Bucharest and Prague, first choices for new retailers entering the CEE market
Bucharest attracted more than 20 new retailers from all around the world to its biggest shopping centres, sharing first place with Prague in top-of-CEE cities which attracted new retail investments. According to a CBRE analysis, about 80 new retailers have entered CEE markets, with lots of projects and commercial developers seeking for new investments.
Both Bucharest and Prague attracted about 22 new brands each, which puts the two capitals on the first place in the region. The retailers opened last year over 85 new stores, half of these being commercial chains from Italy, US or UK.
“Retail spend in core-CEE went up by 6.6 percent in 2016, and the growth rates are still substantially above Western European levels. Modern shopping centres and the high streets of e.g. Prague and Budapest offer prime locations. The network of retail parks has been developed to a decent level as well. Therefore, the probability is high that several retailers will enter CEE in the upcoming years. Romania has the second largest population within CEE and, in addition to its capital Bucharest, some cities with more than 300,000 inhabitants. In combination with the remarkable growth rates derived from continuously increasing spending power these facts will keep attracting new retailers to the Romanian market,” said Walter Woelfler, Head of Retail, CBRE CEE, recently visiting Bucharest for CEE Retail Days event, held for the first time in Romania.
CBRE data reveals that 34 percent of the total are luxury brands and about 13 percent is represented by café’s or restaurants. Retailers like Forever 21, Uterque, 4F, O bag, US polo, COS, Skechers, Tezenis or NYX are just a few examples of brands extending their activity in CEE and also in Romania.
“We at CBRE analyse approximately 3,000 retail leasing deals that our agents close yearly within EMEA. The highest amount of deals still comes from fashion, the runner-up in a number of deals is F&B. Taking into consideration that many owners/developers plan to substantially increase the amount of GLA devoted to F&B, this trend will sustain. It is specifically strong in Romania where eating and drinking is a very important reason for the customers to visit a specific shopping centre,” pointed Walter Woelfler.
Top European cities with the highest brand attractiveness
Bucharest is generating more interest for international brands than other big European cities, like Berlin or Madrid, where Romania’s capital attracted more than 22 new retailers. London (65), Paris (36) or Moscow (33) are the European capitals which attracted the most retailers in 2016.
The Romanian economy was influenced by the consumption growth, so retail was one of the real estate sectors to see a substantial evolution with commercial operators reporting very good sales.
The evolution and positive forecast for Romania convinced new retailers to enter in our market. Stradivarius Man opened a store in ParkLake Shopping Center, Spanish Uterque and French Longchamp retailers went in Baneasa Shopping City with a unit, while Nanos, a fashion retailer for kids, opened a store in Promenada Mall.
Mexican food chain Taco Bell opened their first restaurant from Romania and in the region, while Under Armour or Nine West do prepare new stores for their expansion plans in our country.
“Millennials spend almost 50 percent of their disposable income for leisure, in particular for going out, non-food shopping, cinema, live events and other non-essential items. According to CBRE´s retail research experience is key also for the generation Z (born between 1995 and 2010). In addition this generation wants to spend its free timer being productive and creative instead of just “hanging out.” Thus, the entertainment offer has to be established accordingly in order to be appealing for the Generation Z. As our society is changing retail will have to adapt accordingly. The Generation Z (as mentioned above) is used to grow up “in public” and to be constantly connected, for them online and offline are the same. Hence the retail channels they use will have to seamlessly fit together. It will not be a decision between “physical store” and ”online offering.” They will be browsing online and buying offline or the other way round. The brands will have to act like digital natives as well, offering a true omnichannel experience. Even today we can see that the growth rates for omnichannel retailers are substantially higher than the ones for pure offline- or pure online-players,” Luiza Moraru, Head of Asset&Retail Services, CBRE said.
More and more companies have been seeking for expansion, with brands like Tesla, Bolia, Hema, Pamers, Kiko, Scalpers or TK Mass looking for investments in CEE region.
“Owners and shopping center developers have invested more and more in new food court concepts. This is the reason why Romania is part of a refurbishment and redevelopment strategy and why this is becoming a necessity for Millennials and Generation Z,” added Moraru.