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How global is the business of retail?

Posted on by Track2Realty

By: Vivek Kaul, Head-Retail Services, CBRE South Asia

DLF Brands, DLF Emporio, Delhi NCR real estate, Bangalore Real Estate, JLLM, Jones Lang LaSalle Meghraj, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.comIndiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India Property, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Indiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India PropertyTrack2Realty: According to recent CBRE report—How Global is the Business of Retail?—new trends identified in the global retail market saw retailers focusing on larger markets in 2013, with 83% of the survey cities witnessing at least one new entrant in the year (compared to 81% in 2012), while the top target markets saw a 28% rise in new entrants.

Paris emerged as the top target market last year with 50 new entrants, most of which were smaller European-based brands. And although Hanoi happened to be the most sought after emerging market globally, with 22 new entrants, reflecting the growing popularity of Asia to cross-border retailers—retailers based in the Americas continued to dominate cross-border retailer activity.

Over the years, retailers from the Americas have grown increasingly global in their outlook, with Europe accounting for 40% of new market entrants by American-based retailers in 2013, and Asia (35%) tagging close behind.

The CBRE survey found that Asia Pacific-based retailers saw significant potential in their own geography, and that all of their top 10 target destinations for expansion in 2014 are likely to be within the region. China is a target for 58% of Asia Pacific-based retailers, making it the most sought after market, followed by Vietnam (48%), Malaysia (42%), Indonesia (39%) and Singapore (35%).

The relatively lower levels of interest by Asia Pacific retailers in expanding in American and European markets reflect a cautious attitude to expanding out of their core markets, but that said we are beginning to see a number of Asia-based brands working on strategies for global markets. For example, Chinese brand Bosideng opening on Oxford Street in London and a number of other Chinese brands looking to launch New York and Australia.

Retailers’ expansion plans in Asia Pacific remain relatively modest, with 29% planning to open less than five stores and a further 26% looking to open between 5-10 stores in 2014. Most retailers active within Asia Pacific have tended to focus operations within a few countries, and locations are generally limited to the key or top-tier cities where quality retail space is accessible. Tougher trading conditions in most markets has tempered expansion ambitions for the short term, however, over the longer term economic growth and the rising middle class in Asia are expected to spur further growth.

Global retailers’ targets

Retailers globally are predominantly targeting countries with mature retail sectors, although a number of emerging markets in Asia Pacific also featured strongly in the CBRE survey. Retailers originating from Europe displayed a strong bias towards their own region, with less than 15% of retailers targeting markets outside the region. On the other hand, retailers from the Americas were biased towards the US, but were also targeting European markets, and in particular Germany. 

China lead the way for Asia Pacific, ranking as the fifth most popular destination for global retailers, with 22% of surveyed retailers targeting the market in 2014. Singapore, Hong Kong, Vietnam, Indonesia and Malaysia also feature in the top 20 target markets worldwide. The importance of China globally cannot be underestimated—in part because of the impact thathaving a presence there has on sales in other regions. 

In Vietnam, middle class consumers with rising incomes and a hunger for style continue to draw retailers’ interest. Ho Chi Minh City and Hanoi were both ranked in the top 10 cities of most new retailer entrants in 2012 and 2013, according to CBRE’s Retail Hotspots in Asia Pacific report. The liberation of Foreign Direct Investment (FDI) on wholly-owned retail businesses from 2015 is expected to further stimulate this trend. 

Meanwhile, the economies of Malaysia and Singapore are strengthening and as a result consumer sentiment is expected to improve in both markets. In Malaysia an influx of new supply is due over the next few years. The resulting increase in available space, and expected lower rental levels in these new venues, should provide an added incentive for international retailers wanting to expand there.

In Singapore, stability in the economy and the employment market has laid a sound foundation for domestic consumption. Retail spending has also been boosted by the growth in international tourists, especially affluent ones, following the opening of major new visitor attractions. Singapore has since become one of the gateway cities for brands new to Asia. Of some concern though for retailers in Singapore is the availability of qualified sales floor staff.

Retailer appetite also increased for Indonesia after the recent arrival of major international brands such as UNIQLO and H&M. The Indonesia Shopping Centres Association expects retail sales to grow by 15% in 2014.

Now in its seventh year, CBRE’s report—How Global is the Business of Retail?—analyses the operational networks of 334 leading international retailers across 61 countries and covers the vast majority of the world’s economy. It maps the footprint of leading global retailers at a country level, across 189 of the world’s largest cities; and examines the extent to which retailers expanded their global operations in 2013.

