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New study: physical store expansion remains key to retailers' strategies

Friday February 26th 2016

A new study has concluded that growing online sales will not deter retailers' physical store expansion plans in 2016.

According to CBRE’s seventh edition of “How Active Are Retailers Globally?, a study of over a 150 major international brands, 83% suggested their physical store expansion plans will not be affected by the growth in e-commerce in 2016, and only 22% were concerned about competition from online retailing.

Of those retailers questioned, 17% said they have large scale ambitions with many looking to open more than 40 stores in 2016. In addition, 67% said they are planning to open up to 20 stores.

Mark Disney, executive director, CBRE shopping centre development & leasing, said: “Demand from retailers is stronger than for several years with a substantial number of global brands looking to expand in strategic locations or upgrade their stores to improve customer experience and showcase their brand. This comes in the form of new sites or existing stores being enlarged or upgraded to include further lines or collaborations that retailers may be pursuing. The stores need to support the range that can be found online, and vice versa.”

The study found that core Western Europe is at the top of retailers' expansion targets with Germany proving the most popular country followed by France and the UK.

China came the top of the Asian market with 27% of retailers looking to expand there. Meanwhile, a quarter of retailers are looking to the US as a retail destination in 2016.

Mark Burlton, global executive, retail occupier team, EMEA, added: “Despite the backdrop of economic uncertainty and the popularity of online shopping growing year on year, a physical store presence in key locations is still critical to the strength of a brand’s presence. Stores still need to create an emotional affinity with a shopper and customers still feel a need to go into store, physically touch a product and enjoy the feel-good factor associated with a particular brand experience.”

Street shops and regional shopping malls were cited as the most popular formats for expansion with an increasing number of brands looking to travel hubs. A fifth of brands, largely from the Americas and EMEA, stated their intention to expand into travel hubs in 2016 as they wanted access to high footfall, highly frequented locations.

Burlton added: “The challenge now is for retailers to build an engaging offer that encourages people to stay longer and spend more.”