Shopping accounts for one-third of Europe’s €9200bn disposable income, with European retail turnover standing at €3090bn. Retail employs 18.6 million people in the EU and contributes to 4.3% of its GDP. It has lots of crossover with other parts of the economy, including manufacturing, wholesale distribution and logistics. It is also a significant user of ICT.
So, not surprisingly given its economic importance, governments are making retail a priority for growth and job creation. Through the European Retail Action Plan (ERAP), the EU is seeking to achieve a single market in retail. This aims to lower barriers and reduce operational restrictions, making crossborder sourcing and new market entry much easier. The UK government’s 'strategy for future retail' also looks at developing crossborder opportunities in line with ERAP’s ambitions. Retail is an international sector, as retail consultancy Kantor Retail’s Top 50 Global Retailers ranking demonstrates, with some retailers getting more than 80% of their retail sales outside their home market. Real estate services firm Jones Lang LaSalle’s Cross Border Retailer Index shows where the international retailers are locating, with London, Paris and Moscow occupying the top three spots in Europe.
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Retail faces a variety of challenges, including Europe’s fragile economic recovery from recession; demographic shifts changing consumers’ needs and wants; consumer concerns about sustainability; increasing regulatory pressures; changing supply-chain processes and technologies; and the move to multichannel operations where retailers are operating online as well as in their physical 'bricks-and-mortar' shops. The use of e-commerce and m-commerce (mobile) and other forms of distance selling mean that borders are losing their relevance. So, the town centre is now just as important as the office park and industrial estate as a destination on the FDI map. See you on the high street!
Douglas Clark is director of Location Connections, a site selection and FDI consultancy.