HOW GLOBAL IS THE

BUSINESS OF RETAIL?
CB RICHARD ELLIS | EMEA RESEARCH

c
DISCLAIMER 2008 CB RICHARD ELLIS
CB Richard Ellis has taken every care in the preparation of this report. The sources of
information used are believed to be accurate and reliable, but no guarantee of accuracy or
completeness can be given. Neither CB Richard Ellis, nor any CB Richard Ellis company, nor
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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

2
CONTENTS 4
6
INTRODUCTION

KEY FINDINGS

HOW GLOBAL ARE RETAILERS?

6 TRENDS BY REGION OF ORIGIN

8 TRENDS BY CATEGORY OF RETAILER

10 WHICH MARKETS ATTRACT RETAILERS?

12 REGIONAL TRENDS

14 THE INFLUENCE OF MARKET SIZE

17 CONCLUSION

18 CONTACTS

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

INTRODUCTION
Globalisation is affecting all aspects of social and economic activity, and retailing is no exception.
Many retailers are increasingly venturing beyond their traditional territories, identifying expansion
opportunities in new countries and regions around the world. Shoppers are accustomed to
seeing “London – Paris – New York” adorning the fascia of high-end fashion retailers, but these
are now being joined by a host of others such as IKEA (Sweden), Uniqlo (Japan), Metro
(Germany) and Aldo (Canada) who have established themselves as global brands.

It is no coincidence that the world’s most successful retailers are those that place as much
importance on the location of their stores, and the coverage of their networks, as they do on the
product they sell. So when retailers look to expand, where do they go? Which countries have the
highest presence of international retailers? Which types of retailers are most likely to expand
overseas? Do the biggest retailers necessarily have the largest geographic footprint?

THE AMERICAS
KEY
THE AMERICAS
(7 countries)

EMEA
(40 countries)

ASIA PACIFIC
(14 countries)

Canada

United States

Mexico

Peru
Brazil

Chile

Argentina

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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

This report explores not only which retailers are present where, but also asks such questions as:
what types of retailers are proving most mobile; and which are at the cutting edge of the globali-
sation of retailing?

“OF THE ORIGINAL In order to examine the degree of internationalisation of the retail market, 250 of the world’s top
250 RETAILERS, retailers were selected based on their retail sales and their brand strength. The global footprint of
each retailer was analysed to identify the countries in which the retailer’s fascia was present.
226 HAD SOME
After an initial appraisal, the analysis was narrowed down to 61 countries that had the greatest
PRESENCE OUTSIDE presence of international retailers. Of the original 250 retailers, 226 had some presence outside
THEIR DOMESTIC their domestic market; it is the international presence of these retailers that is the focus of the
MARKET.” analysis in this report. The 61 countries analysed were grouped into three broad regions - The
Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific allowing analysis of broad
regional differences as well as specific national trends.

EMEA & ASIA PACIFIC

Sweden

Norway Finland

Estonia
Russia
United Kingdom Latvia
Denmark Lithuania

Ireland Neth. Poland

Germany
Bel.
Lux. Czech Rep.
Slovakia Ukraine
Austria
Switz. Hungary
Slovenia Romania
Italy Croatia
France Serb.
Bulgaria
Spain
Portugal
Greece
Turkey China Japan
S. Korea
Malta Cyprus
Israel
Morocco
Kuwait
Pakistan
Saudi Arabia U.A.E.
Taiwan
India Hong Kong

Thailand
Vietnam

Malaysia
Singapore

Indonesia

Australia

South Africa

New Zealand

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

KEY FINDINGS
Of the 250 retailers surveyed, 226 (90%) had a presence outside their country of origin.

The scale of this retailers’ international presence varied widely. 22 of the retailers were present
in only one country (beyond their home market), whilst the eight most prolific retailers had
established themselves in 50 or more of the 61 countries evaluated.

On average, the retailers studied were present in 16 countries, with over half present in 10
or more countries.

Just under 15% of the retailers surveyed could reasonably claim to have a truly global
network covering more than 30 markets. However, nearly half had some presence in each of
the three global regions.

Retailers from EMEA generally tend to be the most ‘international’, with all bar two of the
retailers in the original sample having an overseas presence. However, only 13% of European
retailers had a presence in more than 30 markets, compared with 19% of the retailers from
the Americas.

