Archive for October, 2010

Brazil, Russia, India and China – The retail opportunity

Wednesday, October 20th, 2010

Robert Bonwell Jones Lang LaSalleBy Robert Bonwell
CEO EMEA Retail
Jones Lang LaSalle

The middle-class population (i.e. those with incomes over US$6,000) in the BRIC (Brazil, Russia, India and China) economies is expected to increase fourfold over the next decade to reach 1.5 billion people by 2020 – five-times larger than today’s population of the US.  This is a highly compelling attraction for retailers.  Today there are an estimated 1,000 shopping centres in the BRIC economies; by 2020 this is expected to rise to over 2,500.

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Is retail property back in fashion?

Monday, October 4th, 2010

Robert Bonwell Jones Lang LaSalleBy Robert Bonwell
CEO EMEA Retail
Jones Lang LaSalle

Most retail markets across the globe are showing a steady improvement in conditions. Global retail sales and consumer confidence are trending up, transaction volumes have recovered as investors seek greater retail exposure, and demand from retailers, particularly for prime locations and shopping centres, is strengthening. The shopping centre development market is also regaining a degree of momentum, albeit tentatively in the mature markets. Many projects put on-hold during the global financial crisis are underway again and are being remarketed by developers, often with a new spin.
Across the globe, pockets of strong dynamism have emerged. We have the high growth markets such as China, India, Brazil and Turkey, where impressive growth statistics are proving a compelling attraction for retailers, developers and investors. In China, for example, retail sales are growing by a remarkable 18% a year; and in India they are currently opening a new shopping centre every two weeks. Here, the longer-term outlook is equally compelling – the middle-class population of the 4 BRIC economies is expected to grow four-fold to reach 1.5 billion people by 2020 – that’s five-times larger than today’s population of the USA. Hardly surprising that retail is the one real estate sector that all parts of the investment community are trying to tap into.

But it’s not just an emerging market story. In Australia the retail sector is benefiting from a more resilient economy, Germany has a new-found strength in retailing, and both Hong Kong and Singapore are also growing strongly. In addition, large cross-border retailers, predominantly from the US and Europe, have been capitalising on market conditions to resume global expansion plans and are creating excitement from an influx of new brands.

While retailers and shopping centre owners are now showing a more confidence stride … a note of caution … I believe the medium to long-term outlook for the mature retail markets will be far more challenging. Unemployment rates remain stubbornly high in both the US and Europe, wage gains are modest, deleveraging is in vogue and taxes are expected to rise – all of which will limit growth in disposable incomes. And, on top of these economic challenges are the structural shifts that are affecting the sector. As our Retail 2020 programme has highlighted, the whole retail landscape looks set to experience a period of dramatic change. Whether owner, occupier, landlord or retailer, conditions are set to be tougher in the coming decade than they were in the last ten years – but there will be opportunities for those who can perform quick, radical action with impeccable judgement.

For more information: Read our Global Market Perspective Report

Posted in BRIC, Global, Retail 2020, Sweden | No Comments »

What’s in the ‘Bagging Area’?

Monday, October 4th, 2010

Julie Collins Jones Lang LaSalle

Posted by: Julie Collins
Senior Consultant, Retail Research and Consulting
Jones Lang LaSalle EMEA Research

Whilst queuing recently in my local Sainsbury’s, I wondered what the future is for checkout assistants in the UK. The Sainsbury’s I refer to has been extended and now offers checkouts at both ends of the store, with those at the front being all self service. Retailers claim this new technology shortens queues and therefore we may surmise, enhances the customer experience.

Opinions on the technology vary across consumers with some preferring it to interacting with store staff and others becoming increasingly frustrated by a mechanical voice warning you of an unexpected item in the bagging area. Either way, self service is here to stay and indeed grow – Retail Banking Research estimate there will be 15,000 self service checkouts in use by 2011.

If the ratio of four self service checkouts overseen by one checkout assistant continues, where do the remaining three checkout assistants go? Are they redeployed elsewhere in the store in order to enhance the consumer visit or are retailers looking to reduce staffing costs?

Retailers will argue that self serviced checkouts are being introduced for the former rather than latter reason; however, in an industry where the ‘average touch per product’ is becoming increasingly important, self service checkouts do help to reduce this measure.

If we look at the online retailer Ocado, products are simply sourced from a distribution warehouse and delivered to the consumer, resulting in a low ‘average touch per product’. Within a supermarket, products have to be delivered from the warehouse to the store; perhaps stored in the back of the supermarket; put out onto shelf and finally put through the till which results in a far greater number of touches per product and therefore requires higher staffing levels.

If supermarkets are to compete effectively with the internet it is true that they will have to rethink many of the processes currently used in store. Thinking back to the mixed feedback to the technology however, it is vital that process efficiency does not come at the cost of customer satisfaction as one of the best ways to compete with the online environment is to create an offline environment that goes beyond pure convenience.

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