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MAPIC Keynote Wrap-Up 2012, by James Brown, JLL
The document discusses the current state of the European retail economy, highlighting uncertainty and subdued growth post-MAPIC 2011 while noting pockets of strong growth in certain regions. It emphasizes the rise of online retail and multi-channel strategies, the changing landscape for retail requirements, and the importance of international markets. Key takeaways for 2013 include ongoing adaptation to digital trends, targeted expansion, and a bifurcated retail investment market focusing on prime assets due to a lack of debt.
MAPIC Keynote Wrap-Up 2012, by James Brown, JLL
- 1. Wrap up -Mapic 2012 Adapting for Change and Positioning for Growth James Brown Head of EMEA Retail Research & Consulting james.brown@eu.jll.com
- 2. Looking Back What hashappened since Mapic 2011? Mapic 2011 2
- 3. European Economic RecoveryScenarios Uncertainty and volatility remain... Scenario 1: 10% Upside scenario: strong bounce back Scenario 2: 60% Central scenario: ‘muddle’ through Scenario 3: 30% Downside scenario: disorderly breakdown of Eurozone 4
- 4. Consumer and RetailTrade Confidence Mild deterioration in consumer and trade confidence since last year… 4
- 5. Consumer Confidence IndexQ3 2012 Consumer confidence below LT trend across Europe (excl. Turkey & Russia)… Long-Term Country Average = 100 Confidence above Long-Term Country Average Confidence below Long-Term Country Average Country confidence October 2011 Source: European Commission (November 2012) 5
- 6. Retail Sales GrowthForecast 2012 - 2014 Multi speed forecast retail sales growth… Source: Oxford Economics (October 2012); IHS Global Insight for Croatia and Ukraine (October 2012) 8
- 7. The Rise andRise of Online The move to multi-channel is accelerating… Internet retail spend per capita 2010 (£) Source: Euromonitor 9
- 8. The Impact ofMulti-Channel Retail Global trends and initiatives are emerging, FAST… Tesco shopping wall, Korea Source: Google 10
- 9. The Retailer 11
- 10. Retail Requirements areChanging International opportunities for growth; increased competition… Jones Lang LaSalle - Global 660 Source: Jones Lang LaSalle Global 660, ESRI 12
- 11. Destination Europe: LeadingCities London remains ‘springboard’ to Europe for non-European retailers… Source: Jones Lang LaSalle, ‘Destination Europe 2013’ 13
- 12. Destination Europe: Coreand Growth Cities Growth, diversification; international borders no longer a barrier… Source: Jones Lang LaSalle, ‘Destination Europe 2013’ 14
- 13. Retailer Country ofOrigin Italy leads exporter league, the US is catching up fast and China emerges… Source: Jones Lang LaSalle, ‘Destination Europe 2013’ 15
- 14. The Rise andRise of Luxury Thriving through turbulence… • Continued growth anticipated • Specific requirements • Constrained supply of units • Driving prime, luxury HS rents • Favouring larger tourist markets 17
- 15. Portfolio Optimisation forLegacy Retailers Leases events area trigger for change... Cumulative number of lease expiries (%) Lease expiries per year (%) Number of lease expiries per year Cumulative number of lease expiries Source: Jones Lang LaSalle (April 2012) Note: Analysis based on a sample of circa 15,000 European Shopping Centre lease contracts. Lease expiry profile varies by country and by retail sub-sector. 1
- 16. The Owner &Developer 18
- 17. Shopping Centre PipelineH2 2012-2013 Tired stock in WE ripe for redevelopment, Asset Management… 45% of new stock across Europe to be opened in Russia and Turkey combined… Source: Jones Lang LaSalle (October 2012) Note: Includes schemes >5,000m² GLA only; excludes Retail Warehousing and Factory Outlet Centre. Pipeline figures should be treated with caution. 19
- 18. Differentiation to Succeed Keyingredients to succeed in a multi-channel World… Embrace digital Accessibility Listen & communicate Cinema Security Culture Retail Catering Community engagement Education Service Pop-up Environment Convenience Click & collect Know the customer 19
- 19. NEW Opportunities: TravelHubs Europe’s top 100 airports have a combined 1.34 bn ‘visitors’ annually…. 21
- 20. The Investor 22
- 21. European Retail InvestmentVolumes Q1-Q3 2012 €11.7bn invested in Q1-Q3 2012, down 50% y-o-y due to lack of large deals… €178 Retail Transaction €739 Volumes Q1-Q3 2012 in million € €580 €32 4,000 or over €844 2,000 to 4,000 €6 €43 1000 to 2,000 €3,595 500 to 1000 €436 200 to 500 €460 €405 €2,890 100 - 200 0 - 100 €101 €52 No Transactions €758 €121 €12 €29 €74 €118 €220 Source: Jones Lang LaSalle (October 2012) Note: This review considers all investment sales of shopping centres, retail warehouses, factory outlet centres and supermarkets in Europe. The analysis excludes the high street and any investment deal less than $ 5 million in value. 23
- 22. European Retail InvestmentDrivers Q1-Q3 2012 Liquidity and fundamentals continue to attract majority of retail investment… p.a. Average Europe € 1,584 mn – 14% € 8,961 mn – 77% Average EU (27 Countries) € 130 mn - 1% € 964 mn – 8% Source: Oxford Economics (October 2012), Jones Lang LaSalle (October 2012) Note: Average Retail Sales per Capita based on countries shown on graph. % Share investment volumes based on countries shown on graph. 24
- 23. Global Retail Investment Continuedglobalisation and increased competition... 25
- 24. Global Retail Investment Redefiningretail investment markets... 25
- 25. European Retail Investment Redefiningretail investment… • Absence of debt (for the majority) in the near term • Global equity appetite for Retail investment to continue • Partnering to continue – ‘Equity and Expertise’ • EMEA leads investment market but Asia is catching up • Global flows to influence prime pricing for best retail schemes • Spread between prime and secondary pricing likely to stay 25
- 26. Summary 26
- 27. 10 Takeaways 2013 –Still adapting and positioning for growth… • Uncertainty to remain; economic and retail sales growth subdued • Pockets of strong growth exist across Europe • Targeted retail expansion to continue • Do NOT underestimate the impact of digital • Retailer optimisation and consolidation to continue • Re-development becomes the new development in WE • New development continues in Turkey and Russia in particular • Retail investment market to remain focused on ‘best’ • Lack of debt fuelling 2 tier market - prime vs. secondary • Internationalisation of investment and partnering to continue 27
- 28. Adapting for Change andPositioning for Growth Thank you. James Brown Head of EMEA Retail Research & Consulting james.brown@eu.jll.com