Destination Europe 2013 - Jones Lang LaSalle

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Destination Europe 2013 - Jones Lang LaSalle

Destination Europe 2013

The 250 most renowned retailer brands and their presence across the key European cities


Foreword

Our 2009 report, Cross Border Retailing in Europe, explored the international

expansion of retailers into country markets. This report examines, for the first

time in detail, the expansion and presence of international retailers in the key,

leading European retail cities.

Using our unrivalled knowledge and insight into retail markets, in conjunction

with our network of local offices, we have analysed the presence of the 250

leading international retailers across Europe. Our research covers 55 key

European markets, as identified within our 2011 Retail City Profiles, and two

new retail markets in Eastern Europe (Belgrade and Bratislava).

International retailer ‘road mapping’ is becoming increasingly focussed on

cities, as cross border barriers fall and as retailers chase diversification and

growth. Whilst retail is becoming increasingly international, at the same time,

retailers are under growing pressure to improve profitability and margins,

which often means rationalising portfolios and sifting out non-performing

stores. Expansion remains firmly on the agenda however. Factoring in the

continuing challenging economic conditions for retailers across Europe

(with little sign of the headwinds abating), and the structural changes to the

industry resulting from the rise of multi-channel retailing, it is clear that any

expansion needs to be careful, considered, and selective.

The relative attractiveness of cities to international retailers is based on a

combination of numerous complex factors; market size, maturity of market,

resilience and growth prospects, adjacencies and market familiarity,

competition, real estate transparency and risk. This puts a premium on expert

advice from professionals that live and breathe retail, and have access to the

scale and breadth of data to enable them to provide accurate, holistic advice

across Europe and beyond. Jones Lang LaSalle’s pan-European Retail team

now consists of 1,000 dedicated retail staff, across 76 corporate offices in

31 countries. The goal of each is to provide a truly integrated service across

the EMEA region, creating a competitive advantage for our clients, applied

directly to their individual real estate decision-making needs, through the use

of accurate data, market knowledge and forward-focused thinking.

We hope this report proves to be useful and insightful, be you retailer,

investor, developer or landlord. Whilst retail undoubtedly faces challenges,

clear new opportunities are still emerging.

James Dolphin

Head of EMEA

Retail Agency

James Brown

Head of EMEA Retail

Consulting and Research

© Westfield Stratford City


Jones Lang LaSalle Cross Border Retailer Index 2012

Source: Jones Lang LaSalle

City

Rank

• London has the highest presence of international retailers across Europe,

followed by Paris, Moscow, Milan and Madrid.

• Italy, driven by luxury, is the largest exporter of retail fascias across the key

retail cities in Europe, although the US is catching up fast.

• Zara, H&M and Mango have the greatest retailer coverage across Europe;

Guess and Calzedonia are amongst the most expansive retailers.

• Paris commands the highest rents for international retailers, followed by Zurich

and London; London tops the luxury rental table, followed by Paris and Moscow.

• London just edges out Paris at the top of the luxury retailer index, followed by

the powerhouse Moscow, and Milan.

Rank City Index Mainstream Premium Luxury

1

2

3

4

5

6

7

8

9

10

London

Paris

Moscow

Milan

Madrid

Rome

Munich

St Petersburg

Prague

Barcelona

235

217

196

174

168

151

146

142

140

138

1.

Five Fast Facts

London

Paris

Moscow

Milan

Madrid

Rome

Munich

St Petersburg

Prague

Barcelona

Istanbul

Berlin

Hamburg

Vienna

Amsterdam

Frankfurt

Athens

Antwerp

Warsaw

Lisbon

Düsseldorf

Brussels

Zurich

Kiev

Stockholm

Dublin

Cologne

Valencia

Budapest

Bucharest

Zagreb

Lyon

Copenhagen

Manchester

Bilbao

Marseille

Turin

Seville

Glasgow

Stuttgart

Bordeaux

Lille

Liverpool

Belgrade

Oslo

Birmingham

Ankara

Bratislava

Luxembourg

Leeds

Helsinki

Cardiff

Belfast

Gothenburg

Nottingham

Edinburgh

Malmõ

1

2

3

4

5

6

7

8

9

10

11

12

13

14=

14=

16=

16=

18

19=

19=

19=

22

23=

23=

25

26=

26=

28

29

30

31

32=

32=

34

35

36

37=

37=

37=

40

41

42

43

44

45=

45=

45=

48

49=

49=

51

52

53

54

55

56

57

Average

(Average representation = 100)

| 4 | Jones Lang LaSalle

0 50 100 150 200 250

Index


2.

Retailer Presence

London tops the international

retailer league

London is the most attractive location for international retailers, based on the presence

of the top 250 international retailers in the key European retail markets. The UK’s capital

is differentiated by its retail market size and maturity, as well as the high degree of market

transparency, which together have resulted in a long history of success for international

retailers. This year we have seen a number of new brands coming to London, from Rag

and Bone and Victoria’s Secret from the US, to Bosideng from China. Major European

cities are first ports of call for international retailers, and London, which is a particularly

retail friendly market, leads for many as the springboard to Europe.

