According to Savills Impacts publication, for international brands, especially in the luxury segment, physical stores are still key to their strategies. Some are capitalising on prime locations that are cheaper compared to 2019.
Luxury Brands Invest in Physical Stores
The role of the physical stores was already evolving before the pandemic, however, the need for brands to reconnect with their customers and a desire for human interaction following the pandemic has intensified this trend.
Marie Hickey, Director of Retail Research at Savills, commented: “In an increasingly digitised consumer landscape, physical stores are now becoming aspirational destinations that straddle leisure and entertainment.”
While several brands struggled to sustain sales throughout the pandemic, some sectors managed to expand, such as several athleisure, homeware, wellness, F&B and electric vehicle brands.
Sam Foyle, Director of Savills Prime Global Retail, said: “Some successful brands within these sectors are capitalising on their strong revenues during the pandemic. With a rebasing of rents in some markets, with prime retail spaces now more affordable than in 2019, now is an opportune time to acquire new sites and grow their physical footprints. For dynamic luxury brands, the current market may make it possible to relocate existing stores to larger spaces in better locations. It may also create opportunities for new brands to enter.”
New York, Paris and London have demonstrated their continued retail strength and are set to bounce back quicker than other destination cities, according to Savills retailer attractiveness city ranking, produced as part of its 2022 global Impacts research programme.
“Covid has created inevitable changes for the retail industry, with a structural shift towards soaring levels of e-commerce activity. However, the ramifications of the pandemic on consumer behaviour have served to accelerate previous trends and the resilience of many of these destination cities infers that physical retail remains an essential component of a brand’s strategy to reconnect with customers, enhance exposure, and drive sales,” Sam Foyle added.
Luxury Brands Invest in Physical Stores
Emerging Markets
The pandemic has created opportunities for retailers in several emerging markets, primarily across the Middle East and Asia. In Dubai, many luxury brands are represented by mono-brand stores through local franchises, but with the recent change in government policies, Savills is seeing international brands come in directly, looking to take back full control of their stores. Cairo, Saudi Arabia, and Bahrain all have affluent domestic populations, representing interesting opportunities for luxury retailers in this region.
As one of the key trends in retail is the transition from transactional to experiential stores, many brands that traditionally did not need physical stores are opening brick-and-mortar locations. They are using them as part of their brand-building strategies. This year, for example, streaming giant Netflix is set to open its first physical store in Tokyo.
In Viet Nam, the pandemic altered the entry plans for new international brands. However, according to Savills Q1/2022 market report, brands that planned to enter prior to the pandemic, such as 6ixty8ight, are expected to enter within 2022.
Ms Tran Pham Phuong Quyen, Manager of Retail Leasing at Savills Viet Nam, said: “The commercial markets in HCMC and Ha Noi are recovering well. Sales revenue from retail premises in HCMC has reached approximately 75% of pre-covid levels and is expected to make a full recovery soon. As such, rent levels are comparable to 2019. With international brands resuming their plans, this will also be a driving force for rent.”
She added that this is a suitable time for businesses to lease new premises and that they have the opportunity to expand and drive sales through physical stores.
Conclusion
Savills Commercial Leasing provides retail real estate services for leading domestic and international businesses. We provide bespoke services across properties and locations. We offer commercial leasing services based on project scale and location. Contact An to find out more.
Read Further:
.jpg)
.jpg)
.jpg)
.jpg)
.jpg)
(1).jpg)
.jpg)
.jpg)
.jpg)