1GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)

Sophie Baqué: Could you showcase the fi rm Ikea-Centres Russia?Armin Michaely: Ikea-Centres Russia is the country’s largest shopping center owner, with 2.2 million retail sq.m. We have been active for 15 years and we run 14 malls (3 in Mos-cow, 2 in St. Petersburg and 9 in the regions), all with an Ikea store and hypermarket as an-chor tenants. We are a part of Ikea-Centres, which runs 3.2 million retail sq.m of malls and “retail parks” in 14 countries, including 69% in Russia.

How many customer visits do you get at your 14 malls?The malls attracted 275 million visitors in the fi scal year to August 2015, an increase of 2%. Traffi c in 2014 was up by 4.5%. Our largest mall, Belaya Dacha in Moscow with 225,000 sq.m GLA, and 320 stores, attract-ed 40 million visitors last year (up 3%). Our smallest center at Mega Kazan, covering 91,900 sq.m GLA, reported 14 million visi-

THE INTERVIEW

tors. When European colleagues visit us, they are surprised to see that 3 Mega malls in Russia have as many customers as 50 Ikea stores in Germany.

Are malls launched during the good times in Russia now struggling to fi nd tenants? Last year, our business in Russia was resil-ient. The vacancy rate remained at 1.4%. Annual sales of our tenants grew by 7.5% in rubles. Of course, Russia is in a recession (G.D.P. will fall by 4% this year). But the coun-try has the largest population in Europe at 146 million people and it’s not unusual to have economic cycles here. A crisis also of-fers opportunities for retailers and I believe it’s the right time to invest in Russia. If you are prepared to face a crisis, you are more successful when the economy recovers.

Several retailers like New Look, Gerry We-ber, Esprit, River Island, OVS, and Amer-ican Eagle Outfi tters closed in Russia… Of course, a few retailers left but many stayed such as Forever 21, H&M, Mango and Inditex. Turkish retailers are also expanding here, such as fashion brands LC Waikiki (5 new stores) and De Facto (3 new stores). Opening in Russia is easier for retailers from Turkey than for those from the U.S., Europe or Asia. Turkey is closer to Russia from a geo-graphical and cultural point of view. 50% of Mega malls’ tenants are international brands, with 70% from the fashion sector.

In Moscow prime retail rents dropped by 44% on Tverskaya Street. What about Mega malls?It is diffi cult to give an average as rents vary by sector, store size and location within the

The monthly digest of international retail < N° 16-169 > December 2015

IKEA-CENTRES RESTARTS EXPANSION IN RUSSIA

German Armin Michaely, aged 54, has managed Ikea-Centres Russia since March 2013. After 22 years at the German offi ce, he has restarted mall expansion in Russia, which previously stopped in 2012. Sophie Baqué met an inspiring and confi dent business leader to fi nd out why it is the right time to enter Russia.

Armin Michaely

AFTER THE CAMERAS HAVE GONE

As terrorist attacks increase in the U.S., France, Mali, Kenya, Egypt, Tunisia and the Gulf, we offer our condolences to all those who have been affected by these tragic events. Our thoughts are with all of the victims and their families.Meanwhile, life continues, offering new surprises and innovations. There is a notable desire among Millennials to share and experience new ideas. In Singapore, Muji saw sales take off with the addition of an in-store cafe. In the U.S., Urban Outfi tters could soon set up restaurants selling pizzas within its boutiques. In this edition of Global Retail News, you will see how some mall operators are installing art galleries in malls. During this Christmas and New Year, let’s refl ect on this year’s innovations and look forward to next year’s trends.

Neil SternSenior Partner, McMillanDoolittle

EDITORIAL

INTERNATIONAL

Why do retailers increasingly mix re-

tail and food? To counter e-commerce growth, retailers such as Muji, Urban Outfi tters and Casino are investing heavily in food experiences…

P.4

EUROPE

Yellow Korner, the concept of the

month. Lourens Verweij, from Ebeltoft Group, showcases this original concept, which is part de-cor and part art gallery ...

P.5

MIDDLE EAST

Will Iran soon reintegrate into the

world’s economy? After 20 years of limitations for multinational retailers, malls are now mushroo-ming in Iran…

P.8

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)2

mall. Monthly rents can vary from €10/sq.m for a low-margin hypermarket to €100/sq.m for a very profi table shoe store. Since 2009, Ikea-Centres Russia has operated with con-tracts in rubles. There is a massive difference with leases priced in US$ or € from our competitors. The recent currency fl uctuation confi rmed that our ruble-based policy has a strong advantage, as tenants earn and pay in rubles, regardless of currency devaluation. While US$ and € denominated rents caused an average rental increase, our contracts have not been affected by any devaluation in Russian currency. It provides more stability and predictability for our tenants.

How do you manage to attract foreign re-tailers?Ikea-Centres offers an entry-level package with many services including fi scal and property registration for new retailers. I do not recommend franchising in Russia, as it is better for retailers to operate directly. As most contracts run for 3 to 5 years, this allows for new tenants and the opportunity to replace those performing poorly. Discount retail has not developed in Russia, so this is defi nitely a new opportunity.

Could you describe a typical Mega mall in Russia?We have two sizes. For Moscow, the average area is 200,000 sq.m GLA (220 stores). In the regions, it is 130,000 sq.m GLA (165 stores). Each center includes an Ikea store, an Auchan hypermarket and a D.I.Y. store, usually Leroy Merlin or Obi.

You are launching a farm-ers’ market in a Moscow mall. Can you tell us more? In Khimki’s mall (north of Moscow), we opened a farmers’ market cover-ing 750 sq.m GLA in early December. Local producers -farmers, bakers, butchers- sell fresh and local products directly to cus-tomers. I am looking forward to seeing the results. We are also upgrading and extend-ing Khimki’s food court from 6,000 sq.m to 10,000 sq.m GLA (over 12% of the mall’s GLA). Food retail is becoming increasingly important in our malls, as customers spend more time eating out. 30% of visitors come to Mega for meals. Cafes and restaurants now cover 6% of total space and we want to grow that to more than 10%.

Why did Ikea decide to build malls in Russia? I don’t want to be arrogant, but we invent-ed the Russian shopping center model 15 years ago. Our European experience proved that other retailers benefi ted from Ikea’s traf-fi c, but not in a concerted manner. Russia did not have integrated shopping centers in 2000, so we took advantage of this add-ed-value by offering everything under one roof. By comparison, we have 3 integrated malls and 15 standalone Ikea stores in Chi-na, with less land available.

