Retailers with international ambitions must adapt to local market needs if they reap the rewards across global cities, according to a report.

 

The Knight Franck Global Cities: The 2016 Report examined the future of real estate in the world's leading cities and how retail occupiers can make the most of the increasingly global market.

 

The four key options for overseas market entry included organic expansion, acquisition of a local operator, collaboration with a local player and franchising.

 

Although each option comes with its own level of financial risk and reward, Stephen Springham, head of Retail Research at Knight Frank, said: “Aborted international ventures invariably stem from a retailer rigidly trying to impose its domestic values on its new market, rather than tailor its proposition to meet local demands.”

 

The key incentive for retailers to make the global transition is growth. However, the global playing field is anything but even, said the report.

 

 Of the major global economies, the US holds the largest retail format sales per capita at $11,687, whereas India sits at the other end of the spectrum with just $793, it said.

 

From a Dubai perspective, Diaa Noufal, Mena Research Manager, noted: “The city has witnessed an exponential growth in the last decade becoming the first regional shopping destination with an exceptional retail offering. The city boasts around three million sq m of retail GLA while another million is anticipated entering the market over the next three years. Among other global hubs, Dubai retail sales performance lies on a midpoint in terms of sales per capita (around $4,000 in 2014).”

 

The process of the internationalisation of retailers the local real estate community has a wider role to play, principally by providing transparency and market guidance, highlighted the report.

 

Few internationalising retailers will have had first-hand experience of local property practices and idiosyncrasies, it said.

 

Matt Dadd, head of Commercial Leasing at Knight Frank Middle East, commented: “Dubai continues to offer additional new retail brands to the market. These are both international and locally grown concepts, which help Dubai cement its number one position in the region. With major retail centres at full occupancy or expanding their footprint, this is allowing additional brands to enter the highly competitive market."

 

The report set the context for investors by saying that five new cities, each the size of Los Angeles, will need to be built every year for the next five years to accommodate the expected 380 million new city dwellers. 

 

It has predicted that the number of people moving to cities over the next five years will be more than three times the current population of Japan, as they try to make the most of the economic advantages cities increasingly deliver. - TradeArabia News Service