- U.S. top court rebuffs mystery company in Mueller subpoena fight
- White House defers on Mueller’s report release, Democrats seek details
- Bayer, J&J settle U.S. Xarelto litigation for $775 million
- Now that the Mueller report is in, Nancy Pelosi faces some tough choices
- Most Americans predict a weaker economy and a greater national debt by 2050
Many retailers are being smarter today about opening new stores across the globe, precipitating in a cooling off of international expansion, according to a new report from CBRE.
In surveying 47 countries and 123 cities globally, the commercial real estate service firm determined retailers’ growth across boarders into new markets fell 2.9 percent in 2017 from a year ago.
“You have to start with … because of the demographic shifts around the world, there is less need [for new retail] based on population growth,” where populations have steadily become more dense, Spencer Levy, the head of research for CBRE’s Americas division, told CNBC. “Second, yes, there is some e-commerce disruption in the space,” which has prompted companies to be more “cautious” about opening new stores.
Still, just because businesses are being more deliberate about their growth doesn’t mean they’re not growing at all.
U.S.-based brands in particular were the most active in 2017, CBRE found. Companies like Freddy’s and Peleton targeted more than 40 different markets last year — blanketing across the Middle East and Japan — to branch outside of America.
“It speaks to the maturity of the U.S. market,” Levy said.
That said, the U.S. wasn’t the hottest market for new entrants — that title fell to Hong Kong for the third year in a row. Next in line were Dubai, Taipei, London and Tokyo, which all drew at minimum 45 debuts by global retail brands throughout 2017, according to CBRE’s research.
Thirty-two global retailers entered the U.S. in 2017, CBRE found. That included 14 businesses from Europe and 14 from Asia. Examples are Italian luxury shoe brand Bruno Magli, Paris fashion line Faith Connexion, along with a number of European and Asian cosmetics business. There was also the Nutella Cafe, curated by Italian chocolate manufacturer Ferrero International, which made its debut on Chicago’s Michigan Avenue last year.
Leading the pack, though, was German grocer Lidl, which opened almost 50 stores across the U.S. in the latter half of 2017.
Overall, the top destination for global brands in the U.S. last year was New York, followed by Miami, Philadelphia, San Francisco and San Diego. Prime shopping hubs like SoHo in Manhattan and Union Square in San Francisco continue to be a draw for young companies looking to break into new territories.
“If you can make it [in New York], you can make it anywhere,” Levy said.
To be sure, not every retailer that comes to the U.S. is successful. Even Lidl had to slow its growth plan after a rapid start. In 2017, three international brands shuttered all of their stores in America: Comptoir des Cotonniers, Kit & Ace and Bebe.
“Consumers are not cookie cutter,” Levy added. “One’s success or failure has to do with understanding the dynamics of the local consumer. … Consumer preferences need to be taken into consideration when going across boarders.”
Perhaps least threatened by any online competition (mainly e-commerce Amazon) is the coffee and restaurant category, which accounted for 25 percent of retailers’ international growth last year, up from 18 percent in 2016, CBRE found.
According to the real estate firm, as “traditional drivers” for new retail space dissipate, food is filling the gaps, alongside other entertainment venues. And industry experts say they anticipate this trend will continue for years to come.
“Landlords have historically had restrictive covenants, which said you could [only] have certain types of users in your facilities. Now people want uses … like bowling alleys … and the legal restrictions are loosening,” Levy said.
That means the mix of businesses at malls and shopping centers will increasingly drift away from apparel chains and fast-food joints, and instead will include a little bit of everything, even medical offices and living spaces.
WATCH: U.S. mall owner talks about Amazon changing the industry