Other European cities successfully attracting international retailers include the core

established retail markets of Paris, Milan, Madrid, Rome and Munich. A pick-up in

retailer expansion has also been observed recently in other regional cities in Germany

and the Benelux countries. After entering core major markets, retailers are selectively

expanding into regional cities, then into growth markets. Borders are becoming less of a

barrier, and retailers are capitalising on new growth opportunities.

We have also observed the burgeoning success of the emerging growth markets of

Moscow, St Petersburg, Istanbul, Prague, Warsaw and Kiev. With a patchy and subdued

growth outlook for some Western and Southern European markets, Eastern Europe

provides some attractive expansion opportunities for retailers with established and

successful retail businesses.

Further down the rankings, there are still plenty of strong retail markets across Europe,

in particular some of the larger UK regional cities and the Scandinavian markets, which

despite market opportunity remain relatively untapped from an international retailer

perspective.

The trend towards increased penetration of international brands across Europe will

accelerate over the coming years, as expansion strategies for many retailers focus

on top tier cities. Retailers with a strong and translatable proposition should explore

international expansion, whilst appreciating and mitigating the risks. For now, however,

London remains number one, Paris is in second place, but Moscow in particular, is

catching up fast.

© Jason Hawkes Destination Europe 2013 | 7 |


Europe’s Core and Growth Retail Markets

Source: Jones Lang LaSalle

(Circle size is proportional to Cross Border Retailer Index)

Market

core

growth

Demand

strong

steady

flat

Core Retail Markets

The mature, established retail markets are generally the first port of call for retailers

seeking international expansion. The map opposite shows the core retail markets

(together with the growth markets, discussed later) across Western Europe, with the

greatest international retailer appeal.

The number in each circle represents the cross border retailer index ranking for each

city, and the arrow represents current occupier demand. As we can see, demand for

the right space in the right place remains resilient to cyclical headwinds.

The following pages contain a brief description of each of the core retail markets of

London, Paris, Milan, Madrid, Rome and Munich.

London 1

19= Warsaw

8 St. Petersburg

3 Moscow

9 Prague

23= Kiev

Paris 2

Munich 7

Milan 4

Madrid 5

Rome 6

11 Istanbul

| 8 | Jones Lang LaSalle Destination Europe 2013 | 9 |


London

RANK 1

Paris

RANK 2

© Westfield Stratford City

London ranks as the most attractive location for international retailers in Europe. It

attracts international brands for a number of reasons, including: size, maturity and

transparency of the retail market, in addition to the track record of retailers who have

successfully opened here. The four main shopping areas, Oxford Street, Regent

Street, Bond Street and Covent Garden, collectively form the largest concentration

of retail in Europe. The opening of the two Westfield shopping centres has also been

the catalyst for a number of new entrants into the London market, which continues

to dominate the UK retail market, driven in part by tourist spend. London is a retail

friendly market and will continue to act as an entry point to Europe for international

brands. This year we have seen a number of new brands coming to London, from Rag

and Bone and Victoria’s Secret from the US, to Bosideng from China.

Paris is the second most attractive location for international retailers in Europe. Paris

is one of the world’s leading tourist destinations and, along with London, one of the

strongest global retail locations. It continues to attract the biggest international and

national brands that inevitably look to the city to open flagship stores, in particular the

premium and luxury brands. Both shopping centres and high streets are attractive to the

city shoppers, with centrally-located Parisians preferring areas such as the Champs-

Elysées, Opéra and Boulevard Haussmann, while those living on the periphery tend

to migrate to suburban shopping centres Rosny 2 or Velizy 2. The Champs-Élysées,

the most expensive retail location in France, has recently welcomed such new tenants

as Abercrombie & Fitch, Marks & Spencer, and Banana Republic. Other recent new

entrants include Calzedonia, Forever 21, Aldo and Intimissimi.

| 10 | Jones Lang LaSalle Destination Europe 2013 | 11 |


Rome

RANK 6

Milan

RANK 4

Milan is the fourth most attractive location for international retailers in Europe, and is the industrial,

commercial and financial capital of Italy, with an economy dominated by the service sector. Milan

is also one of the world’s most famous fashion centres, and is a particularly strong premium

and luxury retailer market. The city centre boasts a large retail floor space, although there are

no shopping centres in the central areas of the city. The city centre comprises two distinct but

very affluent shopping areas; the first, with a very upmarket emphasis, is located around Via

Montenapoleone, the second is the more mainstream area around the Piazza del Duomo,

including Vittorio Emanuele II. Recent entrants to the market include Cos, Agent Provocateur

and Just Cavalli.

Rome is the sixth most attractive location for international

retailers in Europe. The Italian capital attracts millions of tourists

every year, and the retail market has been dynamic in recent

years. Several large out-of-town shopping centres have opened

recently, but the high street has maintained its pre-eminence for

both local and international shoppers. The areas around Piazza

di Spagna and Piazza del Popolo in the old town are traditionally

the most sought after. Via Condotti and Via del Babuino are also

considered prime locations. In terms of shopping centres, Porta

di Roma (North Rome) and Roma Est (East) remain the best

performing schemes and each feature some important flagship

stores. Recent international retailer market entrants include

Superdry and Deichmann.