Luxury retailers, many of which originate in France or Italy, were the most ‘international’ of
those surveyed. Nearly 90% had a presence in more than 10 markets, and almost 40% were
present in 30 or more countries. By contrast, only 5% of department store retailers in the
survey had a presence in more than 10 markets.

The UK was the most penetrated global market, attracting 55% of international retailers.
European markets generally have a more multinational retail offer than their Asian or
American counterparts.

Top 15 Most International Retail Markets

Rank Country % of International Retailers Present

1 UK 55%
2 Spain 51%
3 France 49%
4 Germany 47%
5 Italy 45%
6 Switzerland 42%
7 Austria 42%
8 UAE 41%
9 China 40%
10 Russia 39%
11 US 39%
12 Netherlands 38%
13 Singapore 38%
14 Belgium 37%
15 Ireland 35%

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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

The particular geo-political context of Europe almost certainly has a significant influence on
these results. The enlargement of the European Union “single European market”, together
with the introduction of the Euro and the strong cultural and historic ties between different
European countries have all contributed to the internationalisation of European retail.

The United Arab Emirates is ranked in eighth position, with 41% of international retailers
present. Retailing in the UAE has changed beyond recognition in recent years, with the
emergence of some of the most high profile retail developments anywhere in the world.

Emerging markets are becoming more important for many retailers, with China and Russia
particularly attractive at ninth and tenth places respectively.

Despite being the largest retail market in the world, the United States is ranked just outside
the top 10, with only 39% of international retailers present. Given that dominant US retailers
are present in virtually every retail category, the size and strength of these domestic operators
may explain why all but the strongest foreign retailers have found it difficult to break into the
US market.

Less than half the retailers from EMEA had any presence in Asia Pacific, compared with
almost 70% of retailers from The Americas. Asian retailers, by contrast, were almost twice as
likely to be present in EMEA than in The Americas.

Of the 52 American retailers in the survey, 39 were found to be present in the UK – second
only to Canada, which has attracted 41.

Establishing a presence in the five largest global economies (USA, Japan, Germany, France
and China) would give a retailer exposure to 57% of the world’s GDP. Operating in the 10
largest economies covers almost three quarters of the total global economy.

American retailers are on average present in only 14 markets but, by virtue of being in the
United States, they access over half of global GDP. European retailers are typically present in
a larger number of markets, but access less than 40% of global GDP because almost half
are not present in the USA.

Whilst there remain barriers to entry into new markets, the process of the globalisation of retail
is still in its early stages. Many more retailers will be establishing overseas operations over the
next ten years.

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

HOW GLOBAL ARE RETAILERS?

In this survey, 226 (90%) of the 250 retailers surveyed had a presence outside their country of origin.

By Domicile EMEA Americas Asia Pacific Total

“International” retailers 156 (99%) 52 (81%) 18 (64%) 226 (90%)
Domestic-only retailers 2 (1%) 12 (19%) 10 (36%) 24 (10%)
Total 158 64 28 250

Within each region there were retailers who had expanded internationally, most notably in EMEA
and the Americas regions. However, the scale of this international presence varied widely, with 22
of the retailers present in only one country (in addition to their domicile), whilst the eight most
prolific retailers had established themselves in 50 or more of the 61 countries. The findings
presented in this report refer to the ‘international’ presence of the 226 international retailers, and
exclude the 24 retailers present only in their domestic market.

Figure 1: Size of International Retail Footprint

Number Of Retailers
70

60

50

40

30

20

10

0
1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-61

Number of Countries In Which Present

Source: CB Richard Ellis

On average, the retailers were present in 16 countries, with over half present in 10 or more
countries (figure 1). It is apparent that many have built a moderate international presence, with
60% operating in up to 15 countries. A further 25% have already established a comprehensive
regional or, in some cases, multi-regional network with a presence in between 16 and 30
countries. Just under 15% of the retailers surveyed could reasonably claim to have a truly global
network covering more than 30 markets, although nearly half of all retailers (43%) had some
presence in each of the three global regions.

TRENDS BY REGION OF ORIGIN

There are differences in the extent to which retailers from different regions have expanded across
borders. Retailers from EMEA and the Americas were each, on average, present in 16 markets,
whilst Asia Pacific retailers tended to have slightly fewer overseas operations (12 on average).

