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May 26, 2016

London is the number one international retail destination but Middle Eastern cities increasingly luring retailers, according to new numbers.

JLL’s Destination Retail report, which has mapped the presence of 240 retail brands across 140 cities, highlights the most attractive locations for retailers to set up shop.

It shows brands are expanding internationally in new ways as the combined effect of globalisation and adoption of technology forces them to explore new markets and different real estate models.

“Structural change is sweeping the retail industry as technology and e-commerce platforms become more sophisticated; however, demand for the right physical space, in the right location, is stronger than ever,” said James Brown, Director of Global Retail Research for JLL.

“Borders are becoming less of an issue for retailers pursuing opportunities overseas and we’re seeing the global retail landscape shifting fast to accommodate the change.”

The report shows that London tops the list as the number one international retail market with the highest presence of international retailers, even edging out Hong Kong in terms of international luxury brand presence. For many retailers, London is the entry point to Europe and recent entrants include J.Crew, Arc’teryx, Club Monaco, Kit and Ace, and John Varvatos.

Elsewhere in Europe, Paris is close behind in terms of international appeal, followed by Moscow, Milan, Madrid, Istanbul, Rome and Munich. But the report has also highlighted that one-third of the top 15 global retail cities are now located in the Middle East.

Dubai, Kuwait City, Abu Dhabi, Jeddah and Riyadh are emerging as business and travel hubs, and this means they’re increasingly catching the eye of global retail brands.

With the domestic retail market in the Middle East less mature than other regions,  international brands can enter without too much competition from local brands.

Andrew Williamson, Head of Retail, JLL MENA, explains: “Middle East consumers are sophisticated shoppers who are demanding an international style experience that replicates what they’ve seen abroad.”

“The short term outlook is cautious. However the mid to long term is very positive for the region. The considerable young demographics, an appetite for a modern retail experience throughout the region and the continued growth in tourism bode well for the future.”

JLL’s report found that international brands prefer to enter the region through franchise models because many countries require businesses to have a local GCC partner. Williamson added: “Many brands prefer to work with a local partner to assist in understanding the cultures, local business practices and logistics.”

Download the full report to explore how international retailers are expanding globally in more detail.

 

James Brown
Global Retail Research Lead, JLL

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