Madrid

RANK 5

Munich

RANK 7

Madrid ranks as the fifth most attractive location

for international retailers in Europe. Being the

capital and largest city in Spain, Madrid draws

upon a large consumer base, which is among

the most affluent in the country. It is also a

transport hub, and as such a magnet for tourist

and business travellers. The Madrid retail market

appeals to a wide audience and many of the

top fashion brands have their flagship stores

here. Preciados is the prime high street, and the

most famous retail location in Spain. The main

city centre shopping centres are La Vaguada

and Parquesur. The stretch of Ortega y Gasset

between Serrano and Velazquez Street is the

prime area for luxury brands. Recent international

retailer market entrants include Tiger of Sweden,

Hollister, Apple and Agent Provocateur.

Munich ranks as the seventh most attractive

location for international retailers in Europe.

The Bavarian state capital is the top retail

location in Germany, and retailers are queuing

up for units in good positions. Retail spend

per capita in Munich is among the highest in

Europe, and a strong tourist market also helps

to buoy the local economy. Kaufingerstrasse,

Neuhauser Strasse and the area around

Marienplatz are the prime high street locations,

with the best performing centrally-located

scheme being Fünf Höfe. Maximilianstrasse

is the home to most luxury retailers in the city.

Recent international retailer market entrants

include Tory Burch and Woolrich.

| 12 | Jones Lang LaSalle Destination Europe 2013 | 13 |


Cross Border Retailer Index Rank vs. Retail Sales Growth Forecast

Source: Jones Lang LaSalle, Oxford Economics (Belgrade data unavailable)

Milan

Paris

London

Moscow

Madrid

Power Retail Growth Markets

With current headwinds across most European markets, opportunities for expansion

into territories with stronger growth prospects are becoming increasingly attractive.

Once established in multiple markets, retailers can benefit from reduced risk associated

with being reliant on one or fewer geographies. In some instances, expansion is about

reducing the risk of over-reliance on a dominant domestic market, for others it is about

growth.

Rome

Barcelona

Athens

Munich

Prague

Berlin

Vienna

Amsterdam

Frankfurt

Antwerp

Istanbul

Hamburg

St Petersburg

Whilst the Far East is clearly a key growth market, attractive opportunities for international

expansion exist closer to home, in Central and Eastern Europe in particular. Central

and Eastern Europe’s growing importance as a global retail market is demonstrated by

the fact that it now has more cities in the top 30 retail locations than Southern Europe.

Current hotspot retail markets in Central and Eastern Europe are the growth markets

of Russia (Moscow and St Petersburg) and Turkey (Istanbul), in addition to the capital

cities of the Central European powerhouse economies (Prague and Warsaw) and

the emerging retail market in Kiev. These markets, as shown opposite, are already

successfully attracting significant numbers of international retailers, either through

franchise or company-owned stores. They still have scope for further expansion,

however, due to the market size, and/or positive retail sales outlook.

The size of bubble in the graph opposite (and throughout the report) represents the

size of the country retail market. As such, it provides an indication of the wider market

opportunity presented by entry into each individual country market.

Bilbao

Düsseldorf

Dublin

Valencia

Seville

Stuttgart

Lisbon

Zurich

Brussels

Cologne

Budapest

Zagreb

Lyon

Copenhagen

Marseille

Turin

Bordeaux

Warsaw

Kiev

Stockholm

Bucharest

Manchester

Glasgow

Key: Country Level Retail Sales (2011)

Under €50bn

€50bn -

€100bn

€100bn -

€200bn

€200bn -

€300bn

€300bn -

€400bn

Over €400bn

Key:

growth markets

Retail Sales Growth Forecast (5 yr %)

| 14 | Jones Lang LaSalle -20 -10 0 10 20 30

Liverpool

Cross Border Retailer Index Ranking

Birmingham

Bratislava

Leeds

Belfast

Nottingham

Helsinki

Lille

Oslo

Luxembourg

Cardiff

Gothenburg

Edinburgh

Malmõ

Ankara


Moscow

RANK 3

Prague

RANK 9

Moscow ranks as the third most attractive location for international retailers in Europe.

Russia is predicted to become Europe’s leading retail market, with disposable incomes

increasing rapidly and a burgeoning middle class. Moscow’s high overall ranking in our

Index is due mainly to the high penetration of mass retailers in the city. There are over

80 shopping centres in the Moscow region (with a further estimated 320,000 sq m in the

pipeline), in addition to some prominent areas of high street retail. Tretyakovsky Proezd

is the main luxury street, whilst the GUM and TSUM areas, in addition to Petrovka and

Stoleshnikov Lane, also host luxury brands. The main streets for local and international

mass market brands are Tverskaya, Novy and Stary Arbat. Recent entrants into the

market include; American Eagle, Victoria’s Secret, American Apparel, Ben Sherman,

Koton, La Senza, Mac Cosmetics, Marlboro Classics, Okaidi and Warehouse.

Prague ranks as the ninth most attractive location for international retailers in Europe. The Czech Republic capital’s

retail market is dominated by shopping centres. Nový Smíchov shopping centre is located on one of the busiest

transport hubs in Prague, helping make it the best performing centre in the city. The prime high street locations are

concentrated in two places; the area around Na Příkopě provides the mass retail offer, and includes four shopping

galleries. Pařížská Street is home to luxury brands such as Louis Vuitton and Hermès, and offers a smaller number

of shops in a more ‘intimate’ atmosphere. Recent entrants into the market include Carpisa, Aldo, T.M. Lewin,

Desigual, Tiffany & Co, Jimmy Choo and Parfois.

