in 2013, with Hennes & Mauritz (H&M), Desigual, Superdry, Victoria’s Secret, & Other Stories and Hollister also in the top 10.

The Luxury & Business Fashion sector was the most active in 2013, accounting for 24% of new openings, followed by Mid-Range Fashion (20%). However, among the world’s leading 334 retailers, Homeware & Department Stores saw the largest increase in their footprint (4.4% at city level) with Zara Home and Tiger leading the way.