Russia, Digital And Prime Locations The Talk Of Vibrant MAPIC 14 to 16 November 2012 - Palais des Festivals, Cannes
CANNES, France, Nov. 16, 2012 /PRNewswire/ -- The booming Russian retail market, coupled with digital developments and the continued demand for prime, centre city retail locations, were the talking points of MAPIC 2012, where representatives from some 70 countries gathered for three days of high-octane business discussions.
Under clear Cote d'Azur skies, 8,500 delegates (+6,2%), including 2,400 retail representatives and 850 investors, met in Cannes, with no fewer than 400 retail brands, including the likes of Calvin Klein Jeans, Costa, Tiffany & Co and Dairy Queen, making their first appearance at MAPIC. The biggest attendance surge came from the United States. The US delegation of 113 companies represented a 39% increase on 2011.
"We have seen a significant jump in American participation this year, driven by interest from retail brands and investment companies," confirmed MAPIC Director Nathalie Depetro. Major US names on the exhibition floor included Howard Hughes, Vornado Realty Trust and Thor Equities, which recently opened a Paris-based office to expand its European business and to encourage European retailers to enter the US market.
As MAPIC progressed, real estate financial and professional services companies CBRE, Cushman & Wakefield, Jones Lang LaSalle, BNP Paribas Real Estate and Savills rolled out their latest retail real estate reports. They concluded that strong demand from luxury and fashion brands and a shortage of available premium space in prime centre city locations has seen rents rising in key cities including New York, Hong Kong, London, Paris, Moscow, Milan and Madrid.
One of the territories drawing most attention throughout the week was Russia, the 2012 MAPIC Country of Honour and Europe's leader in terms of projected retail real estate investment. Russian participation rose 28%, with 294 companies in Cannes.
According to the country's State Statistics Service, retail sales in Russia rose 4.4% in September compared to 12 months ago and overall retail sales for the first half of 2012 increased by 7.3%. "With disposable incomes growing and a growing middle class, Russia is predicted to become Europe's leading retail market," commented Robert Bronwell, CEO EMEA Retail at Jones Lang LaSalle (JLL).
In his packed keynote address, Cushman & Wakefield's Head of Retail in Russia, Maxim Karbasnikoff, said one current trend among retailers is to target second tier cities. "In some small cities there is almost nothing. We'll see a shift in cities like this in the next three to five years." He added that there is a significant growth in outlet stores, a previously under-used format in Russia where some 100,000 sq m of outlet development is due to be completed by the end of 2013. Cushman & Wakefield data, released during MAPIC, reported retail property investment in Russia hit a record €4 billion for the first nine months of 2012.
Among the major retail names with expansion plans in the Russian market are Auchan, which is opening its first Auchan Drive outlet in Moscow next year, Spanish fashion chain Inditext, which has plans for 50-60 new stores, DIY retailer Leroy Merlin and fast food specialist Burger King.
Russian powerhouse real estate developer Tashir, whose President Samvel S. Karapetyan was the MAPIC 2012 Personality of the Year, brought nine new projects to MAPIC, four of which are in Moscow. Speaking in Cannes, Tashir's Vice President, Artak Evoyan, said the company plans to increase its retail real estate business in the Russian capital from 50% to 70% of Tashir's total portfolio, with one million sq m currently in development.
Not surprisingly, one of the hottest subjects for conversation in Cannes was how retailers manage the marriage of physical stores and online retailing. For the first time, MAPIC hosted the inaugural Digital Summit where Pamela Wolf, Partner of Digital Business at consultancy Invalio, urged retailers to move fast to embrace the digital landscape. Clem Constantine, Property Director at Marks & Spencer, which has been praised for its online stores, said that one challenge facing landlords is identifying where revenues are generated, as clients habits vary between shopping online and collecting goods in shops or checking out goods in retail stores before completing purchases via the web.
In a standing-room-only MAPIC keynote address, Robert Tercek, Founder of General Consulting Creativity, asked his audience, "Your customer has evolved. Have you?" He noted that retailers are adopting three strategies towards digital shopping – pretending it's not happening, making empty gestures by setting up un-empowered digital teams, or embracing change. He warned retailers not to try to go head-to-head with digital on price, product and data, but to capitalise on the unique in-store experience of human contact, advice, and bespoke services.
In particular, Robert Tercek urged retailers to put the mobile phone at the heart of their digital strategy. "50% of customers in your store are using mobile phones and 50% of them are shopping on that phone." He said brands needed to significantly up their game in the social media field, where he cited Red Bull, Burberry and Zara as good examples of brands successfully interacting with clients and using social media as valuable marketing tools.
Throughout MAPIC, the major real estate financial and professional service companies released a series of market reports covering aspects of the industry.
In its survey of 100 leading retailers, 'How Active are Retailers in EMEA,' CBRE noted a continued appetite for expansion, with 75% of companies planning to open five or more stores and 20% aiming to open 30 stores or more, with Germany, Austria, the Netherlands and the UK as favoured targets. Peter Gold, Head of Cross-Border Retail EMEA at CBRE, commented that online shopping drives traffic to stores. He said the news is that multi-channel will lead to greater investment in new and existing stores.
JLL's Destination Europe 2013 report noted that Paris now commands the highest retail rentals in Europe, followed by Zurich and London. Paris' Champs Elysees this year set a new record for the French capital with prices hitting €18,000 per sq m according to BNP Paribas Real Estate. BNP Paribas said that expansion of fashion retail brands and a shortage of prime supply is pushing rents up in Germany, France and central London.
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MAPIC 2013 will take place in Cannes November 13-15 2013.
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