Istanbul

RANK 11

St Petersburg

RANK 8

St Petersburg is the eighth most attractive location for international

retailers in Europe. St Petersburg is the second largest city in

Russia, and a major financial and industrial centre. Consumer

spend is divided between out-of-town regional shopping centres

and the city centre, which is skewed towards mass-market and

premium brands. Nevskiy Prospect is the historic centre of the

city and the most popular street, providing a large variety of mass

market shops. Premium brands are found mainly in multi-brand

chain stores. 2010 brought long-awaited large new schemes to

the market, Galeria and Nevskiy Centre, and there is a further

estimated 425,000 sq m in the pipeline. Recent entrants into

the market include Chanel, Guess, Mac Cosmetics, Marlboro

Classics, Sephora and Trussardi Jeans.

Istanbul is the eleventh most attractive location for international retailers

in Europe. Turkey is the seventh largest organised retail market in

Europe, with a total leasable area of 8.3 million sq m across 332 shopping

centres. Approximately 2.6 million sq m of leasable space is currently

under construction, with Istanbul accounting for almost half of this total.

The huge market of approximately 13.3 million consumers in Istanbul is

viewed by many retailers as the perfect gateway to the Middle East and

Caucasus region. Istanbul’s retail market is revolutionising itself at great

speed, with significant quantities of modern shopping centre stock coming

online. The importance of shopping centres in the market is growing, with

the likes of Forum Istanbul and Istinye Park trading particularly well. This

will be further fuelled by the huge development pipeline, and in particular

the imminent opening of several landmark schemes, including the Zorlu

Center and Emaar’s Boulevardi. Istanbul’s retail culture is still mostly

dominated by the high street, however, with Istiklal Street the dominant

mass market location on the European side, along with Nişantaşi district,

which caters for luxury brands. On the Asian side, Bagdat Street is the most

well-known and popular area, featuring a range of local and international

brands. Recent entrants into the market include Aeropostale, Carluccio’s,

Zadig&Voltaire, Promod and Gymboree.

| 16 | Jones Lang LaSalle Destination Europe 2013 | 17 |


Warsaw

RANK 19=

Warsaw ranks as the equal nineteenth most attractive location for international retailers

in Europe. The retail landscape in the Polish capital is dominated by shopping centres, a

reflection of the shopping patterns of Polish consumers, who prefer covered schemes to

exposed streets. Nevertheless, high street locations are gradually gaining in importance

and capturing retailers’ interest. The prime high street locations are concentrated in

Marszałkowska Street, along with the renovated Wars and Sawa Junior department

stores. This area is the most sought-after pitch for popular mass market brands.

Warsaw’s shopping centres continue to perform strongly, in particular the Zlote Tarasy

scheme. Recent entrants into the market include Gap, Cos, American Eagle, Victoria’s

Secret, Bath & Bodyworks, Carpisa and Marco Polo.

Other Hotspot Retail Markets

In addition to the fast-moving growth markets, there are a number of more established

retail markets that have attracted retailers in the last 12 months, and which benefit

from a relatively strong retail sales growth outlook. In particular, the Benelux cities

(Brussels, Amsterdam, Antwerp), have seen some of the strongest international

retailer interest in the last 12 months. And the regional German cities of Frankfurt and

Düsseldorf, together with Vienna, are all established, affluent markets which have

been successful in attracting international retailers from the first-stop core cities, on

the next phase of their expansion.

Kiev

RANK 23=

Further down the rankings, there are numerous retail markets that are relatively

untapped from an international retailer perspective, but which are forecast to benefit

from above average retail sales growth. Whilst relatively small in terms of overall

market size, the affluent Scandinavian markets of Malmõ, Gothenburg and Helsinki,

in addition to some of the larger UK regional cities of Edinburgh, Nottingham, Belfast

and Cardiff, should be on the radar of expansive international retailers going forward.

The Ukrainian capital is the equal twenty-third most attractive

location for international retailers in Europe. After a long

period of uncertainty resulting from the financial crisis and

political instability, Kiev’s retail market activity has picked up

markedly. The recent European Football Championships

stimulated significant infrastructure and commercial real estate

development, but Kiev still lags behind most European capitals

in terms of quality of shopping centre stock and provision per

capita. The main shopping streets in Kiev include Kreschatik,

Krasnoarmeyskaya and Sagaidachnogo – home to the international

brands. Upmarket brands traditionally prefer the

prestigious area around Passage and Gorodetskogo. There

are several shopping centres in the city centre with quality

tenant-mixes, including Globus and Mandarin Plaza. The reconstructed

TSUM is expected to be opened on Kreschatik

St in 2015. Recent entrants into the market include Diesel,

Oviesse, Valentino, Prada, Dolce & Gabbana, Mac Cosmetics

and Trussardi Jeans.

| 18 | Jones Lang LaSalle Destination Europe 2013 | 19 |


Cross Border Retailer Index vs. International Prime Rent

Source: Jones Lang LaSalle

3.

240

220

Cross Border Retailer Index

London

Paris

Rental Analysis

200

Moscow

Retailer appetite for the best space across Europe remains strong. Many top-tier

retailers will accept flagship space (often in the form of brand pavilions, which are

effectively showroom style stores that showcase the brand) in iconic locations, and

nothing less. This is maintaining or, in some instances, putting upward pressure on

rents in super-prime locations, while more secondary locations are seeing higher

vacancies and reduced demand for space.

