Destination Europe 2013 - Jones Lang LaSalle

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
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