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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

By Domicile EMEA Americas Asia Pacific Total

Number of ‘International’ Retailers 156 52 18 226
Percentage of sample 69% 23% 8% 100%
Average no. of countries in which present 16 16 12 16

13% EMEA 19% Americas

% present in 1-10 markets % present in 1-10 markets
16%
29%
42%
% present in 11-20 markets 48% % present in 11-20 markets
15%
% present in 21-30 markets % present in 21-30 markets

29% % present in more than 30 markets 17% % present in more than 30 markets

11% Asia-Pacfic 15% Total

% present in 1-10 markets % present in 1-10 markets
22% 15% 45%
67% % present in 11-20 markets % present in 11-20 markets

% present in 21-30 markets % present in 21-30 markets

% present in more than 30 markets 26% % present in more than 30 markets

However, this masks some significant differences between the regions. Two-thirds of Asian
retailers were present in 10 or fewer markets (and 40% were in 5 or fewer countries), compared
with less than half of those domiciled in EMEA or the Americas. Retailers from EMEA generally
tend to be the most ‘international’; they formed by far the largest proportion of the original
sample of 250 major retail brands, and all bar two had some overseas presence. However, only
13% of European retailers had a presence in over 30 markets, compared with 19 % of the
retailers from the Americas. Nevertheless, the fact that over 10% of the sample from each of the
three regions were active in over 30 markets indicates that nationality is not necessarily a barrier
to establishing a truly global presence.

Figure 2: Distribution of Retailers by Region and Footprint

Percentage of Retailers from Each Region

100%

Asia Pacific Retailers

90%
Americas Retailers

80% EMEA Retailers

70%

60%

50%

40%

30%

20%

10%

0%
1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-61

Number of Countries In Which Present

Source: CB Richard Ellis

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

TRENDS BY CATEGORY OF RETAILER

A further, and significant, influence on propensity to expand internationally concerns the type of
operation that the retailer is engaged in. To examine this, the retailers in the survey were classified
into seven categories according to their particular focus:
Luxury
Grocery/Food and Drink
Clothing/Footwear/Accessories
Electricals/Computing/Phone
Furniture and Textiles
Books/Music/DVDs
Department Store

Luxury retailers were the most ‘international’ of all those surveyed, nearly 90% had a presence in
more than 10 markets. This was markedly ahead of the grocery, food and drink retailers, of which
only 60% had a presence in more than 10 markets, and clothing, footwear and accessories
retailers of which 54% were in more than 10 markets. It is worth noting, however, that many of the
brands classified as ‘Luxury’ retailers are particularly well known for their clothing ranges (for
example Hugo Boss or Versace).

Figure 3: Size of International Footprint by Type of Retailer

100%

90% Presence in >10 Markets

80% Presence in >20 Markets

Presence in >30 Markets

70%

60%

50%

40%

30%

20%

10%

0%
De

Bo

Fu

Ele

Cl

Gr

Lu
ot
rn

o
pa

ok

xu
ctr

ce
hin
it

ry
s/
rtm

ur

i ca

ry
M

g/
ea

/F
en

ls/
us

Fo

o
nd
tS

Co

od
ic/

ot
we
to

m
Te
DV

an
re

pu
xti

ar
D

d
tin

/A
les

Dr
cc
g/

ink
Ph

es
on

so
es

rie

Source: CB Richard Ellis

s

As Figure 3 shows, most categories contain a significant proportion of retailers that have “ALMOST 40% OF
expanded into anything up to 20 international markets. However, when looking at the brands with LUXURY RETAILERS
the largest international presence, it is the luxury retailers which dominate. Almost 40% of the
WERE PRESENT
retailers in this category were present in 30 or more of the 61 countries in the survey, a far higher
proportion than seen in any other category. IN 30 OR MORE
COUNTRIES.”

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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

This is not surprising when the nature of luxury retailing is considered. Prestige brands focused
on high-value, high-margin/low-volume products are able to access new markets through
selective opening of strategically placed individual units in key cities. The focus on exclusivity
makes this strategy positively attractive, in contrast to mid-market retailers who require a more
significant presence in a country to justify entering the market. It is therefore typically the luxury
brands which pioneer entry into both developed and emerging markets via ‘flagship’ stores, often
paving the way for the subsequent arrival of mass market retailers.