180

160

Madrid

Milan

Looking at the rental levels commanded by international retailers (luxury rents are

explored later in the report), there is a clear correlation between the number of

international retailers present in a market, and the prime rents paid by international

retailers, as demonstrated opposite.

140

120

St Petersburg

Prague

Istanbul

Athens

Lisbon

Warsaw

Amsterdam

Antwerp

Brussels

Rome

Barcelona

Berlin

Hamburg

Düsseldorf

Frankfurt

Munich

Key: Country Level Retail Sales (2011)

Under €50bn €50bn -

€100bn

€100bn -

€200bn

€200bn -

€300bn

€300bn -

€400bn

Over €400bn

100

80

60

40

Stockholm

Budapest

Bucharest

Bilbao

Liverpool

Seville

Ankara

Birmingham

Bratislava

Befast

Gothenburg

Nottingham

Malmõ

Dublin

Valencia

Zagreb

Kiev

Amsterdam

Copenhagen

Cologne

Manchester

Turin

Stuttgart

Glasgow / Bordeaux / Lille / Marseille

Belgrade

Leeds

Oslo

Luxembourg

Helsinki

Cardiff

Edinburgh

Lyon

Zurich

International Prime Rent (€/sq m/year)

1000 2000 3000 4000 5000 6000 7000 8000

| 20 | Jones Lang LaSalle


Paris commands

top international

retailer rents

25

Retail Sales Growth Forecast vs. International Prime Rent

Source: Jones Lang LaSalle, Oxford Economics (Belgrade data unavailable)

Paris, Zurich and London clearly command

the highest international retailer rents

for prime, mainstream retail space,

on the Avenue des Champs-Élysées,

Bahnhofstraße and Oxford Street respectively.

The core cities of Munich and

Milan, as well as the growth powerhouse

market of Moscow, are also commanding

high rents, and lead the following pack.

The graph on the previous page also clearly

identifies the regional clusters, whereby UK

regional, Scandinavian, French regional,

German, Benelux, Eastern European and

Southern European cities are generally

grouped together. Whilst not surprising,

this illustrates that there are useful reference

points and commonalities between cities in

the same country or region.

The maturity of the retail market clearly

influences prime rental levels. The growth

markets of Istanbul, St Petersburg, Warsaw,

Prague and Kiev are all commanding

relatively low rental levels, relative to their

international retailer presence. These

markets are also forecast to benefit from

some of the strongest medium-term retail

sales growth in Europe. Clearly as these

markets mature, retail sales grow, and the

number of international retailers present

increases, rents are likely to rise further.

| 22 | Jones Lang LaSalle

20

Bucharest

15

-5

-10

-15

-20

Malmõ

Nottingham

Retail Sales Growth Forecast (5 yr %)

Ankara

Stockholm

Seville

Warsaw

Turin

Valencia

Dublin

Bilbao

Kiev

Oslo

Athens

St Petersburg

Edinburgh

Manchester

Istanbul

Madrid

Barcelona

Liverpool

Hamburg

Rome

Milan

Moscow

Gothenburg

Glasgow

10 Luxembourg

Birmingham

Lille

Prague

Helsinki

Cardiff

Budapest

Belfast

Lyon

Cologne

Leeds

Amsterdam

Munich

Bratislava

5

Marseille

Vienna

Copenhagen

Frankfurt

Bordeaux

Zagreb

Antwerp

Brussels

Stuttgart

0

Lisbon

Berlin

Düsseldorf

London

Zurich

1000 2000 3000 4000 5000 6000 7000 8000

Key:

core markets

growth markets

Paris

International Prime Rent (€/sq m/year)


4.

Retailer Country

of Origin

Italy tops the retailer exporter league

Looking at the country of origin of international retailers, as we can see in the map overleaf,

Italy is the number one exporter of retail fascias, accounting for 17% of total international

retailer presence in the 57 European markets covered. Benetton and Diesel are the highest

placed Italian retailers, with strong coverage across the 57 markets. However, it is the

strength of the Italian Luxury retailers which accounts for Italy’s position at the top of the

rankings. Max Mara is the most prolific luxury retailer in our analysis, with presence in 75%

of the markets covered.

Italy’s supremacy, however, is under threat from across the Atlantic. The US is currently in

second place, accounting for 16% of total international retailer presence, but is rising rapidly

as American retailers continue to selectively expand across Europe. Long established

operators such as Starbucks continue their expansion and a variety of newer entrants to

the market, including most recently, Victoria’s Secret are exploring new markets.

The UK ranks third, accounting for 13% of all international retailer presence. Whilst London

is the largest importer of international brands, the UK is also successfully exporting brands

globally. Retailers such as The Body Shop, Lush, Burberry, Marks & Spencer, Debenhams,

Primark, Superdry, and Topshop are actively, albeit selectively, expanding into new

territories.

The top three exporter countries are followed closely by Germany, also accounting for 13%

of the market, driven by its strength in mass market retailing, France with 12%, driven by

Luxury, in particular through the large holding companies of Pinault-Printemps-Redoute

(PPR) and LVMH, and Spain with 10%, driven mainly by the reach and coverage of Mango

and the Inditex brands.