What do you like the most about your job?Russians are very open to buying and selling. The speed of change and increased freedom are quite impressive. Once you make a deci-sion and have investors on board, an Ikea store can open within one year and a mall within 2 years. Russia is a huge country and there are no restrictions on the size of sites. In Germany or England, it would be almost impossible to build a mall with 150,000 to 200,000 sq.m GLA. In Russia, you can build as large as you want. It is a nice environment to invest in and to see things changing.

What has surprised you the most in Rus-sia?Customer mentality is different, Russians shop anywhere and anytime. Stores and restaurants are open 365 days a year with longer operating times. Since 2013, Ikea is open from 10am to 2am. We moved closing

time from midnight as studies showed that hourly transactions doubled

between midnight and 2am! Several Obi D.I.Y. stores are

open 24 hours, so it is normal to shop at mid-night to avoid Moscow’s traffi c jams.

Does the massive size of Russia change con-

sumption patterns?Catchment areas are huge, so

Russians drive for up to 4 hours to visit a mall. Sometimes, they stay overnight to spend the whole weekend. In Omsk, our Mega Mall attracts many customers from Kazakhstan. In Russia, a shopping center is an attraction in itself. Our sites in Moscow and St. Petersburg have a profi le similar to those in Europe.

Do you have other openings planned?We still have not covered many regional

THE INTERVIEW

cities (Millionniki) and this is our 1st prior-ity. Ikea-Centres Russia is in the purchase phase for sites in Chelyabinsk, Perm and Krasnoyarsk. For many retailers, Moscow is the gateway to Russia, but regions also offer opportunities. We are also looking for space in Moscow and St. Petersburg. In Voronezh (southwest), we have obtained the building permit for a standalone Ikea store. For the Mytischi mall project (230,000 sq.m GLA in Moscow and €500 million investment), we are in the process of obtaining all agree-ments, with opening planned for late 2018. This will be our largest mall in Russia, with services like children’s entertainment, cook-ing classes, music classes and a food court.

In 2014, domestic consumption account-ed for 50% of Russian G.D.P. vs. 37% in China. Did you see a shift with the crisis?Russians are focusing on food and daily needs. Regarding home furnishings, many Russians live in urban apartments and they prefer to invest in dacha/ summer homes. Home furnishing stores Hoff from Austria and Crate&Barrel from the U.S. are active in Rus-sia, with smaller stores. As a professional mall operator, we are happy to offer them space in some Mega malls to optimize our retail mix. We don’t try to protect our anchor tenants. We are discussing a location with Hoff in our future mall of Adygea-Kuban (Krasdonar).

A last word to conclude?Short-term oriented retailers can’t succeed in Russia because the market is mature. It’s not about launching a unique offer, as the competition has already arrived in force, with plenty of local experience. Auchan, Obi and Leroy Merlin are getting bigger. Ikea-Centres has invested 15 years in Russia and we are known as a landlord who understands Rus-sian retail. In summary, I believe that every international retailer should have a presence in Russia.

The Russian mentality is

different. People are used to driving up to 4 hours to a mall and shopping until

midnight

This farmers market opened in December at Khimki Mall (Moscow)

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved) 3

RUSSIA UNDER THE MICROSCOPE

LOOKING FOR VALUE

Today, almost all global retailers are consid-ering some form of reduction in exposure to Russian risk. By comparison, some fast food chains such as McDonald’s, Starbucks, Burger King, Dunkin’ Donuts and KFC are among the few players with fresh opportu-nities in Russia. Their prices are two to three times lower than traditional restaurants and many Russians eat there on a regular basis for lunch. McDonald’s was hit by reprisals when Western sanctions were introduced in 2014, but business has been resilient. In Au-gust 2015, the fi rm signed a franchise agree-ment with the Gid Llc Company to open 20 restaurants in Siberia before 2020 (regions of Novosibirsk, Tomsk, Kemerovo and Altai). McDonald’s has been active in Russia for 25 years, with 500 restaurants in 120 cities.

In Russia, spending has shifted from lux-ury to value-for-money channels, such as Auchan hypermarkets. According to sourc-es, Auchan yields are 40% higher per sq.m. than those of some Russian retailers, such as Lenta or O’Key.

In September, a corruption scandal broke that involved Russia’s 2nd largest grocery retailer X5 Retail, which owns Pyaterochka discount stores, Perekrestok supermarkets and Karusel hypermarkets. A Perekrestok executive from the purcha-

sing team asked for a US$548,300 bribe to place a catering product in X5 stores. “Personal corruption is endemic in any business relationship in Russia. However, it is quite rare that such a case involves police intervention,” said Alexis Nekrasov, Director of Russia Beyond the Headlines.

In the case of Ikea-Centres, frustration over corruption at all levels has created tension in the past between the mall operator and the Russian market. Exaspe-rated by bribery attempts, the fi rm halted any further expansion in 2012. In 2015, however, there appears to be a healthier relationship with local authorities. As an

example, the Belaya Dacha Mall in Mos-cow will be home to a government State Store, allowing customers to obtain birth, death, marriage and passport documents.

According to the pro-government newspa-per “Izvestia Daily”, the average amount of bribes doubled in Russia between 2014 and 2015, reaching US$3,000, as the ruble has fallen in value against the US$ dollar. “Civil offi cials are used to ta-king bribes in US$, or fi xing amounts to the Central Bank’s exchange rate,” said Dmitry Chugunov, a member of the Public Chamber.

CONSUMPTION. HOW SALES OF FOOD AND BEAUTY

REMAIN RESILIENT

According to Rosstat (Russia’s Statistics Agency) and the PMR institute, retail sales fell by 8.5% in Russia between January and September 2015, showing big differences by category. In 2015, the grocery retail market should increase by 11.5% in value and the cosmetics market will grow by 8.7%. True in-fl ation is expected to grow at more than 15%, whereas offi cial sources plan an annual rate of 6%. “Russians have signifi cantly reduced shopping expenses. They look for cheaper substitutes, buy private labels more often or limit the number of items”, said Bartosz Bo-lecki, an analyst at PMR. “Sales of clothing and footwear will drop by 8%, but the value of the shoe market will decrease slowly. Foot-wear is a higher priority than clothing on the list of basic household needs”. Low-priced supermarkets are gaining traction and are expanding their selection of fashion items. If we examine the dynamic of foreign retailers leaving Russia, most of them are mid-range

brands, such as Chevignon, Gerry Webber, Sepalla, Esprit, New Look, OVS and River Island. According to a VTSIOM survey con-ducted in September 2015, 31% of Russians were using their savings to cover daily expen-ditures. The D.I.Y market is due to drop by 6% in 2015, as there is less confi dence in spend-ing on home renovations. Purchasing prop-erty is diffi cult as credit and loans are very restricted. The consumer electronics market is expected to decrease by 10%, affected by lower demand and a “high base” effect. In 2014, Russians rushed to make home elec-tronics purchases before the impact of price infl ation.Russian retail is not expected to return to double-digit growth before 2020, but it may balance out at about 7%. In the Christmas period, spending on gifts in Russia may de-crease by 7% versus 2014, with a value of US$238 per household.

