With no new developments opening in the UK next year, many of the more expansionist retailers are looking across the Channel for growth. They will find some markets in robust form, says Mark Faithfull

Westfield’s new project in Milan should re-energise the north of the country and bring in new players

While none of Europe’s nations completely evaded the development slowdown, as global funding shuddered to a panicky halt, several markets gave short shrift to the downturn and countries as diverse as Poland, the Czech Republic, Turkey, the Balkan states, Germany, Scandinavia and, perhaps surprisingly, Spain have emerged from the recession as the focus of both retail and developer interest.

For UK retailers mired in Britain’s low growth economy the attraction of the Continent has never been greater and with a combination of established franchise partners, increasingly transparent store ownership laws and with many having dabbled with online delivery, heading for Europe may not be easy, but it is getting easier.

“The number of UK retailers at Mapic was very noticeable last year,” recalls Jones Lang LaSalle head of UK retail Guy Grainger.

“I think that reflects the amount of interest there is in overseas markets and I would expect to see even more at Mapic in November. Retailers have become much more open-minded about where they expand – I have been at a board meeting where the retailer was choosing between opening a store in Birmingham or one in Munich.”

Of course, the shortage of new shopping centres being built in Europe has restricted retail expansion everywhere but an increase in available space in emerging countries next year is expected to accelerate retailer growth in the less mature markets, according to property adviser CB Richard Ellis (CBRE). About 20.4 million sq ft of shopping centre space was completed in 2010 – a fall of 36% from the previous year, which itself was 30% lower than the peak in 2008. However, if all of the new shopping centres due in 2011 complete on time it will produce an increase of 53% in new space, totalling 31.2 million sq ft.

There are currently 146 shopping centres (over 215,285 sq ft) under construction in Europe, with the highest levels of activity in Turkey (14 million sq ft over 26 schemes), Russia (9.2 million sq ft over 19 schemes), and Poland (7.7 million sq ft over 21 schemes).

Neville Moss, head of EMEA retail research, CBRE, adds: “The shopping centre development market in Turkey, for example, has sprung back to life. This resurgence in activity is due to increased confidence among retailers, developers and investors on the back of strong economic growth. This is attracting new retailers to Turkey, while major international brands already present are also expanding aggressively.”

Where the space is

By contrast, in Western Europe, Italy (4.2 million sq ft), Germany (3.9 million sq ft), and Spain (3.8 million sq ft) have the largest amount of new space under construction. Italy remains a difficult trading market, although Westfield’s new project in Milan should re-energise the north of the country and bring in new players, but Germany – despite its fiercely value-driven shoppers – is high on the agenda for a number of retailers. Spain, too, despite its economic uncertainty, has proved successful for retailers such as Primark and the consensus appears to be that well-located malls will continue to perform strongly, regardless of the worsening economic backdrop.

Primark will be one of the fashion anchors at British Land’s joint venture Puerto Venecia project, near Zaragoza, which will become Europe’s largest retail and leisure centre when it opens next year.

The development market is also active in much of Central and Eastern Europe. The amount of space under construction in the Ukraine (3.1 million sq ft) will almost double the level of stock there, while the space available in Serbia, Croatia, Slovakia, Bulgaria, and Romania will increase by at least 25%. German, Scandinavian and Benelux retailers especially have targeted the Balkans – with Delhaize and Lidl recently ramping up activity – while Saks Fifth Avenue is to open a department store in Almaty, Kazakhstan. However, Poland and the Czech Republic are the standout successes in the region, and TK Maxx – with shops in DT Centrum and Blue City – plus Peacocks and New Look have all arrived in Warsaw within the last year, while retailers such as Tesco and Marks & Spencer already trade in the Czech Republic.

And the impetus is from all sectors. DIY giant Kingfisher plans to double to 120 the number of its Castorama stores in Poland and convert the Brico Depot trade outlets to spur growth. Chief executive Ian Cheshire said of the move: “We will continue to build stores because there’s a lot of unoccupied market space. There’s evidence of a more sophisticated, decorative and aspirational customer, so we can see top-line growth in that.”

Until recently Poland has lacked a strong luxury sector but Gucci looks set to open its first store in Poland as part of a new luxury department store development close to the landmark Zlote Tarasy shopping centre in Warsaw. Some more upscale retailers have already moved into the Polish retail market including Pandora, Agatha, Ann Christine (the New Yorker concept) and Guess.

But the under-construction luxury department store on Bracka Street, close to Zlote Tarasy and the main train station, will host concessions for Gucci and Sergio Rossi, while local reports suggest that the main tenant will be French multinational PPR, the world’s second largest luxury goods conglomerate, which also owns Bottega Veneta, Balenciaga, Yves Saint Laurent and Alexander McQueen. 

Mapic, November 16 to 18, 2011 - Palais des Festivals, Cannes, France

For the 17th year Cannes will roll out the red carpet for the retail industry in November as about 7,500 industry professionals, including an increasingly large proportion of retailers, meet up in one of the Mediterranean’s best-known boutique towns.

Last year 67 countries were represented, with 570 attendees from the UK and Ireland. As of mid-July 640 retail companies had already signed up for what is, in effect, a huge networking event with an exhibition, conferences, workshops, awards and various receptions attached. Italy is country of honour this year, which will be reflected at the opening cocktail party and the award of the personality of the year.

Mapic is also ramping up its social media and educational provision and what was the Retail Lab last year will be the MORE Pavilion in 2011, showcasing retail innovation and tied to presentations and information under the MORE vision banner.

A fair number of the big retailers, especially French operators, take stand space but the undisputed winner in self-publicity last year was Hollister, which used its iconic semi-clad models as a walking brand building exercise. Parent Abercrombie & Fitch will be there this year for the first time, while Kahala, Limited Brands, Focus Brands, Villa Enterprises, Krispy Kreme, Aldo Group and PS Imports will also be first-timers at the show.

From the UK the Peacock Group, Perry Ellis Europe, Original Penguin, Farah Vintage and JD Sports will all be attending for the first time.

As for the awards, John Strachan, global head of retail at Cushman & Wakefield, chairs the jury who will hand out awards for the best new retail concept, best retail expansion, best retailer in a city centre and best retail development.

And in keeping with an event that is increasingly encouraging delegates to do things quickly, expansionist retailers can size up new developments in rapid-fire speed matching sessions and 15-minute meetings.

If that proves too much, fortunately Mapic’s location in Cannes makes it a very pleasant place to enjoy an espresso.