We have also analysed the main countries targeted by the top six exporter countries. Not

surprisingly, it is generally a question of neighbouring, familiar markets being the favoured

target countries. The Italian brands have strong presence in the German and Spanish

cities, for instance, the US brands initially favour the UK market, and London specifically,

as their springboard into Europe. UK retailers have a strong presence in Germany and

increasingly in Russia, whilst French retailers target the neighbouring German cities, and

Spanish retailers are heavily represented in French cities.

| 24 | Jones Lang LaSalle Destination Europe 2013 | 25 |


Retailer Country of Origin

Source: Jones Lang LaSalle

UK

Retailer

Rank

The Body Shop 3 rd =

Lush

6 th

Burberry 31 st =

Karen Millen 37 th =

Marks & Spencer 64 th =

3 rd 4 th

GERMANY

Retailer

Rank

Adidas 16 th =

Hugo Boss 19 th =

New Yorker 24 th =

Deichmann 27 th =

Puma 27 th =

USA

2 nd

Key:

Rank – Retailer Coverage Ranking (1-250)

Retailer

Rank

Timberland 7 th =

Tommy Hilfiger 7 th =

Foot Locker 9 th =

Claire’s 16 th =

Starbucks 19 th =

SPAIN

FRANCE

Retailer

5 th

Rank

Louis Vuitton 19 th =

Petit Bateau 37 th =

Escada 37 th =

Cartier 47 th =

Hermès 53 th =

ITALY

1 st

Retailer

Rank

Benetton 3 rd =

Diesel 11 th =

Max Mara 13 th =

Geox 16 th =

Emporio Armani 37 th =

Retailer

Rank

Zara

1 st

Mango 3 rd =

Massimo Dutti 11 th =

Bershka 31 st =

Desigual 31 st =

| 26 | Jones Lang LaSalle Destination Europe 2013 | 27 |


Top 20 Retailers

% Coverage of Europe’s Key Markets

Source: Jones Lang LaSalle

City Rank

Zara

H&M

The Body Shop

Benetton

Mango

Lush

Tommy Hilfiger

Timberland

Foot Locker

G-Star

Diesel

Massimo Dutti

Max Mara

Jack Jones

Gant

Geox

Claire’s

Adidas

Starbucks

Louis Vuitton

Hugo Boss

1

2

3=

3=

3=

6

7=

7=

9

10

11=

11=

13=

13=

13=

16=

16=

16=

19=

19=

19=

60 65 70 75 80 85 90 95 100

Mainstream Premium Luxury

5.

Extensive and

Expansive Retailers

Zara tops the coverage league

Zara is the only retailer with 100% coverage across all the key European

markets reviewed, and therefore tops the retailer coverage league. Zara’s

Spanish owner Inditex group also owns the Massimo Dutti premium

clothing brand, which ranks equal 11th in the retailer coverage list. In total,

the Inditex Group operates 5,693 stores across the world, and opened 166

stores in the first six months of 2012 alone.

Swedish retailer, H&M, is second on the list, with presence in 96% of

markets covered. Despite its first international expansion taking place

nearly 50 years ago, pan-European coverage has only really materialised

in the last five to ten years. With plans to open stores in Mexico, Malaysia

and Kuwait over the next eighteen months, H&M clearly has its sights on

global coverage.

Rival UK cosmetics retailers, The Body Shop (equal 3rd) and Lush (6th),

are closely matched in terms of coverage of the key European markets.

Both use a franchise model, which provides retailers with a quick and low

risk means of increasing coverage. In addition, the need for small retail

units, combined with relatively affordable products, allows both retailers to

export their brand successfully with relative ease across many markets.

Not surprisingly, Starbucks is the only Food and Beverage retailer to make

the Top 20 of the coverage table (equal 19th). Further expansion looks

likely, as plans to open 300 new stores across the EMEA region in the next

five years have been widely reported.

The Top 20 is dominated by retailers we define as mainstream, accounting

for 12 out of the Top 20 retailers by total coverage. There are six premium

retailers within the Top 20, with US retailers Tommy Hilfiger and Timberland

ranking highest (equal 7th), both with over 80% coverage of Europe’s key

markets. Italy’s Max Mara (equal 13th) and France’s Louis Vuitton (equal

19th) are the only Luxury brands to make it into the Top 20.

| 28 | Jones Lang LaSalle Destination Europe 2013 | 29 |


Significant expansion

opportunities remain…

Perhaps surprisingly, only nine retailers have more

than 80% coverage across Europe’s key markets.

For the majority of international retailers, therefore,

significant expansion opportunities remain. In fact,

over 100 retailers have presence in less than 20%

of markets covered. For these retailers, over 80%

of the key markets analysed across Europe remain

untapped.

Amongst those retailers which are currently in

expansive mode are North American retailers,

Guess, Forever 21, Apple, Starbucks and Mac

Cosmetics, in addition to European players Michael

Kors and Calzedonia.

…although challenges

to overcome

There is a great temptation to access the huge pool

of potential new customers in foreign markets, in

particular for retailers that perhaps are not seeing

any growth or even struggling in their domestic

markets. Expansion for these reasons very rarely

works, and it is important to have a strong, well-run

business, before dedicating the extensive time and

resources needed for expansion.