DOING BUSINESS IN A CORRUPT ENVIRONMENT

A Karusel hypermarket (X5 Retail)

Value change of Russia’s retail sales by segments from 2011 to 2015(Source: PMR, Russia Federal State Statistics Service)

Category 2011 2012 2013 2014 2015 *

Grocery 13.8% 9.5% 11.7% 11.8% 11.5%

Consumer electronics 13.1% 14.1% 9.5% 11.1% -9.9%

Cosmetics 16.6% 13.8% 13.1% 11.0% 8.7%

Clothing 12.1% 11.2% 7.1% 8.6% -8.2%

Footwear 9.5% 12.7% 5.3% 7.7% -7.1%

Total clothing& Footwear 11.5% 11.5% 6.7% 8.4% -8.0%

D.I.Y 11.7% 16.0% 6.0% 5.1% -6.0%

* Forecasts

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)4

INTERNATIONAL

HOW TO SHOP AND EAT AT THE SAME TIME

Eager to enhance shopping experiences and offer attractions beyond items for sale, specialty retailers are expanding food and beverage offerings within their stores. In Sin-gapore, in September 2015, the Japanese retailer Muji opened “Cafe&Meal” with 52 seats in the Orchard Road fl agship, within the Paragon Mall. This cafe covers 15% of the store’s area at 121 sq.m. According to Jasmine Sng, General Manager of Muji-Sin-gapore, “Since the opening of our cafe two

months ago, Muji’s sales have jumped by 40%. Consumer traffi c has clearly increased. The Cafe&Meal area draws customers into the store. After a meal, they usually shop as well.” Muji’s Cafe&Meal has been installed in 23 other stores across Japan, China(Chengdu), Taiwan and Hong Kong. Mim-icking Muji’s design aesthetic, all cafes have a minimalist design, natural wood furniture and serve a simple Asian cuisine with a wide range of desserts.

In the U.S., department stores Bergdorf Goodman and Bloomingdale’s are invest-ing heavily in food. In November 2015, the struggling fashion retailer Urban Outfi tterssurprised investors when it announced a takeover of Philadelphia’s Vetri Family Group (owner of Vetri pizzerias) for an undisclosed sum. Urban Outfi tters, whose traffi c has de-clined similarly to Macy’s and Nordstrom, has been testing in-store restaurants. “Millen-

nials account for 25% of the U.S. population, and they are more willing than any other age group to spend on food”, said Richard Hayne, C.E.O. of Urban Outfi tters. “Spending spreads to leisure and dining instead of clothing. We believe that there is a tremendous oppor-tunity to expand the Pizzeria Vetri concept.” Hayne did not say whether Italian restaurants would open within Urban Outfi tters stores or as independent units.

In Europe, German supermarket fi rm Rewesigned a partnership with Starbucks to roll out in-store cafes in 2016. Starbucks signed similar deals in 2015 with an array of gro-cery retailers such as Casino-Guichard in France (Casino and Monoprix supermarkets), KeskoFood convenience stores in Finland (licensing agreement) and Dansk Super-marked in Denmark.

WILL AMAZON BE THE 2nd LARGEST GLOBAL RETAILER IN 2020?

Global vision, local insightsTake your brand global with the best local expertise from Ebeltoft Group’s retail consultants across 20 key international markets.

www.ebeltoftgroup.com

The world’s 10 largest retailers in 2020 by sales (Source: Planet Retail)

Retailer Rank 2020 Rank 2015 Sales 2020 in US$ billion *

Sales 2015 in US$ billion * % growth 2015-2020

Wal-Mart 1 1 609.0 523.9 3.1%

Amazon 2 5 211.2 113.7 13.2%

Costco 3 2 177.4 127.9 6.8%

Carrefour 4 3 151.4 122.2 4.4%

Kroger 5 4 139.6 116.4 3.7%

Schwarz Group (Lidl, Kaufl and) 6 8 134.7 103.2 5.5%

Walgreens-Boots 7 7 127.3 105.2 3.9%

Seven & I 8 9 123.9 101.5 4.1%

Tesco 9 6 121.9 107.7 2.5%

The Home Depot 10 10 108.3 90.9 3.6%

* Forecasts

Sales at Muji at Paragon Mall (Singapore) have risen by 40% since the launch of Cafe&Meal food service.

Eataly lands in Germany. In late November, Eataly opened its 27th restau-rant-store in Munich’s Viktualienmarkt in partnership with Signa Retail. This 4,600 sq.m store is in the former Schrannenhalle market. New stores are due in Moscow, New York (One World Trade Center), Boston, Los Angeles, Toronto, Paris, London and the U.A.E. In 2014, the fi rm’s sales reached €400 mil-lion.

Europe’s malls best in class. During the 3rd quarter ending in September 2015, rents rose by 1.6% in shopping malls at Al-tarea-Cogedim, by 3.9% at Unibail-Rodamco and by 3.3% at Mercialys. Following its merg-er with Corio in 2015, the rents of Klepierre cannot be compared to 2014. Like-for-like sales at tenants’ stores grew by 4.8% at Unibail, by 4.6% at Klepierre and by 1% at Altarea.

For Savills, Europe’s online re-

tail sales are still low. In 2015, on-line sales will account for 8.4% of European consumer goods (excluding travel and enter-tainment) with large differences by country. E-commerce represents 15.2% of the UK’s retail market, 11.6% in Germany, 8% in France, 7.8% in Sweden, 7.4% in the Neth-erlands, 3.5% in Spain, 3.3% in Poland and only 2.5% in Italy.

Primark opens a sprawling store

in Madrid. In October, the discount fash-ion retailer added a 12,400-sq.m store in the Gran Via in Madrid. Primark runs 7 stores in Madrid, 40 in Spain and 294 globally. In No-vember, it opened its 2nd U.S. unit of 7,500 sq.m. in the King of Prussia Mall (Simon Property).

Desigual tightens its belt. In the 1st half of 2015, sales at the colorful fashion re-tailer remained steady at €452 million but E.B.I.T.D.A. plummeted by 26%. The Span-ish group runs 548 stores in 9 countries. Consequently, the group will reduce staff at headquarters and will delay a move to a new building. In September Desigual replaced Manel Jadraque as C.E.O with founder Thomas Meyer.

