Re­tail­ers ex­pand­ing in lead­ing cities around the world

Re­tail­ers ex­pand­ing in lead­ing cities around the world

Shoes & Accessories - - Contents -

Paris and Hong Kong com­mand top in­ter­na­tional re­tailer rents…

As the role of a phys­i­cal store for in­ter­na­tional re­tail brands and lux­ury re­tail­ers

rent lev­els paid. Analysing re­tail lo­ca­tions most sought af­ter by key in­ter­na­tional main­stream re­tail brands, The Av­enue des Champs-elysées in Paris and Sai Ye­ung Choi Street in Hong Kong’s re­silient Mong Kok area com­mand the high­est rental lev­els. As de­mand has far out­stripped sup­ply, rent lev­els have soared in re­cent years to circa US$20,000 sqm a year in both mar­kets. New York’s Soho and Lon­don’s Ox­ford Street are also highly sought af­ter by in­ter­na­tional re­tail­ers, and com­mand some of the world’s high­est rents among main­stream and pre­mium brands. Lux­ury re­tail­ers are gen­er­ally able to af­ford higher rents that many main­stream re­tail­ers. Up­per Fifth Av­enue in New York is the most sought af­ter re­tail lo­ca­tion glob­ally by top lux­ury brands, with head­line rents reach­ing up to US$37,700 sqm a year. More in­sight into the top lux­ury re­tail rents glob­ally will be pro­vided in the chap­ter ‘Lux­ury’.

Bei­jing and Kuwait City have all wit­nessed im­pres­sive trans­for­ma­tion of their re­tail mar­kets and have at­tracted many new brands. How­ever, these cities com­mand rel­a­tively low prime rent lev­els, rel­a­tive to their in­ter­na­tional re­tailer pres­ence. These mar­kets are fore­cast to see con­tin­ued strong re­tail sales growth, and

growth slows, com­pe­ti­tion among in­ter­na­tional re­tail­ers for the best lo­ca­tions is likely to push rent lev­els up­wards.

the best re­tail lo­ca­tions in well-es­tab­lished mar­kets. Re­tail­ers are in­creas­ingly com­pet­ing for stores in prime lo­ca­tions in or­der to tap into the ris­ing tourism spend and in­crease their in­ter­na­tional brand aware­ness. An in­creas­ing num­ber of re­tail­ers are suc­cess­fully em­bed­ding e-com­merce into their wider re­tail strate­gies.

ex­pan­sion into less densely pop­u­lated but none­the­less at­trac­tive re­tail mar­kets.


The Amer­i­cas has be­come the largest global re­gion for per­sonal lux­ury goods, driven by a strong in­crease of the US dol­lar cur­rency value. The US alone ac­counts for over 90% of all lux­ury spend within the Amer­i­cas.


Growth across the con­ti­nent was up 9% in 2015, pri­mar­ily driven by Chi­nese and US tourists at­tracted by a weak euro.


both real and nom­i­nal terms, driven by a in­ter­est from lo­cal con­sumers.

Main­land China

China’s lo­cal spend­ing con­tin­ued to con­tract slightly dur­ing 2015, due to greater con­trols on lux­ury spend­ing and slow­ing con­sump­tion growth.

Rest of Asia

South Korea con­tin­ues to ex­cel with 4% real growth year on year. Sales in Hong Kong and Ma­cau re­main un­der down­ward pres­sure due to the on­go­ing anti-cor­rup­tion cam­paign.

Hong Kong and New York dom­i­nate lux­ury rental pic­ture…

We have also an­a­lysed rents com­manded by lux­ury re­tail­ers in the most pres­ti­gious re­tail lo­ca­tions across the 140 mar­kets cov­ered. Up­per Fifth Av­enue in New York tops the rental league with head­line rents reach­ing up to US$37,700 per sqm a year fol­low­ing a strong in­crease in re­tailer de­mand. Ex­clu­sive Can­ton Road in Hong Kong fol­lows with rents of US$25,000 per sqm a year. Up­per Fifth Av­enue has over­taken Can­ton Road as the most ex­pen­sive re­tail lo­ca­tion in the world, fol­low­ing a re­cent cor­rec­tion in Hong Kong’s top rents due to a change in spend­ing pat­terns of Main­land Chi­nese tourists.

There is ‘clear wa­ter’ be­tween rental lev­els in these two glob­ally renowned re­tail lo­ca­tions and the rest of the world, with rents in Europe’s pow­er­house mar­kets of Lon­don and Paris the clos­est, at US$16,100 per sqm a year and US$13,400 re­spec­tively, fol­lowed by Los An­ge­les, Zurich, Mi­lan, Tokyo and Rome. The su­per-pre­mium rental lev­els sig­nify the value to lux­ury re­tail­ers from hav­ing a pres­ence in iconic re­tail­ing lo­ca­tions. This, and the scarcity of sup­ply in the prime lux­ury re­tail­ing lo­ca­tions world­wide, will likely main­tain these su­per pre­mium rental lev­els.

How­ever, while rents and oc­cu­pancy costs are im­por­tant, in the con­text of op­er­at­ing a global lux­ury re­tail busi­ness, they are not al­ways the ul­ti­mate driv­ing force be­hind re­tail­ers de­cid­ing where to take space. Rent sen­si­tiv­ity di­min­ishes for global lux­ury brands, as they use their phys­i­cal pres­ence for func­tions be­yond tra­di­tional trans­ac­tional re­tail.

The anal­y­sis also high­lights that rental lev­els in some of the emerg­ing re­tail lo­ca­tions, in par­tic­u­lar in some Mid­dle East and Asian cities, such as Bei­jing, Dubai and Osaka, could be viewed as ‘fair value’ in com­par­i­son with some of the more tra­di­tional lux­ury re­tail lo­ca­tions.

In ad­di­tion to rank­ing and pro­fil­ing the cities in terms of over­all in­ter­na­tional re­tailer pres­ence, the re­port ex­am­ines the im­pact of tech­nol­ogy on our chang­ing re­tail spaces, analy­ses rents within each mar­ket, and how rental lev­els are in­flu­enced by the dif­fer­ing role of the store. The re­port also iden­ti­fies which are the ma­jor ex­porter coun­tries of in­ter­na­tional re­tailer brands and the most ex­pan­sive re­tail­ers, and ex­am­ines their vary­ing routes to mar­ket. Ad­di­tion­ally, the re­port delves in depth into the dy­nam­ics of the global lux­ury re­tail mar­ket.

Source: Bain & Com­pany (2015)

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