UK overtakes Germany as least difficult market for retail expansion, EC Harris reports

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The UK has surpassed Germany as the least difficult market for retailers to expand into while emerging economies in the East remain some of the most difficult in the world, according to EC Harris’s second annual global retail study, the Retail International Programme Expansion Index.

The annual Index by the leading global built asset consultancy ranks 40 important international retail markets according to five factors that have a major impact on successful retail expansion, including: quality of infrastructure, capability of the construction supply chain, legal framework, quality of project delivery and business environment.

Whilst many of the top ranking countries are those with established markets, strong infrastructure and a well-developed consumer base, those that rank lower include developing BRIC nations such as Russia and India, and Egypt where recent political unrest has impacted its accessibility and desirability as a market for retail expansion.

The best and worst countries were:

Top 10      

1.     United Kingdom

2.     Netherlands

3.     Germany

4.     Canada

5.     Taiwan

6.     France

7.     Qatar

8.     Japan

9.     USA

10.  Australia

Bottom 10

31.  Philippines

32.  Vietnam

33.  India

34.  Egypt

35.  Ukraine

36.  Romania

37.  Pakistan

38.  Nigeria

39.  Argentina

40.  Russia

Colin Turner, head of retail and corporate occupiers at EC Harris, said: “The UK has always been a magnet for global retailers looking to expand due to its good infrastructure, sustainable legal framework and sound business environment. However, for Western retailers looking to stay ahead of competition coming from the East they must focus on investing in existing stores and finding new ways to become more efficient in the development and deployment of large-scale refurbishment.”

Brand protection

With renewed focus on compliance, ethics and business governance, arising from the Bangladesh factory incident, retailers are also increasingly in need of proactive measures in place to protect the brand from direct and indirect damage and to minimise reputational risks. The likelihood of risk and reputational damage to a retailer is much greater in emerging and developing markets. The report highlights how to maintain brand protection whilst keeping quality and pace when entering new markets.

Emerging consumer economies

Despite China rapidly becoming the world’s largest consumer market, the country remains around the midpoint of the Index in 23rd place, though above the other BRIC countries – Brazil, India and Russia. The report reasons that the BRICs are more difficult to expand into than Western markets due to a lack of supply chain and project delivery capability, which creates far greater risk and potential reputational damage for retailers.

However, the report found that the pool of international retailers competing to deliver a store expansion programme in emerging markets, such as the BRICs, is continuing to grow. UK brands are expanding outside of the UK to secure new revenue to underpin lower return in Western economies and drive brand loyalty in new markets.

Turner said: “Western retailers are increasingly looking to implement expansion programmes in the East, specifically China, to take advantage of its rapidly growing consumer market. Success in a country such as this relies on a high quality store end-product and the pace of delivery, so retailers must assess and retain the best programme capabilities in order to mitigate risk and reputational damage. 

“No matter where retailers are looking to expand, property development programmes must be streamlined to ensure efficiency. In today’s volatile market, the competitive advantage will come to retailers which implement practical solutions throughout the supply chain to expand faster and save money, whilst protecting the brand.”

The full report is available for download here.