Asda posts its 5th consecutive

quarterly drop. In the quarter to Sep-tember, Asda’s like-for-like sales in the U.K. fell by 4.5%. The combined market share of Aldi and Lidl has doubled since 2012, reach-ing 10%, and is likely to grow to 15% on par with other European countries. According to C.E.O. Andy Clarke, “It is going to be a very challenging Christmas. Our research shows that more than 20% of shoppers plan to spend less money this Christmas than in 2014 and a further 68% expect to spend the same”. Asda is traditionally the cheapest of the large grocers (Tesco, Waitrose, Sains-bury’s and Morrisons).

IN SHORT

AMAZON ROLLS OUT LOCKERS IN PARIS

In a fi rst for France, Amazon has set up collection lockers in a Parisian shopping mall. The service began on December 3, 2015, in So Ouest shopping center, owned by Unibail-Rodamco in Levallois, a western suburb of Paris. This unit has 60 lockers. Customers collect items via a PIN code and the credit card used when orde-ring on Amazon’s website.

TURKISH RETAILERS ARE EYEING IPOs

In Turkey, the grocery discounter Sok Market(2,800 stores, a subsidiary of conglomerate Yildiz Holding specializing in clothing), has revealed plans for an Initial Public Offering on the Istanbul Stock Exchange over three years. Rival Bim, Turkey’s largest grocery re-tailer by sales, is already listed in Istanbul. Be-tween January and September 2015, Bim’s sales jumped by 11.5% like-for-like to €3.3 billion (with 70% coming from private label).

Meanwhile, Begendik (42 stores) is seeking

foreign investors, including Iranian investors, to support a future I.P.O. This underpins an aggressive strategy of external growth. By December 2015, the purchase of 10 ex-Tes-co supermarkets (Kipa) will be complete, 12 months after taking over 12 Real hypermar-kets from the German Metro AG. Begendik forecasts sales of about US$500 million in 2015 and a growth rate exceeding 30% in 2016. If SOK Market also completes an I.P.O., A101 will be the only unlisted retailer among the top three discounters in Turkey.

THE CONCEPT OF THE MONTH

Lourens Verweij, Development Manager at Ebeltoft Group, highlights Yellow Korner, a quickly expanding chain which is part decor and part art gallery.

“Making photographic art accessible to ev-eryone.” That is the goal of Yellow Korner, a French retailer founded in 2006, which sells photographs. Yellow Korner sells photos (from Man Ray, Lee Jeffries, etc.) printed as limited editions. The retail concept is sim-ple. Instead of selling 10 edited photos for €5,000 in an art gallery, Yellow Korner prints about 1,000 units, all of which are authenti-cated. Prices vary from €19 to €3,500 for an exclusive shot limited to 50 pieces.

Yellow Korner was running 75 stores in 25 countries, covering about 120 sq.m GLA, at the end of 2014. Annual sales reached €30 million with double-digit growth. The best perform-ing stores register 300,000 visitors a year with an average ticket of €400. More than 50% of Yellow Korner’s sales come from foreign countries. The company has opened about 20 new stores this year in Western Europe, Bangkok (Thailand) and Chicago (USA). A launch in Japan and additional U.S. stores are planned for 2016. In order to fi nance expansion, Yellow Korner has raised €12 million since inception from investment funds and business partners, such as 360° Capital Partners and Audacia (owned by Charles Beigbeder). Yellow Korner has found a foothold between exclusivity, which drives demand, and avail-ability, which grows the customer base. This makes photos more accessible, but does not fl ood the mass market. Similar to the automobile sector, where personalization and limited ranges are hugely successful with customers selecting seat covers and dashboard fi nish-es, the customers of Yellow Korner feel unique. They have access to a high-end product, previously only available to the elite.” Lourens Verweij

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved) 5

EUROPE

Apple launches a one-hour “click

& collect” service. In the U.K., Apple has launched a one-hour “click & collect” service. Internet ordering generates items that are ready for collection in 60 minutes. Next day delivery is also possible for orders placed by 6:00pm.

Ruhr Park reopens in Germany. After an 18-month refurbishment, the Ger-man mall Ruhr Park has re-opened. Owner Unibail-Rodamco increased store units from 157 to 204 while keeping 115,500 sq.m GLA total space. New tenants are G-Star, Superdry, Forever 21, Foot Locker, Zara and Mango. Uni-bail runs 27 malls in Germany. The “weight of money” from investors targeting Germany has generated a strong performance for re-tail property.

Lidl invests in a delivery start-

up. The German discount retailer Lidl (Schwarz Group) surprised the whole in-dustry by buying Kochzauber, a food deliv-ery service. The fi rm delivers fresh food and “food boxes” including all of the ingredients needed to cook a meal at home. This deal should help Lidl gain experience delivering fresh products.

Stockmann will close in Russia. The Finnish-listed retailer Stockmann (rev-enue of €1.84 billion in 2014) is selling all 7 department stores in Russia to Reviva Holdings. The purchase price is €5 million and the sale should be complete in January 2016. Stockmann is keeping its real estate assets in Russia. Reviva also controls De-benhams’ local franchise via its subsidiary Debruss. As a result, Stockmann will record a non-recurring cost of €75 million in the 4th quarter of 2015.

John Lewis to partner in the

Netherlands. Instead of investing in physical stores, the British department store is expanding globally through concession agreements in existing department stores. The partnership signed an agreement with previous rival Bijenkorf to open “stores-with-in-stores” covering 28 to 50 sq.m. The 1st outlets are planned in Amsterdam, Rotter-dam and The Hague in spring 2016, with further units to follow in Eindhoven, Utrecht, Amstelveen and Maastricht. John Lewis runs 7 similar concessions in Shinsegae depart-ment stores (South Korea) and 14 in Singa-pore and the Philippines.

Albert Heijn launches a 100%

self-scanning store. In Amsterdam, the new Albert Heijn supermarket (opened in October) offers a self-scan purchase system for credit cards only. The number of staff is similar to a standard Albert Heijn store, but instead concentrates on the added value of sale and services versus checkout. Will this be the standard format in the future?

WHAT MAKES A BEST IN CLASS RETAIL DESTINATION?

According to the 3rd edition of the “City At-tractiveness” study from Redevco, cultural and historical sites are key drivers in the per-formance of cities. “Soft factors, such as the presence of historic monuments and other tourist attractions, and the representation of creative professionals in a population, play a growing role in the attractiveness of cities”,

said Marrit Laning, Head of Research and Strategy at Redevco.

