Retailers’ store plans undeterred by e-commerce

woman shoppingStiff competition from online retailing will not deter retailers’ physical store expansion plans in 2016, with New Zealand ranking 44th on the list of countries where retailers are currently looking to grow their presence, a CBRE report indicated.

Data shows that 83 per cent of brands do not expect their physical store expansion plans to be affected by the growth in e-commerce this year, with only 22 per cent of brands showing concern about the growing online sales.

Among the respondents, 17 per cent have large-scale ambitions, with many retailers looking to open more than 40 stores this year, up from 9 per cent in 2015. About 67 per cent of respondents indicated they plan to open up to 20 stores.

“Despite the popularity of online shopping growing year on year, a physical store presence in key locations is still seen as critical for maintaining a strong brand presence,” said Tim Starling, Pacific head of retail tenant representation for CBRE.

Starling said shoppers still, “feel a need to go into a physical store, physically touch a product and enjoy the brand experience”.

Germany topped the list for store expansion, with 35 per cent of retailers looking to grow their presence there. France is next on the list, with 33 per cent of retailers thinking of opening physical stores in the country. The UK is third on the list. The report indicated all three countries “are home to cities with good spending power and steady levels of tourism.”

China is the top Asian market, with 27 per cent of retailers looking to expand there. Australia takes 11th place on the global list, with 19 per cent of retailers looking to grow their presence in the country. New Zealand ranks 44 with 5 per cent.

But, according to the report, despite the positive headlines, retailers are remaining “cautiously optimistic” in 2016. When questioned about the risk factors for them in the coming year, similar to last year, real estate cost escalation, 56 per cent, and unclear economic prospects, 42 per cent, continue to be at the forefront of their minds.

Street shops, 76 per cent, and regional shopping malls, 72 per cent, were cited as the most popular formats for expansion with an increasing number of brands looking to travel hubs.

One-fifth of the brands surveyed, largely from the Americas and EMEA, expressed their intention to expand into travel hubs in 2016 as this will give them access to high footfall, highly frequented locations.

“The challenge now is for retailers to build an engaging offer that encourages people to stay longer and spend more,” Starling said.

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