“UNDERSTANDABLY By contrast, only 5% of department store retailers in the survey had a presence in more than 10
DEPARTMENT STORE markets. Understandably department store retailers face many challenges when entering new
markets. The quantity and range of merchandise that need to be offered make it difficult to
RETAILERS FACE
replicate an existing retail format and offer in another country. Such retailers also tend to have
MANY CHALLENGES quite specific real estate requirements, which may be difficult to satisfy in competition with
WHEN ENTERING existing domestic operators. Department stores are also very reflective of the culture of the
NEW MARKETS.” country in which they operate, meaning that their ‘brand’ often does not travel well. Those which
have expanded internationally have tended to do so within their own region, generally remaining
in close proximity to their domestic markets for cultural and logistical reasons. The few who have
expanded outside their home ‘region’ have done so via signature stores, but it remains the case
that the Asian department stores have rarely expanded into the European or American markets
and vice versa.

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

WHICH MARKETS ATTRACT RETAILERS? “EUROPEAN

The results were analysed to identify the proportion of international retailers that were present in MARKETS APPEAR
each country – effectively an ‘international retailer representation’ ranking. The UK was the most
TO HAVE A MORE
highly penetrated global market; of the non-UK retailers examined, 55% were present in the
market. As Figure 4 shows, the major European economies (Spain, France, Germany, Italy) MULTINATIONAL
attract the most ‘international’ retailers. Indeed, European markets appear to have a more RETAIL OFFER
multinational retail offer than their Asian or American counterparts. THAN THEIR ASIAN
OR AMERICAN
The particular geo-political context of Europe almost certainly has a significant influence on COUNTERPARTS.”
these results. There are now 27 countries within the newly enlarged European Union, 15 of which
share a common currency (the Euro, introduced in 2002). Within the EU there are effectively no
barriers to trade or the movement of goods, thereby promoting cross-border trade and facilitating
retailer expansion across the continent. With a large number of countries in close proximity, the
emergence of a ‘single European market’ has encouraged many European retailers to move into
new countries. This process has been facilitated by – in global terms at least – some strong
cultural and historic ties between different countries. Thus Austria and Switzerland are quite high
in the ranking (sixth and seventh respectively) in large part due to the strong presence of German
retailers. Equally, retailers in some of the smaller European countries have also been encouraged
to move into other markets due to the relatively restricted size of their domestic marketplace.

Figure 4: International Retailer Representation 2007

% of international retailers present (excluding retailers based in that country)

60%

55%

50% Asia Pacific Retailers

45% Americas Retailers

EMEA Retailers
40%

35%

30%

25%

20%

15%

10%

5%

0%
UK
Spain
France
Germany
Italy
Switzerland
Austria
UAE
China
Russia

Netherlands
Singapore
Belgium
Ireland
Poland
Portugal
Japan
Turkey
Canada
Greece
Czech
Taiwan
Hong Kong
Sweden
Thailand
Hungary
Kuwait
Saudi Arabia
South Korea

Australia
Malaysia
Mexico
Slovenia
Indonesia
Croatia
Romania
Norway
Luxembourg
Finland
Brazil
Slovakia
India
Ukraine
Cyprus
New Zealand
Chile
Bulgaria
Latvia
Morocco
Argentina
Malta
Lithuania
Israel
South Africa
Serbia
Estonia
Vietnam
Peru
Pakistan
Denmark
US

Source: CB Richard Ellis

Analysis was also undertaken to understand the propensity of particular nationalities of retailer to
expand into other countries. Italian retailers were found to be the most international, on average
having a presence in 25 countries outside Italy. This was notably ahead of the next highest
country, Spain, whose international retailers were operating in an average of 19 other countries.
To some extent, however, this also reflects the historic dominance of luxury goods and clothing
by European ‘haute couture’ fashion houses. It is this, rather than their nationality per se, that
accounts for the high global presence of Italian retailers.

Several countries which have not historically proven attractive to international retailers have
enjoyed increased interest over the last few years. Despite its second place global ranking of
international retail presence, Spain is a relatively new destination for international retailers. The
very strong recent performance of the economy has boosted retail sales, generating strong
demand for space in high street and shopping centre locations from both domestic and

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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

international retailers. The United Arab Emirates is ranked in eigth position, with 41% of
international retailers present. Retailing in the UAE has changed beyond recognition in recent
years. This is due to a number of factors including rapid population growth, rising affluence due
to strong oil revenues, relative lack of competition from domestic brands, the emergence of
some of the most high profile retail developments in the world and a desire to enhance the
global profile of the country.

