Shopping around for a retail location? Hong Kong is the best in the world, but don’t discount the UK or US

Deciding where to open a new outlet is a huge decision for any retailer.

Deciding where to open a new outlet is a huge decision for any retailer. Market demands, economic climate, quality of infrastructure and ease of establishment and operation are all critical in determining the success of a new venture but can be difficult to evaluate from afar. Providing retailers with the insight they need when assessing how to reshape or expand their portfolios, a new ARCADIS study ranks 50 international markets according to these key factors.

With its first-rate infrastructure, superior business conditions and strong economic climate, Hong Kong currently offers retailers the best operating environment in the world. Benefitting from the spending power of their burgeoning middle classes and from favourable regulatory environments, Singapore and Japan are ranked second and fourth respectively while the USA and UK defy their aging infrastructure to round off the top five. On-going uncertainty in the Eurozone continues to take its economic toll with only Germany and the Netherlands featuring in the top ten. A booming tourist industry, excellent infrastructure and strong economic environment sees the UAE rank eighth in the world while at nineteen Chile is the strongest Latin American representative.

Our Retail Operations Index ranks markets according to the key factors that retailers look for when choosing where to locate their stores. It awarded pole position to Hong Kong due to its winning combination of world-class air and seaports, a state of the art telecommunications infrastructure and stable and efficient business conditions. All of this is complemented by high demand from Chinese tourists taking advantage of access to international and luxury brands at tax free prices. Nonetheless, economists fear that a reduction in tourist numbers and general slowdown in China along with ever-increasing rents may lead to slower growth in retail sales in 2015.

Ranked third and fifth respectively, the USA and UK continue to provide retailers with the favourable regulatory environment and strong economic climate that they need in order to thrive. Aging infrastructure does, however, threaten to impact upon their rankings in future studies. Meanwhile, despite benefiting from strong supply chains and ranking highly for ease of doing business and becoming operational, the Eurozone nations are held back by on-going uncertainty over interest rates, employment levels and overall economic instability. Retailers in the only members of the single currency to break into the top ten, Germany and the Netherlands, are deploying innovative strategies such as enhanced on-line shopping experiences in order to stimulate sales. Whether or not this is enough to offset the long-term impact of the unfavourable economic climate remains to be seen.

Elsewhere, China has struggled to keep pace with its regional counterparts. Despite its economic superpower status and the size and scale of its domestic consumer base, retailers currently operating within China have been forced to adopt optimisation or consolidation strategies. In part this is due to China’s fragmented market structure but can largely be attributed to a tightening up of regulations. This has significantly reduced the ease of doing business in China and led to its relatively low overall ranking of 27th on the ARCADIS index. Nevertheless, Chinese retail sales volumes are predicted to surpass the US in the next few years, increasing the attractiveness of the Chinese market for many retailers. The complexity of the Chinese case only serves to underpin the critical importance of retailers having access to up-to-date and comprehensive information before moving in to new markets.

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