The availability of prime locations, the maturity of the retail property and an open business environment make the UK the second easiest market for retailers seeking to expand, according to a new report.
The first annual Retail International Programme Expansion Index, published by property consultancy EC Harris, has found that the UK is one of the most popular countries for retailers looking to expand internationally. Germany topped the survey.
Brazil, China and Russia are at the bottom end of the list because factors such as poor infrastructure, complex legal frameworks and a lack of access to prime locations make it more difficult for retailers to gain a foothold in those countries.
EC Harris head Colin Turner said: “International expansion is the new battleground for retailers experiencing low growth in their domestic markets. Consumer appetite for Western brands in Asia makes these markets attractive, but not always easy to enter.”
According to the report this correlates with Walmart’s decision not to expand into Russia, despite carrying out three years of research, and it adds that Mothercare, Kingfisher and Metro, who have launched into Russia, needed a lot of local specialist support to open stores.
Turner warned that the low barriers to entry in Western countries mean that mature local retailers need to protect their market share from foreign competitors. “[Local retailers] need to keep their offer fresh, for example through refreshing their store environment. The new Marks & Spencer concept store is one good example of this.”
The index showed that the Middle East offers good opportunities for retailers, particularly those in the luxury market, that are seeking to expand. Saudi Arabia, Qatar and the United Arab Emirates offer the best opportunities, while Chile has the most favourable conditions for international retailers looking for opportunities in Latin America. Wal-Mart has already taken leadership in the country after acquiring a majority stake in domestic retailer D&S in 2009.