“THE LEVEL OF Completing the top 10 ranking are China and Russia in ninth and tenth places respectively, with
INTERNATIONAL China being the only non EMEA country in the top ten. Whilst average consumer spending per
capita remains low, as is characteristic in emerging markets, the level of international retailer
RETAILER PRESENCE
presence in these markets is similar to that of much more mature economies, which is explained
IN CHINA AND by a number of factors.
RUSSIA IS SIMILAR
TO THAT OF MUCH Politically and economically, both China and Russia have seen a significant relaxation of
MORE MATURE restrictions on investment as they have started to move towards free-market capitalism; China’s
ECONOMIES.” commitment to the World Trade Organisation at the end of 2001 saw a huge influx of retailers into
the country. The sheer size of their markets and the very strong growth in consumer spending
per head (over 10% per annum in China and 7.5% per annum in Russia) also makes them
attractive, and their potential for further growth is clearly significant.

National averages are also highly misleading in these markets. Within the primary cities (such
as Beijing, Shanghai and Guangzhou in China, and Moscow in Russia), there is a significant
concentration of wealth and it is around these cities that much of the international retail activity
is still centered. This strength of expenditure, and thus retailer demand (particularly from luxury
brands), has seen Moscow emerge as the most expensive retail destination in Europe in terms
of prime rental values.

It is interesting to note that two of the other major emerging markets, Brazil and India, appear far
lower down the rankings in 42nd and 44th places respectively. In the case of India, the immaturity
and fragmentation of the retail sectors, together with restrictions on foreign investment, have
limited penetration by international brands in the past. Although this is beginning to change, with
many overseas retailers entering India – often via franchise operations in the first instance, the
restrictions on foreign investment still remain the key barrier. In South America, Brazil is the
largest and potentially most attractive retail market on the continent, and has also started to see
increased penetration of foreign brand retailers. The size and growth potential of the country is
likely to encourage many more new entrants over the next decade.

“THE US IS ONE It is worth observing that, in eleventh place, the United States is absent from the top 10, with only
OF THE MOST 39% of international retailers present. With a population of over 300 million people, and retail
sales generating over $4 trillion annually, one would expect America to be a magnet for foreign
MATURE – AND
retailers. However, whilst potentially very lucrative to those who succeed, the US is also one of
THUS COMPETITIVE - the most mature – and thus competitive - retail markets in the world. It is far easier for a US
RETAIL MARKETS IN domestic retailer, with a strong local or regional presence, to expand its network nationally than it
THE WORLD.” is for a new overseas entrant to adapt its offer to suit the American market. Dominant US retailers
are present in virtually every retail category, and the size and strength of these domestic
operators may explain why foreign retailers have found it difficult to break into the US market.

Beyond China, only Singapore and Japan from the Asia Pacific region make the top 20, with
38% and 35% respectively of international retailers present. Japan and especially Tokyo is a key
commercial centre on both a regional and global basis. Japan’s wealthy consumers are eager
to experience new retail brands, and with premium goods being especially desirable, Japan
boasts the highest number of international luxury retailers of any country in the survey. Similarly,
Singapore has a very mature retail market. As an affluent city-state, it also has a very high density
of wealthy consumers and thus attracts a significant number of international retailers from both
Europe and the US.

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

REGIONAL TRENDS
To some extent, patterns of retailer expansion are likely to be determined by geographical
proximity and/or cultural similarty. Initially one might expect retailers to expand within their
geographic region, before subsequently moving further afield.

By Domicile EMEA Americas Asia Pacific Total

Number of “International” Retailers 156 52 18 226
Average no. of countries in which present 16 16 12 16
% present in EMEA 100%* 83% 72% 94%
% present in The Americas 55% 87%* 38% 61%
% present in Asia Pacific 49% 69% 88%* 57%
*Note – for retailers domiciled within the region concerned, % relates to those that have a presence elsewhere in the region outside their country of domicile

To an extent, this is clearly true. All the European retailers were present in at least one other
EMEA country. EMEA was also the most popular destination for retailers from Asia Pacific and
The Americas, who had decided to expand beyond their domestic region. However, less than
half the retailers from EMEA had any presence in Asia Pacific. This was significantly lower than
almost 70% of retailers from The Americas, who were present in the region. Asian retailers, by
contrast, were almost twice as likely to be present in EMEA than in The Americas.

