Comment: Why Germany is the most popular retail market for expansion

With consumer confidence returning and global expansion plans firmly back on the agenda, retailers are searching for where best to build their brand and exploit the opportunities provided by economies in growth. So, where are they looking?

In our recently conducted How Active are Retailers Globally? survey where we questioned more than 130 retailers from around the globe on their expansion plans for 2014, our research found that Germany is by far the most attractive global retail market for expansion beating those of France, UK, Austria and China.

Global retailers are drawn to Germany as it offers the opportunity to target 20 large cities in one market with five of these being global top-tier cities. More than 40% of global retailers that took part in the How Active are Retailers Globally? survey plan to open a store in Germany in 2014 and this figure increases to a whopping 70% when we took into account only retailers that have European origins.

After featuring high in CBRE’s ranking of top real estate investment destinations and top European retail destinations and offering relatively cheap rents in comparison to the likes of Hong Kong, New York and London, it is unsurprising that Germany is a location that features high on the radar of retailers with global expansion plans. The strength of its investment appeal reflects the strength of its consumer economy relative to surrounding countries of a similar size.

But what is sparking this attraction in growth and expansion?

An upturn in consumer confidence and renewed vigour in the global retailer community as a result of the climb out of recession has put large scale expansion firmly back on the agenda. While the pace of international growth has slowed in recent years, retailers are ready to invest in and expand their store networks throughout 2014.

More than one third (35%) of retailers plan to expand their store portfolio by 40 stores or more over the next 12 months. This is an impressive increase on the same time last year when although only European retailers were surveyed, the figure sat at 16%. Of those retailers looking to open 40 stores or more, mid-range fashion and value fashion are the most active sectors accounting for one third of the total each.

In terms of the country- of-origin and their expansion behaviour, US retailers have the most extensive large-scale expansion plans with almost half (47%) of retailers surveyed looking to open more than 40 stores in 2014, unsurprisingly with their domestic market as their number one expansion priority. They are, however, seeking to grow their global businesses because of the saturated and super-competitive nature of their home market.

US retailers are targeting European markets in particular with 19% looking to open stores in Germany this year and 14% in the UK, France and Austria with Canada the only non-European option in their top five expansion list.

With retail expansion plans at the highest they have been since 2007 we can expect to see a lot happening in the retail sector during 2014 with movement not just within EMEA itself but on a much more global scale.

• Peter Gold is managing director - Retail Cross Border, EMEA at CBRE