One of the largest tests for international retailers

looking to grow in Europe’s key markets, is the risk

that the brand or product does not translate across

borders. Unfortunately, there are numerous examples

of retailers that have endeavoured to break into a new

market later to withdraw. Market testing is crucial,

and one of the principal advantages of e-commerce

is the ability to build brand awareness overseas prior

to arrival, of which there are many examples.

E-commerce, and social media in particular are

facilitating and accelerating the internationalisation

of fashion trends in particular. Previously retailers

could not transfer products as easily, as they were

historically designed for targeting domestic markets.

This generally left the retailer with the choice to either

accept lower sales densities in overseas markets or

to design and source separate ranges. There are now

more than 1 billion consumers using Facebook each

month around the world. Consumers everywhere,

therefore, are increasingly exposed to the same

fashion and cultural influences.

The second major challenge lies in understanding

market differences. The complexities of local

market fundamentals exist across all retail markets,

irrespective of geography. In this context, local

expertise or partnering is paramount in order to try and

avoid the pitfalls, in terms of legislation, site selection

and lease terms.

6.

Luxury

| 30 | Jones Lang LaSalle Destination Europe 2013 | 31 |


The rise and rise of luxury

The global luxury market has remained relatively sheltered from

the economic crisis. Despite a short period of slower sales in

2009, the market bounced back in 2010 and continued to flourish

throughout 2011 and into 2012. Whilst economic uncertainty has

deterred most global middle-income shoppers, affluent Western

shoppers have flocked back to the luxury brands, which together

with economic growth in the BRIC nations and an insatiable

appetite for luxury goods in the Far East, has driven growth in the

luxury goods market globally.

According to retail expert Verdict, the global luxury goods market

witnessed strong growth to 2010, and is currently valued at €320bn.

Verdict’s recent forecasts suggest that this expansionary trend is set

to continue, with estimates valuing the market at around €390bn by

2015. Europe remains the largest luxury goods market, with over

€90bn being spent on luxury branded products in 2010. However,

Asia Pacific is the only market not to have suffered a drop in luxury

sales in 2009, and is set to experience unprecedented growth over

the next five years, rapidly closing in on Europe’s number one

position. By 2015, Asia Pacific’s luxury goods market is expected

to be valued at €112bn, up 92% on today’s valuation. The growing

wealth creation in the Asia Pacific region, most notably throughout

China, and the sheer volume and size of its densely populated

cities, has made it a very attractive destination for luxury retailers.

The Global Luxury Houses have emerged from the financial crisis

much faster and stronger than most businesses. Burberry, Gucci

Group, Hermès, LVMH, Polo Ralph Lauren and Richemont have

all revealed strong sales growth, with some recording record sales

in the last year. Expanding store networks have driven growth,

particularly across the Asia Pacific region, where retail operations

typically outperform the rest of the business elsewhere in the world.

But despite this rapidly expanding region, Europe remains a core,

mature and key market for the international luxury retail brands.

London

Paris

Moscow

Milan

Madrid

Rome

Munich

Istanbul

Barcelona

Zurich

St Petersburg

Kiev

Hamburg

Prague

Athens

Frankfurt

Berlin

Vienna

Brussels

Düsseldorf

Amsterdam

Lisbon

Warsaw

Antwerp

Valencia

Budapest

Copenhagen

Stockholm

Bucharest

Cologne

Turin

Bilbao

Bordeaux

Lyon

Seville

Lille

Stuttgart

Zagreb

Luxembourg

Manchester

Marseille

Oslo

Belgrade

Dublin

Helsinki

Ankara

Birmingham

Edinburgh

Glasgow

Leeds

Liverpool

Nottingham

Belfast

Bratislava

Cardiff

Gothenburg

Malmõ

City Rank

1

2

3

4

5

6

7

8

9=

9=

11

12

13=

13=

15=

15=

17=

17=

19=

19=

21

22

23

24=

24=

26=

26=

26=

29

30

31

32=

32=

32=

32=

36=

36=

36=

39=

39=

39=

39=

43=

43=

43=

46=

46=

46=

46=

50=

50=

50=

53=

53=

53=

56=

56=

Cross Border Luxury Retailer Index 2012

Source: Jones Lang LaSalle

(Average representation = 100)

0 50 100 150 200 250 300 350 400

Index

| 32 | Jones Lang LaSalle Destination Europe 2013 | 33 |


Cross Border Luxury Retailer Index vs Prime Rent (Luxury District)

Source: Jones Lang LaSalle

400

London pips Paris

to the post

In 2011, we published a report, ‘Glitter & glamour

shining brightly’, which analysed the 100 most renowned

luxury brands, and their presence in Europe’s

top retail centres. As part of this research, we have

revisited this work, expanding the number of markets

covered in the analysis to the 57 key retail markets

covered in this report.

