Asia Pacific retailers are increasingly embracing overseas expansion, accounting for nearly one-third of new entrants in the region. 

Between 2014 and 2017, the proportion of new APAC retailers increased from 17% to 30%. Besides F&B operators, mid-range fashion and beauty brands are the most active players in the region, followed by luxury retailers, according to CBRE’s Rise of APAC  Retailers 2018 report.

China, Hong Kong, Taiwan and Singapore are the most popular target markets for new entrants, with APAC brands eyeing the prospect of stronger sales growth in major retail hubs. 

Vivek Kaul, Head of Retail, Advisory & Transaction Services, Asia told WILLIAMS MEDIA, “APAC retailers are becoming a driving force in the region, spurred on by potential revenue growth and the need for stronger brand awareness.

"This expansion is not focused on one single market – instead, it reflects the diversity and dynamism within Asia Pacific’s retail sector.”

After analysing 600 openings by Asia Pacific retailers in the region, CBRE identified the following insights for developing a successful expansion strategy: 

Understand local market practice and consumer needs

• Given the wide cultural diversity within APAC, retailers should be aware of the tax and business structures, foreign direct investment (FDI) regulations and consumer trends that apply to each market.
• Lack of market transparency in licensing processes is a key challenge for retailers, creating operational uncertainty, significant delays and extra costs.

Determine the right market entry strategy

• Direct operation is the recommended entry path for APAC retailers seeking full control over their business, but heavy upfront costs are a potential drawback. 
• Franchising, with its lower upfront costs, allows retailers to leverage the market knowledge of local operators. However, any partnership dispute could result in business disruption or brand damage. 
• E-commerce offers a cost-effective option for retailers looking to enter a new market. Viable strategies include setting up an online, market-specific store, or partnering with a leading e-commerce platform.

Match real estate assets to business goals

• Retailers looking to maximise their brand exposure should consider establishing flagship stores in prime retail locations or iconic properties. 
• If footfall is the main priority, retailers should look at options in shopping centres, department stores and high street shops. 
• Pop-up stores allow retailers to test their business potential in a new market and offer innovative retail experiences without investing too much up front.

Develop strong relationships with brokers, landlords and developers

• New-to-market retailers can leverage the expertise of local brokers to craft comprehensive market entry strategies.
• APAC retailers should build relationships with landlords to secure prime retail space and negotiate better lease terms.

“Whether they are establishing flagship stores in gateway cities or testing the waters in emerging markets, APAC brands are increasingly adopting a savvier approach to regional expansion,” notes Liz Hung, Associate Director of Asia Pacific Research.

For more information about retail expansion throughout APAC phone or email Vivek Kaul, Head of Retail, Advisory & Transaction Services, Asia CBRE via the contact details listed below. 

Source: CBRE

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