As the European Union emerges from a re-cession, the number of tourists across Eu-rope grew by 3% this year. It is a key factor for retail sales, despite some differences by cities. Amsterdam’s economic fundamen-tals have lagged behind other major E.U. cities, but the fl ow of tourists is twice as high as the rest of the Netherlands. It jumped by 12% this year vs. 5% in the Netherlands. New retailers such as JD Sports (fl agship), Calzedonia, Stradivarius and Oysho (Indi-tex) have added vibrancy to Amsterdam, and John Lewis is expected in 2016. Brighton, U.K., is home to a seaside art scene with an affl uent population, a large proportion of cre-ative professions and many boutiques. Last year, the number of tourists grew by 10.3% to 2.9 million nights spent. On a European scale Brighton ranks 34th, roughly on par with Bordeaux in France (39th) and Munster in Germany (61st). “As consumers increasingly combine shopping with leisure activities in their hard-earned leisure time, they choose locations where there is more to see and do than shopping”, added Marrit Laning.

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)6

EUROPE IN SHORT

FRANCE. WHAT IS ANNUAL TURNOVER PER SQ.M?

Comparisons of annual sales in France for 8 retailers (in €/ sq.m) (Source: Correspondance de l’Enseigne)

Europe’s 10 most attractive retail destinations in 2015

(Source : Redevco)

City Rank2015 Rank 2014

London 1 1

Paris 2 2

Munich 3 3

Berlin 4 6

Hamburg 5 4

Vienna 6 5

Stockholm 7 13

Milan 8 10

Amsterdam 9 9

Copenhagen 10 16

€5,714

€7,609

€9,167

€18,750

€18,750

€23,649

€22,598

€28,000

0 5000 10000 15000 20000 25000 30000

Hema

Calzedonia

Burger King

Micromania

Big Fernand

Tacos Avenue

Corso Restaurant

Pandora

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved) 7

AMERICAS

AFRICA, MIDDLE EAST

WHO EARNS WHAT AT U.S. FOOD RETAILERS?

Salary sampling in the supermarket industry (US$ / year) based on the fi rm’s annual sales(Sources: Supermarket News, Austin-Michael Executive Search)

Position Sales from $0.5 - $1 billion

Sales from $1-$10 billion

Sales> $10 billion

CEO 600,000 825,000 1,500,000

COO 365,000 620,000 770,000

CFO 345,000 470,000 610,000

CMO 340,000 470,000 615,000

CIO 270,000 350,000 450,000

WAL-MART SUSPECTED OF CORRUPTION IN BRAZIL

After China, is Brazil enforcing a major an-ti-corruption policy? While President Dilma Rousseff is involved in impeachment procee-dings for alleged illegal fi nancing, Wal-Mart could be involved in a bribery scandal in Bra-zil. Authorities are investigating US$500,000

in suspected bribery payments. It is alleged these were bribes to speed up two store ope-nings in Brazil from 2009 to 2012. According to the Wall Street Journal, Brazilian witnesses were interviewed in November to determine if Wal-Mart’s executives were aware of and sanctioned suspected payments. Wal-Mart made inroads into Brazil in 1995, but has struggled to become the country’s largest retailer with U.S.-style superstores and Everyday Low Price guarantees. In 2005, it acquired two local retailers to increase market share. Between 2006 and 2012, Wal-Mart almost doubled its stores from 299 to

558, but expansion ceased in 2013. Accor-ding to Morgan Stanley, Brazilian sales ac-count for only 3% of Wal-Mart’s revenue (net sales of US$482.2 billion in 2014, with 70% coming from the U.S.) An investigation of Wal-Mart found no major offenses in Mexico, but found evidence of small bribes in India. In Brazil, the Casino Group is also alleged to have paid US$115,170 to Carolina de Olivei-ra, the wife of the former Minister of Industry and Commerce. Federal police are investiga-ting claims of bribery, criminal action, corrup-tion and money laundering.

HOME IMPROVEMENT. LAFARGE-HOLCIM OPENS A

STORE IN IRAQ

The industrial group Lafarge-Holcim, the world’s largest manufacturer of building ma-terials, opened in Northern Iraq (Kurdistan region) in early December. This store covers 750 sq.m GLA and sells 40% of home impro-vement and D.I.Y. products like paint, sanitary goods, electrical fi ttings, and 60% of building materials such as cement, aggregates, mor-

tar and insulation. According to Iqbal Omar, Retail Director of Lafarge-Holcim: “In Iraq, we have overcome signifi cant supply chain diffi -culties, given the country’s current situation. Iraqis have a real need for building materials available under one roof. Our services such as technical support are much appreciated”.

The Lafarge-Holcim Group resulted from a merger between Lafarge and Holcim in July 2015. Consolidated sales of both entities were €26 billion in 2014. The group moved into retail in Latin America in 2018 and ex-panded into North Africa in 2010. Today, the fi rm operates more than 600 stores under various banners, such as Batistore in Algeria and Red Minetti in Argentina. Lafarge-Holcim retail stores are well established in Ecuador, Argentina, Morocco and Algeria.

A NEW YORK OUTLET

By the end of 2017, New York will house Empire Outlets, its fi rst outlet center cove-ring 35,530 sq.m GLA with 100 stores. The Brooklyn-based developer BFC Partners has started building on Staten Island, with 50% of space already leased. Nordstrom Rack, Gap, Nike, Starbucks and H&M are confi rmed te-nants. It will use 2,800 sq.m for cafes and restaurants. 7 million visitors are expected per year. Empire Outlets is part of a mixed-use complex including a hotel and a world’s record 192-meter ferris wheel.

SINGLE WOMEN BANNED

FROM RESTAURANTS

Saudi Arabia’s National Society for Human Rights (N.S.H.R.) has criticized the ruling by some restaurants to ban single women if unaccompanied by male guardians. “We made this decision because we have seen numerous incidents of fl irting taking place inside restaurants, and such behavior ad-versely affects business,” said a restaurant owner to Al Hayat newspaper. N.S.H.R. says that signs placed in restaurants are against the law and should be removed immediately. With 28.3 million inhabitants and 51% under age 25, the Saudi food mar-ket is worth US$21 billion a year, posting 10% annual growth. Given the extreme weather, 80% of food products are imported. As Saudi Arabia offers no entertainment beyond res-taurants and shopping, households spend 25% of their budget on food and beverage.