During the year, overall cross-border retailer activity accelerated, with the number of new entrants at the city level going up by 30%—reflecting the growing number of retailers that are at crossing borders to grow their businesses.

Nearly 80% of global retail brands enter India through New Delhi

Posted on by Track2Realty

By: Anshuman Magazine, CMD, CBRE South Asia 

DLF Brands, DLF Emporio, Delhi NCR real estate, Bangalore Real Estate, JLLM, Jones Lang LaSalle Meghraj, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.comIndiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India Property, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Indiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India PropertyTrack2Realty: The expanding retail footprint of global brands in India has been a major growth driver of retail real estate in the country. In an effort to map and analyze the spread of international retailers, CBRE undertook a research study of more than 300 prominent global retailers—Expanding Horizons of Global Retailers in India—to identify operating trends, expansion strategies, and extent of penetration across leading cities. 

Most of the international retailers surveyed for the study opted to enter India by opening a store in a major metropolitan city, such as New Delhi (79%) or Mumbai (68%), before gradually expanding their footprint to other tier I locations, including Bangalore, Chennai, Hyderabad, Kolkata and Pune. The graph below presents where retailers are already operating in India, as well as their preferred cities of operation:

The India entry strategy for most global retailers from the CBRE survey continues to be guided by the economic and demographic dynamics of leading metropolitan cities. New Delhi is the top destination preferred by retailers, followed closely by Mumbai and Bangalore. In recent times, smaller cities in proximity to these large urban agglomerations have also witnessed a spill over effect, with an increased percolation of global brands. Hyderabad ranks fourth on the list of cities most favored by global retailers; but the gap between the number of retailers present in Hyderabad and Bangalore is significant (66 in Hyderabad compared to 102 in Bangalore). 

Apart from the major locations of New Delhi, Gurgaon, Noida, Mumbai and Bangalore, where a majority of global brands and retail segments are present, it is interesting to note the density of global brand segments in other tier-II and III locations. The emerging locations of the country with a growing presence of global retailer presence include Chandigarh, Ahmedabad, Ludhiana, Amritsar, Lucknow, Surat, etc. Chandigarh is the most penetrated city in terms of global fashion apparel brands, with more than 50% of international retailers present there belonging to this segment. Ludhiana and Amritsar follow close behind. As far as global F&B brands are concerned—apart from the NCR locations of Noida and Gurgaon with a sizeable penetration of global eating outlets—nearly 25% of global brands in Lucknow happen to be F&B brands, closely followed by Jaipur and Amritsar. Jaipur also has the most sizeable presence (~10%) of global cash-and-carry brands in the city’s bouquet of international shopping outlets.

Most of the global brands included in the CBRE study preferred to enter the country by setting up base in a metropolitan city, such as New Delhi (and the NCR) and Mumbai, before gradually expanding to locations such as Bangalore, Chennai, Pune, Hyderabad, and in select cases, Kolkata. These locations have emerged as prime destinations mainly due to their high per capita incomes, the presence of a large working population and, in particular, a sizable share of households earning an annual income greater than INR 1 million. According to the study, luxury brands in particular have set up base in these cities before expanding to Hyderabad and Kolkata guided by the density of high net worth individuals in each of these prominent locations.

CITY GLOBAL RETAIL DYNAMICS
Jaipur A prominent tourist destination, Jaipur has emerged as an important retail destination in North India. Organized retail has come up and is proliferating in areas such as Tonk Road, Malviya Nagar, Ajmer Road, among others.
Chandigarh Increasing per capita income, growing commercial activity and high literacy rates are factors spurring the growth of the retail sector in the city. The Elante mall has been met with a resounding response, reiterating the significance of the city as a retail destination.
Ludhiana The city is a strong industrial hub, has high per capita income and a large NRI population. These factors have led to an improvement in its socio-economic profile. Ferozpur Road is the main growth corridor and major developers such as Ansals, DLF, Omaxe, etc., are entering the market to develop retail space.
Amritsar The city houses brands that are similar to the brand mix observed in the suburban regions of the NCR. The city being a leading tourist destination, it has led to increasing footfalls for retail developments in the city.
Ahmedabad The city has emerged as one of the fastest growing cities in the country on account of infrastructure initiatives and industrial growth. Ahmedabad also has a high number of educational institutes, besides emerging as a key center for the IT/ITeS sector. A combination of these factors is leading the city to emerge as a favorable retail destination.
Lucknow The city is poised to emerge as one of the key locations expected to witness high retail activity over the coming years due to significant retailer interest and high shopping development activity.