2009 will be a measured year for overseas expansion as retailers grapple with torrid trading conditions at home.
Ernst & Young head of retail Gavin George said that international plans remain “an important strand of retail strategy during a downturn”.
“In tough times, retailers may go for three countries instead of six, or instead of rolling out 100 stores they will roll out 50,” he explained.
George forecast that retailers will continue to gradually grow in existing international markets, while making strategic moves into new markets where they are certain of a return.
There will be more franchising than in other years, he added, as it represents a cheap way of testing a new market.
“This is a reflection of the fact there is little capital around,” said George. “There are market opportunities out there that someone else will take if you don’t.”
The Middle East and Russia continue to be popular new markets for retailers, with those entering Russia including Mothercare, New Look, Hamleys and Habitat. All four already have stores or are seeking partners in the Middle East.
George said: “The Middle East and Russia are slightly different economies to other countries because of oil, and spending power per head is quite high so the potential is strong.”
Pragma director Mike Godliman said India and China will prove resilient international markets. “Demand will slow in 2009 but the markets will still be buoyant,” he said. “When things start to recover this is where the demand will be.”
George highlighted Eastern Europe, North Africa, the Balkans and Poland as offering the most opportunities in 2009.
“Retailers can make money straight away in Eastern Europe, but it takes time to get a proper return out of China and India,” he said.
He cited Egypt, Turkey and Romania as countries to look at in future as their middle class populations swell.