An Uber-based promotion in

South Africa. For Black Friday, Shoprite offered customers a free Uber ride to Check-ers supermarkets, thereby launching the Christmas season the day after Thanksgiving. The fi rst 1,000 customers who signed up with Uber using a promotion code qualifi ed for a free return trip to any Checkers super-market (valued at up to US$14). Checkers, owned by Shoprite, runs 230 grocery stores in South Africa. Aeropostale will land in Egypt in

early 2016. Aeropostale, a U.S. clothing retailer for children and teenagers, signed a licensing agreement with “Q&A Retail Com-pany” to launch in Egypt. The agreement includes 10 independent stores by 2020 in Egypt. Q&A Retail Company is owned by Quattro Trading Company, which operates franchising deals in the furniture and high-end fashion sectors. Quattro is actively look-ing to add food and beverage retailers to their portfolio.

Go Sport signs 3 master-fran-

chising deals. In November 2015, the sporting goods retailer opened a 3,200 sq.m GLA fl agship in Dubai’s Mall of the Emirates (U.A.E.) in partnership with Al Mana Fashion Group. The store has a “gait analysis” service which helps customers choose shoes, a vir-tual “home trainer” if selecting a trail bike and a 10 meter climbing wall. In October, Go Sport opened a 800-sq.m GLA store in Abi-djan (Ivory Coast), located in Cap Sud Mall and run by Mercure International of Monaco. Another unit opened in Baku (Azerbaijan), covering 950 sq.m GLA and is operated by Blue Planet. Steinhoff moves into home elec-

tronics retail. The South African com-pany, previously specializing in discount non-food retail with Conforama (furniture) and Pepkor (clothing and home furnishings), plans to buy the home electronics retailer Ex-treme Digital. Based in Hungary, Extreme Dig-ital posted sales of US$80 million in 2014. In early 2015, Steinhoff invested US$5.7 billion to take over Pepkor, already well established in Poland and Australia. With its low priced offerings, Steinhoff continues expanding into countries with an emerging middle class like Hungary, as most revenue is earned in Eu-rope.

Massmart launches a D.I.Y store

in Zambia. The D.I.Y chain of Builders Warehouse, owned by Massmart, opened a Zambian store of 4,665 sq.m (plus an exter-nal yard of 6,393 sq.m) in November. Locat-ed at the East Park Shopping Mall in Lusaka, it created 156 jobs. It is the 39th Builders Warehouse store overall and the 6th outside South Africa.

IRAN. MALL DEVELOPERS ARE OPTIMISTIC

During the Mapic event, the Iranian devel-oper IMCC said it had already leased 50% of the future Iran Mall in Tehran (net rent-able area of 255,000 sq.m, opening in H1 2017). Carrefour will occupy 20,000 sq.m with a hypermarket and Lebanese fi rm Aza-dea has expressed interest as well. Azadea is a distributor of 55 global brands in the Middle East such as Superdry, Cal-zedonia and Eataly. “With 600 stores and 20,000 parking spaces, Iran Mall will be the fi rst shopping center of this scale in Iran”, said a spokesman. “Food and beverage will cover 10% of the area.” It is part of a mixed-use complex, which includes a skating rink, a 14-screen theater and 2 hotels. IMCC is also building two oth-er malls in Tehran: the high-end Farmanieh Mall (70,416 sq.m GLA, opening in 2018) in the wealthy northern suburb and the Mirral Mall (17,000 sq.m GLA, opening in 2019), which will target the middle class. A 3rd mall is being developed (130,000 sq.m GLA) in Mashhad, Iran’s second most populated city.

In terms of retail property, Teheran has no luxury high streets, only 65 shopping malls. “Many malls have illegal permits and 300 malls are now under construction in Iran. Making sure that you enter the right shop-

ping mall is a key challenge”, said Allan Kellenberger from the Swiss property fi rm Elocations.

Intellectual property is another major chal-lenge in Iran. In November 2015, an “illegiti-mate” KFC fast food outlet opened in Tehran (Iran), but no franchise rights have been granted to any party in Iran. It was closed the next day. Zara and Massimo Dutti have also been victims of counterfeiting. “Some people go to Dubai, buy an array of merchandise from those brands and resell them in Iran”, said a specialist.

With an educated and sophisticated pop-ulation of 80 million (60% is under age

35), interest in retailers keeps ris-ing. Foreign sanctions against

Iran could be lifted before the beginning of 2016 and many Iranians want to buy foreign brands without having to fl y to Dubai. Iran’s G.D.P. should grow by

3% this year while infl a-tion should “slow” to 15%,

down from a 45% increase two years ago. Iran’s fashion mar-

ket (clothing and footwear) jumped by 51% in 2014 to US$8.1 billion. The beauty market grew by 29% to US$3.5 billion. The high-end watch market is also seeing fair growth, with Omega and Zenith already selling in the country. For Mr.Kellenberg-er, “Luxury goods that are accepted by conservative Muslims are luxury watch-es, which are mostly worn by men.” Since opening in Iran in 2006, Benetton runs 24 stores and Salvatore Ferragamo is active via an agreement with the multi-brand retailer Alijenab. Carrefour runs 3 HyperStar hypermarkets and 2 supermarkets. LVMH will open a Sephora store in Iran in 2016.

The capital city of Tehran garners 20 million inhabitants

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)8

AFRICA, MIDDLE EAST IN SHORT

Sephora beauty retailer (LVMH)

will launch in Iran in 2016

LULU EXPANDS FROM THE GULF TO MALAYSIA

U.A.E-based Lulu Group plans to build 10 hypermarkets in Malaysia via an invest-ment of US$300 million over the next 2 years. Expansion will provide 5,000 jobs to Malaysians. “To ensure proper training, we will take our Malaysian staff to our hyper-markets in the Middle East,” said Chair-man Yusuff Ali M.A.

Lulu Group owns the largest hypermarket chain in the Middle East, with 118 hyper-markets and shopping malls in the Gulf and India. In 2015, its sales are expected to reach about US$7.7 billion. The group is about to open its 1st hypermarket in Ma-laysia in February 2016 (located at Jalan Munshi Abdullah).

Asics leads the athletic shoe race. During the 9 months ending in September 2015, sales of Asics reached US$2.7 billion, with 76% coming from outside of Japan. The footwear manufacturer continues expand-ing into retail, with 414 independent stores under the banners Asics, Onitsuka Tiger and Asics Tiger. Asics Tiger gives new life to icon-ic running shoes of the 1990s (like Gel-Lyte III) and is particularly appealing to younger customers. Asics opened a fl agship in Ma-drid in February 2015 and launched a new “performance concept store” in France in July 2015. In Europe, sales at its standalone stores increased by 26%.