In our 2012 report, London leads the rankings in terms

of luxury brand presence, marginally ahead of Paris,

befitting their status as the two most renowned retail

locations in Europe. The growth market of Moscow

lies in third position, as in the overall index, followed

by Milan, Madrid, Rome and Munich. These markets

represent the mature luxury retail markets across

Europe, each with a critical mass of international luxury

retailers which attract both domestic and international

consumers seeking high-end shopping experiences.

| 34 | Jones Lang LaSalle

350

300

250

200

150

100

Cross Border Luxury Retailer Index

St Petersburg

Athens

Lisbon

Istanbul

Prague

Brussels

Amsterdam

Madrid

Barcelona

Kiev

Berlin

Munich

Hamburg

Frankfurt

Düsseldorf

Vienna

London

Warsaw

Valencia

Antwerp

Stockholm

Cologne

Budapest

Copenhagen

Turin

Bucharest

50 Bordeaux

Lyon

Seville

Stuttgart

Bilbao

Zagreb

Marseille

Lille

Lyon

Luxembourg

Helsinki

Ankara

Oslo Dublin

Liverpool

Nottingham

Belgrade

Belfast

Glasgow

Bratislava

Edinburgh

Prime Rent Luxury Districts (€/sq m/year)

0 Malmõ

Cardiff

Gothenburg

Leeds

1000 2000 3000 4000 5000 6000 7000 8000 9000

Paris

Moscow

Milan

Rome

Zurich

Growth Luxury Markets Established Luxury Markets

Emerging Luxury Markets


New Bond Street: from

prime to über-prime

Max Mara is the most

prevalent luxury retailer

We have also analysed rents commanded by luxury retailers across

the 57 markets covered. New Bond Street in London tops the rental

league, with headline rents of over €8,300 per sq m per year, following

recent growth this year due to pent up demand for space finally being

realised. Avenue Montaigne in Paris lies in second place, commanding

rents of €7,500 per sq m per year. Despite the relatively small market

size in terms of international retailer presence, Bahnhofstraße in

Zurich commands the third highest rents in Europe, at just over €7,000

per sq m per year. This is followed by the Italian luxury shopping

locations of Via Condotti in Rome and Via Montenapoleone in Milan,

both at €6,700 per sq m per year and Stoleshinkov Lane in Moscow,

commanding €6,000 per sq m per year.

There is a clear gap between the rental levels in the top six luxury

retail locations, and the rest, which are led by Vienna and the German

cities. On this basis, Madrid (and to a slightly lesser extent Barcelona)

and the growth markets of Istanbul and St Petersburg, all with

established luxury retail markets, currently appear to provide luxury

retailers with relatively good value for money.

Top 20 Luxury Retailers

% Coverage of Europe’s Key Markets

Source: Jones Lang LaSalle

Max Mara

Louis Vuitton

Burberry

Mont Blanc

Emporio Armani

Cartier

Hermès

Gucci

Bally

Ermenegildo

Giorgio Armani

Bulgari

Salvatore

Longchamp

Chopard

Chanel

Prada

Bottega Veneta

Tiffany & Co

Tod’s

City Rank

1

2

3

4=

4=

6

7=

7=

9

10

11

12

13

14

15=

15=

17=

17=

19=

19=

Italian luxury brand, Max Mara, has the highest presence amongst luxury retailers, with 75% coverage of all

markets. Louis Vuitton is the only other luxury retailer with over 70% coverage. Other luxury retailers with

over 50% coverage are; Burberry, Mont Blanc, Emporio Armani, Cartier, Hermès and Gucci. Expansive luxury

retailers include Tory Burch, Bottega Veneta and Mulberry.

30 40 50 60 70 80

| 36 | Jones Lang LaSalle Destination Europe 2013 | 37 |


7.

Conclusion

Methodology

Looking ahead, the numerous challenges facing

retailers operating internationally will persist. As

will the ever changing competitive environment that

forces retailers to consider shorter-term, domestic

opportunities with longer-term opportunities in

developing markets. The top retailers in the next

decade are likely to be those that focus on a

portfolio of markets, with different levels of risk

(core and growth), at different levels of maturity

and with distinct consumer profiles.

There are undoubtedly significant expansion

opportunities for retailers across Europe’s

key city markets. The key is for retailers to

fully understand and maximise current store

portfolios, before assessing the detailed risks and

benefits associated with international expansion.

And above all, to partner with knowledge and

experience to achieve strategic, profitable and

long-lasting growth.

The analysis looks at the presence of brands in the

specific cities, as well as retailers which are opening

imminently, focusing solely on retailers’ own shop

networks, including franchises. Retailer concessions

are excluded as are second-line brands, multi-label

stores and branded shops within department stores,

due to the lack of transparency. Geographically the

study looks at the downtown area of each individual

city, concentrating on its well-known shopping areas,

supplemented by surrounding areas and out of town

malls in prime locations.

Prime rents represent the top open-market rent that

could be expected to be paid by international and/

or luxury retailers for a notional unit of the highest

quality and specification, in the most prime location in

a market.

What is becoming increasingly clear, is that

borders are becoming irrelevant, and the

internationalisation of retail is gaining unstoppable

momentum.

| 38 | Jones Lang LaSalle Destination Europe 2013 | 39 |


Contact

James Dolphin

Head of EMEA Retail Agency

+44 (0)7921 944 355

james.dolphin@eu.jll.com

James Brown

Head of EMEA Retail Research & Consulting

+44 (0)7860 408 863

james.brown@eu.jll.com

Colin Burnet

Associate Director, EMEA Retail Research & Consulting

+44 (0)203 147 1185

colin.burnet@eu.jll.com

www.joneslanglasalle.eu

Copyright (c) Jones Lang LaSalle IP, INC 2012

No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable.

Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.

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