These trends can be examined in more detail by looking at the relative over- or under-
representation of different regional retailers at national level, as shown in Figures 5 and 6.

For example, not one of the retailers in the survey came from the Czech Republic, and therefore
it would be possible for all 226 ‘international’ retailers to be present in the country. In fact, 75 of
them are. If these 75 were drawn from across the world in proportion to the distribution of the
sample, all other things being equal one would ‘expect’ 69% of them to come from EMEA, 23%
from The Americas and 8% to come from Asia Pacific (the overall regional split of the retailers in
the sample). In fact, 63 (or 84%) of the 75 international retailers in the Czech Republic are from
elsewhere in EMEA, which is 15 percentage points more than ‘expected’. Thus retailers from
EMEA are ‘15% over-represented’ in the Czech Republic, whereas those from The Americas are
correspondingly ‘under-represented’. Considerable care needs to be taken in interpreting these
results, but some interesting patterns do emerge

Figure 5: Retailer Presence in EMEA: Over/Under Representation

20%

EMEA Retailers
15%
Americas Retailers

10% Asia Pacific Retailers

5%

0%

-5%

-10%

-15%

-20%
Czech Republic
South Africa
Russia
Poland
Slovenia
Romania
Ukraine
Luxembourg
Switzerland
Croatia
Hungary

Greece
Belgium

Slovakia

Portugal

Turkey

Kuwait
Morocco
Austria
Cyprus
Sweden
Netherlands
Ireland
Norway
Estonia
Serbia

Germany
Lithuania

France
Saudi Arabia

Finland
Bulgaria
UK

Denmark

Italy
Malta

Israel
Spain

Latvia

UAE

Source: CB Richard Ellis

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 HOW GLOBAL IS THE BUSINESS OF RETAIL?

Unsurprisingly, and as highlighted in the regional analysis, European retailers are generally
over-represented within the EMEA markets (Figure 5). However, there are some notable
exceptions. European retailers are relatively under-represented in South Africa and a number of
the Scandinavian markets (Denmark, Sweden, Norway and Finland). In all these cases, there are
proportionally more retailers from The Americas than one would accordingly expect. This is also
true of Israel and Ireland, which is perhaps understandable given the strong political and cultural
links between these countries and the United States.

Most interesting, however, is the apparent under-representation of European retailers in the UK.
Of the 108 international retailers present, 62 are from elsewhere in EMEA (or around half of the
non-UK retailers in the region). It would be misleading to suggest that European retailers do
not expand into the UK, yet the very mature nature of the UK market may make it competitively
difficult for many of them to do so. The apparent under-representation of European retailers in the
UK is in fact a reflection of the very strong presence of retailers from The Americas (particularly
from the United States). Of the 52 North American retailers in the survey, 39 were found to be
present in the UK – second only to Canada, which has attracted 41 of the 50 US retailers. This
reflects the very strong links between the UK and US, as well as the importance of London as a
retail market and its popularity as a destination for flagship stores.

In looking at the Asia Pacific markets, it is apparent that European retailers (albeit on a
proportional basis) tend to be relatively under-represented (Figure 6). In the Asian markets, this is
generally (and understandably) due to the relatively strong cross-border presence of other Asian
retailers. Notable exceptions, however, are India, Japan, Australia and New Zealand – where, in
all cases, American retailers have a stronger presence than might be expected.

Figure 6: Retailer Presence in Asia Pacific and The Americas: Over/Under Representation

40%

30% EMEA Retailers

Americas Retailers

20% Asia Pacific Retailers

10%

0%

-10%

-20%

-30%

-40%
New Zealand

Australia

Pakistan

Malaysia

Vietnam

Taiwan

Singapore

Japan

South Korea

China

Thailand

Indonesia

India

Hong Kong

Canada

Peru

Argentina

Mexico

Brazil

Chile

US

Source: CB Richard Ellis

Finally, within the Americas region, US retailers are unsurprisingly dominant in Canada, but also
in Peru and Argentina. EMEA retailers have made relatively greater inroads into Brazil, Chile and
Mexico. Retailers from Asia Pacific are under-represented in virtually all of the markets in the
region. Also noteworthy is that the representation of international retailers in the US is exactly in line
with the distribution of the sample as a whole!