The U.S. hamburger chain Shake

Shack enters Japan. Shake Shack hamburger restaurant opened its 1st Japa-nese unit in Tokyo’s Icho Namiki Avenue (Mei-ji-Jingu Gaien Park). Created in 2004 in New York, Shake Shack is the forerunner of next generation burger restaurants, a long way from the fast food restaurants of the 1990’s. It uses natural and fresh ingredients, meat without added hormones and a modern de-sign. In February 2015, Shake Shack was list-ed on Wall Street in a US$1.6 billion I.P.O. In November 2015, it operated 80 restaurants.

Hong Kong. No rent increase in

2016. According to CBRE, “Prime high street rents in Hong Kong, serving 7 million people, fell by 16% in the 9 months of 2015. The restrictive policy for Chinese shopping tours has reduced critical tourist spending. Rents should end the year down by 20%, and con-tinue to fall by up to 15% through 2016. The impact has been more apparent on high streets where rents fell the most”, said CBRE, while the effect on malls has been relatively limited. “The decline in tourist spending is fundamental and will not be reversed in the near future”. Athletic and fashion mid-market brands are gradually replacing luxury brands as tenants in core tier-one sites.

Costco sells online in South Ko-

rea. In November, the U.S. retailer Costco Wholesale (turnover of US$113.7 billion in 2014) started selling online in South Korea, a fi rst for Asia. Only clients with a membership card can buy on the website, which does not include fresh products. All prices include delivery. In South Korea, a country with de-manding clients, Costco ranks 1st in terms of customer satisfaction ahead of the 4 large hypermarket chains (E-Mart, Homeplus, Lotte Mart and NH Hanaro Mart), according to the Local Consumer Agency.

Apple Pay to launch in China in

February 2016. In China, Apple has signed an agreement with 4 major banks to launch its payment system Apple Pay, which works with an Iphone and a fi ngerprint. U.S. consumers have not adopted Apple Pay, as they still prefer credit cards.

IN SHORT

THAILAND. IKEA OPENS A PICK UP STORE

The world’s largest home furniture retailer Ikea opened its fi rst “pick-up and order point” in Asia on November 27th. Located at the Phuket resort (Thailand), this store covers 2,615 sq.m with 15 parking spaces and represents an investment of about €4.5 million. Previously, Phuket customers had to pay for delivery from the only store in Thailand, more than 800 km away via Bangna’s International Airport. Customers can order the full Ikea line apart from plants, and collect from the pickup point within 5

days. Thanks to Ikea Phuket “pick-up store”, sales of the Bangkok store should increase by 10%. Eager to expand the Thai presence, Ikea started construction on a 2nd store in Bangkok near the Central Plaza Westgate mall. Another site is planned in Northern Bangkok, near the recently expanded Future Park Rangsit Mall. Ikea is also seeking local partners in the Philippines (Manila) and Vietnam (Ho Chi Minh City).

To avoid expensive delivery costs for large-volume furniture, Ikea has rolled out pickup points for online orders. It opened its 1st pilot in March 2015 in Spain, followed by a similar unit in the United Arab Emirates during the summer (2,500 sq.m in the city of Al Ain) run by Al Futtaim Group. Another unit is expected in Canada shortly.

ALIBABA’S PROMOTIONAL SALES JUMP BY 60%

On November 11th, during Alibaba’s Singles Days shopping festival, sales of Tmall.com and Taobao.com jumped by 60% to US$14.3 billion in China (gross merchandise value), with 68% of orders made via mobile phone. The categories of fashion (Uniqlo, Nike, Adidas), beauty (Lancôme and L’Oreal) and baby products were the best sellers in China, boosted by big discounts. International brands ac-counted for 33% of Alibaba’s sales on that day.“This is not a profi table event, but it defi -nitely helps us build brand awareness in China” said Jeroen de Groot, Executive at Metro Cash & Carry. “This is a good investment because we learn who our

clients are and how to reach them online”. In February 2016, Alibaba will launch a se-cond promotion before the Chinese New Year.

Meanwhile, Alibaba continues expansion into the retail sector. In March 2015, the fi rm invested US$692 million in partnership with Intime Chinese department stores. In August 2015, the business invested US$4.5 billion to purchase 19.9% of Su-ning, the Chinese home-electronics retai-ler. Alibaba aims to strengthen the logistics network required in China for cost-effective delivery to Internet customers over very long distances.

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved) 9

ASIA

ASIA’S EMERGING RETAIL MARKETS

Forecasted metropolitan retail sales in Asian megacities (in US$ billion, 2015 forecast) (Source: Planet Retail)

16.5

19.1

74.2

80.2

98.2

103.3

169.0

0 20 40 60 80 100 120 140 160 180

Bangalore

Dhaka

Beijing

Chongqing

Shanghai

Guangzhou-Foshan

Seoul

Caroline Lamy

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)10

STUDY

Outlet centers, as a liquidation channel, are resistant to crisis. Although Western Europe shows the most profi table outlet malls, Eastern Europe has the lion’s share of expansion projects.

OUTLET CENTERS. MATURITY IN THE WEST, EXPANSION IN THE EAST

According to a study from Ecostra and Mag-dus conducted among 90 outlet retailers, new outlet openings have slowed in Europe. For 2 years, the majority of new sq.m came from extensions of existing assets. The tight funding environment and the lack of confi -dence of some investors for outlets, seen as out-of-town and lower value sites, created a negative context for development. Outlet malls are still profi table for tenants. In 2014, the home appliance stores Home & Cook Outlet (Seb Group) posted average sales of €7,000/ sq.m a year. Top stores reached €15,000/ sq.m. “When our store is placed exactly where we want it within the mall, turnover per sq.m can be 200% more than the mall average”, said Geraud d’Adhemar, Retail Director at Group Seb. In 2015, 59% of the retailers said their outlet stores were more profi table than their stan-dard stores. Retailers plan to open 3.2 outlet stores in the next 12 months, down from 4.6 one year ago.

Based on the ratio of turnover versus site costs, the study also revealed a ranking of Europe’s “Top 20” outlet malls. This year, 95% of Europe’s best outlet centers were in West-ern countries. Close to the German border, the Dutch Roermond Outlet is the most prof-itable and also one of the largest at 35,000 sq.m, whereas the average is 20,000 sq.m. Another 15,000 sq.m is planned for 2017. Outlet Roermond attracts 5 million visitors a year and Germans account for 55%. Its operator is McArthur Glen, Europe’s largest outlet operator (turnover of €2.8 billion in 2014).

The U.K. site at Bicester Village near Oxford (Value Retail) is the 2nd most profi table in Eu-rope, boosted by a large number of foreign tourists. Japanese travel agencies based in

Tokyo are selling visits to London, including tours to Bicester Village.

