There is no doubt that retailing has become an increasingly international business. While the physical store still plays a vital role for international brands, the rise of e-commerce has resulted in a shift in focus towards opening fewer stores in strategic cities and locations around the world.
It’s therefore vital that the locations chosen for stores provide maximum brand exposure and opportunities for enhanced customer engagement, ultimately helping to drive both in-store and online sales.
No two brands or retailers are the same, so each will have their own specific requirements when it comes to location. However, there are a number of high-level macro characteristics that may make some cities more attractive than others as initial targets.
These characteristics include size, both in terms of population and volume of retail sales; forecast growth in sales’ affluence of the resident population, plus anticipated growth in affluence; unemployment rate, and the city’s appeal and ease of access to international tourists.
We have drawn on these macro indicators to create Savills Global Retail City Benchmark (see table below), highlighting the most attractive strategic locations for expanding international brands. This ranks the top 30 cities globally in terms of their overall attractiveness to retailers and the top growth markets over the next five years.
London, New York and Hong Kong all feature in the top three in terms of overall attractiveness, largely thanks to their large domestic retail markets and the high numbers of international visitors they attract. For brands wanting to focus on emerging growth markets, London and Hong Kong remain relevant, with Kuala Lumpur, Bangkok, Shanghai and Delhi all stand out markets in Asia.
In the Americas, it’s Toronto and Sao Paulo that are forecast to be the key growth markets. In Europe, Amsterdam has been highlighted as a key future growth city supported, in part, by the global connectivity of its international airport which is expected to support am increase in tourism to the city.
Savills Global Retail City Benchmark (future high growth markets in bold)