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HOW GLOBAL IS THE BUSINESS OF RETAIL?

THE INFLUENCE OF MARKET SIZE

To an extent, the propensity of a particular retailer to expand cross-border – and the choice of
which market to enter – will be a function of the size of a market. Although the survey only
covered 61 countries, collectively these account for 96% of the worlds GDP. The ‘presence’ of a
retailer in a country does not necessarily give it access to the whole of that market - in some
cases it may mean just one flagship store. Nevertheless, it is instructive to look at the proportion
of global GDP which retailers are potentially accessing by weighting the analysis of their networks
using national GDP.

The size of a market (in this case as measured by the size of its economy) is not the only factor
that retailers consider when evaluating a market. Nevertheless, it is broadly true that the larger the
country’s economy, the greater the potential retail opportunity it represents and thus the more
attractive it is likely to be to a foreign retailer. Figure 7 shows the largest 45 economies within the
survey ranked in order of GDP, with the line representing the cumulative percentage of global
GDP that each market represents.

Thus a retailer that is present in the United States, the world’s largest economy, is potentially able
to access 30% of global GDP by being in that country alone. Strong US retailers are therefore
able to grow very large before they have to start considering ‘international expansion’ in order to
expand. In Deloitte Touche Tohmatsu’s Global Powers of Retailing report in 2007, they identified
two US retailers which were in the global top 10 retailers when ranked by total sales, despite
operating only within the US market. “OPERATING IN ONLY
THE 10 LARGEST
Expanding to establish a presence in the next four largest markets (Japan, Germany, France and
COUNTRIES COVERS
China) would give a retailer exposure to 57% of the worlds GDP, whilst operating in only the 10
largest countries covers almost three quarters of the total global economy. Whilst it remains true ALMOST THREE
that retailers will still need to establish themselves in a large number of countries in order to be QUARTERS OF THE
considered ‘global’, this does highlight the fact that the geographic footprint of a retailer is not TOTAL GLOBAL
necessarily an accurate reflection of its scale of operations. ECONOMY.”

Figure 7: Cumulative Global GDP

100%

90% 30 Countries = 93%

80%

70% 10 Countries = 74%

60%
% Exposure to Global GDP

5 Countries
50%
= 57%

40%

30%

20%

10%

0%
Japan
Germany
France
China
UK
Italy
Spain
Canada
South Korea
India
Mexico
Australia
Netherlands
Brazil
Russia
Belgium
Turkey
Switzerland
Taiwan
Indonesia
Sweden
Austria

Poland
Saudi Arabia
Greece
South Africa
Ireland
Hong Kong
Argentina
Thailand
Portugal
Finland
Norway
Chile
Israel
Czech Republic
Romania
Malaysia
Singapore
Hungary
Pakistan
New Zealand
UAE
Denmark
US

Source: Oxford Economics, Experian Business Strategies, CB Richard Ellis

14
 HOW GLOBAL IS THE BUSINESS OF RETAIL?

This is demonstrated by the fact that when we calculate the exposure that each of our 250
retailers had to the world’s GDP (in this case including the 24 retailers who operated in only one
country), it was not necessarily the retailers present in the greatest number of markets which had
exposure to the highest amount of GDP. Indeed, as the table below shows, American retailers
were on average present in only 14 markets but, by virtue of being in the United States, had
access to over half of global GDP. European retailers were typically present in a larger number of
markets, but accessed less than 40% of global GDP because almost half are not present in
the USA.

By Domicile EMEA Americas Asia Pacific Total

Number of Retailers 158 64 28 250
Average no. of countries in which present 17 14 9 16
Average % of Global GDP exposed to 39% 52% 22% 41%

Of the 250 retailers, 128 were exposed to less than 40% of global GDP (Figure 8), indicating that
these retailers are essentially regional rather than truly global players. As Figure 8 shows, at the
other end of the spectrum, there were 20 retailers who were able to access between 90% and
100% of global GDP. However, they achieved this using very different footprints, having
established themselves in anything from 32 to 57 different markets.

Figure 8: Retailer Exposure to Global GDP

Number of Retailers/countries
60 60

Number of retailers For example, there are 40 retailers who are

exposed to between 20% and 30% of global
50 Number of countries in which GDP, which they achieve by being present in 50
retailers are present (max min) between 1 and 29 different countries.

40 40

30 30

20 20

10 10

0 0
<10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100%

Percentage of Global GDP to which exposed

Source: Oxford Economics, Experian Business Strategies, CB Richard Ellis

15
HOW GLOBAL IS THE BUSINESS OF RETAIL?

In general, as retailers seek to access a higher proportion of the global market they naturally
tend to establish themselves in a larger number of countries (Figures 8 and 9). Yet this is not
consistently the case. For example, one of the 24 retailers accessing 70-80% of global GDP was
doing so by having a presence in just 10 markets.

Figure 9: Retailer Footprint by GDP and Market Presence

Percentage of global GDP to which retailer is exposed

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
0 10 20 30 40 50 60
Number of markets in which retailer is present

Source: Oxford Economics, Experian Business Strategies, CB Richard Ellis

16
 HOW GLOBAL IS THE BUSINESS OF RETAIL?

CONCLUSION
With the ever-increasing integration of the global economy, it is no surprise that many retailers are
focussing on expanding their international operations. This process is being fuelled by the rapid
growth of the emerging markets, and particularly the new potential represented by the emerging
middle-classes in Russia and China. Communications technology and integrated global media
channels offer retailers ample opportunities to market themselves to new consumers. Arguably,
it has never been easier, or more attractive, to develop a global retail brand.

At the same time, retailers still face considerable challenges when looking to move into new
markets. Whilst luxury brand retailers selling exclusive products may have to make few
concessions to local cultures, the vast majority of retailers will need to adapt their approach in
some way to suit a particular market. Language differences, recruitment of staff, management
controls, legal barriers, logistics and supply chain issues, business culture and existing local
competition are just a few of the issues to be dealt with – not to mention securing appropriate
premises in the right locations.

“THE STORY OF THE Retailers are therefore understandably cautious in their expansion plans. However, as this survey
GLOBALISATION OF demonstrates, a significant number of retailers around the world are establishing themselves as
truly global players. This process is still in its early stages. Given the number of retailers known to
RETAILING HAS ONLY
be reviewing their regional networks and evaluating new markets, the story of the globalisation of
JUST BEGUN.” retailing has only just begun.

17
HOW GLOBAL IS THE BUSINESS OF RETAIL?

CB RICHARD ELLIS OFFICES

UNDERSTANDING THE GLOBAL

BUSINESS OF RETAIL:
THE KEY TO SUCCESS IN TODAY’S
INTERNATIONAL RETAIL MARKETS.
18
HOW GLOBAL IS THE BUSINESS OF RETAIL?

19
HOW GLOBAL IS THE BUSINESS OF RETAIL?

CONTACTS
Across the world, retailers are breaking free of their traditional boundaries, exploring new markets
and new territories. The need to understand the potential of these markets – and how to exploit
the opportunities they offer - has never been greater. Identifying a gap in the market is one thing,
but knowing how to access that country and operate in it successfully is another.

No one understands this challenge better than the CB Richard Ellis’ Retail Research Team. With
over 100 skilled researchers in 125 offices across EMEA, our Research & consulting team is
perfectly placed to work with retailers, investors and developers to identify and act upon new
opportunities in the retail sector. ‘How Global Is the Business of Retail?’ is part of a regular series
of research publications from CB Richard Ellis’ retail research team.

By combining the expertise of our research, consultancy and transaction teams, we are able
to provide insight into retail opportunities at any level. Whether you are interested in the
characteristics of different national retail markets, analysis of specific city-regions or evaluations
of detailed trading location, we can help.

CB Richard Ellis’ recognised skill in retail married with its global research capability makes us a
powerful partner for all those involved in the retail. We welcome the opportunity to talk to you.

Retail Research
Rebecca Canty
t: +44 207 182 3974
e: rebecca.canty@cbre.com

Jonathan Riches
t: +44 207 182 3045
e: jonathan.riches@cbre.com

Further Global Contacts

Bryn Davies
Asia Pacific
t: +86 10 5820 9028 (Beijing)
t: +44 207 182 2955 (London)
e: bryn.davies@cbre.com

Peter Gold
Europe, Middle East and Africa (EMEA)
t: +44 207 182 2969
e: peter.gold@cbre.com

Anthony Buono
The Americas
t: +1 858 646 4718
e: anthony.buono@cbre.com

20
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