In Germany, “All Outlet Centers perform sig-nifi cantly above the European average, said Caroline Lamy, Director of Magdus. The pref-erence of global retailers for German loca-tions is unmistakable.” 56% of the retailers polled plan to open outlet stores in Germany in the next 12 months, with 46% interest-ed in France and 27% in the U.K. South of Stuttgart, the top ranked outlet center of Out-letcity Metzingen is the highest performing German unit (operator is Holy AG, former owner of Hugo Boss). Still in Germany, Zwei-brücken (Neinver), Ingolstadt Village (Value Retail), Ochtum Park Outlet, Designer Outlet Berlin and Wertheim Village are all ranked in the “Top 20” . In 2015 the local Competition Authority ordered Value Retail to remove so-called “radius” clauses from leases, which prevented retailers from opening new outlet stores within a radius of 150 km of existing units.

Eastern Europe, which saw no outlet activity before 2002, remains largely unsaturated and could be the next destination for inves-tors, once political stability is proven. Polandis a major exception with 10 outlet centers (5 are run by Neinver). The Fashion House property developer (Liebrecht & Wood) runs outlet malls of 22,000 sq.m GLA on average in Russia, Poland and Romania . These were built in 3 phases to serve a catchment area of 2.5 million people.

In Moscow, Russia, Belaya Dacha Outlet is ranked 20th (Hines, 14,015 sq.m). “Outlet sales are literally fl ying today in Russia”, said Brendon O’Reilly, C.E.O. of Fashion House. It is exactly the same situation as in Poland af-ter the 2009 crisis”. In Moscow, the Fashion House Outlet mall will post like-for-like sales up by 30% in 2015 (in rubles). A 4,500-sq.m expansion (€11 million investment) is under-way to add 30 stores before November 2016. “Outlet centers are a liquidation channel, not a retail channel, and they are resistant to cri-sis, added Mr. O’Reilly. Russians are traveling less and they want to buy discounted West-ern brands by up to 70%.” Fashion House is investing €70 million to build another unit in St. Petersburg (120 stores, 20,260 sq.m GLA with 31% already leased).

Romania, Bulgaria, Croatia, Serbia and Slovak Republic have 1 outlet center and the Czech Republic has 2 (Prague and Znomjo). According to the International Out-let Journal, the Peakside investor is looking for opportunities in the Czech Republic, Austria and Hungary, with Ukraine as a pos-sible focus. In early 2014, the Kiev E95 Out-let project of 35,500 sq.m was suspended due to political turmoil (developer Evo Land Co.). The Darynok Trade Centre announced a 5,000-sq.m project in Kiev. In Kazakhstan, a US$100 million outlet center may open in Amalty or Astana. In Belarus, a 30,000-sq.m unit is planned in Globus Park (Minsk) with the country’s President as an investor.

* 1 = maximum score / 5 = minimum score

The 10 best outlet centers in Europe in 2015 (Sources : Ecostra / Magdus 2015)

Rank 2014 Outlet Centre Country Operator Average

grade *

1 Roermond Netherlands McArthur Glen 1.32

2 Bicester Village Outlet Shopping U.K. Value Retail 1.40

3 Outletcity Metzingen Germany Holy AG 1.57

4 La Vallée Village, Paris France Value Retail 1.67

5 London Designer Outlet U.K. Realm 1.80

6 Ellesme Port Cheshire Oaks U.K. McArthur Glen 1.85

7 Serravalle Scrivia Italy McArthur Glen 1.86

8 Portsmouth Gunwharf Quays U.K. Land Securities 1.88

9 Parndorf Austria McArthur Glen 1.93

10 Zweibrücken, The Style Outlets Germany Neinver 1.98

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved) 11

STUDY

In 2015, rental values remained surprisingly steady, driven by strong demand from global retailers and poor supply of available locations in the most popular streets.

RETAIL RENTS. WHICH ARE THE MOST EXPENSIVE STREETS IN THE WORLD?

Cushman & Wakefi eld released its 27th

annual survey of retail rents among 500 international shopping streets. This shows that rental values increased by 0.7% in the year to June 2015, slowing down from the 2% increase of 2014. Rents grew by 35% on the streets surveyed despite the slower global G.D.P. growth expected at 2.5% this year, the stock market crash in China during the summer of 2015, political tensions in the Gulf, the 50% fall in oil prices (to US$50 in mid-2015) and increased terrorist threats.

New York’s 5th Avenue (between 49th and 60th streets) is the most expensive retail location in the world. Strong tourist fl ow to Manhattan helped keep this high position, with foreign visitors attracted to the vibrant high streets dominated by luxury retailers. Rents across the U.S. grew by 7% year-over-year, with peaks in Los Angeles (up 23% on Rodeo Drive) and San Francisco (up 13% in Union Square). In Argentina, Florida Street (Bue-nos Aires) was the most expensive street in Latin America (€1,206 /sq.m/year). “North America should sustain a positive trajectory going forward in 2016, bolstered by a steady consumer sector benefi ting from a reduction in energy costs and stable employment ex-pectations, especially in the U.S.,” said Gene Spiegelman, Head of Retail in North America. In Europe, the Champs Elysées (Paris, France) is the world’s 2nd most expensive shopping street, as 2015 saw the arrival of high-end retailers (Longchamp fl agship store, Dubail’s luxury watches). “Paris retail dynamics may be affected by the terrorist attacks of November 13th”, said the study. In 2015, London (U.K.) should attract 18.8 million visitors and become the most visit-ed city in the world. In many E.U. capitals, rents have jumped due to the shortage of high-end locations and strong demand from global retailers such as Rituals, Harmont & Blaine, Coach, J. Crew, Arc’Teryx, New Bal-ance and Kikki-K, which want to reach the E.U. population of 506 million inhabitants. In Rome, retail rents at Via Condotti’s best locations jumped by 27% in 2015. Rent-al values on the best streets in Spain and Portugal increased (up 6% on Avenida de Liberdade, up 10% on Gran Vía in Madrid, up 12% on Rambla de Catalunya in Barcelo-

na). In Ireland, rents at Grafton Street (Dub-lin) jumped by 28%, the largest increase alongside Covent Garden, London. In Turkey, Bagdat Caddesi in Istanbul was the most expensive street at €3,016/sq.m. The highest rental growth rates were in Is-tanbul on Caddesi (up 24%), Istiklal Street (up 27%) and Abdi Ipecki (up 21%). The Nisantasi district continued to attract luxury fashion retailers like Zadig & Voltaire, Armani and the Swiss watch maker Ulysse Nardin. Demand remained healthy, as Kiko Milanoand Under Armour entered Turkey with Dogus Holding. Legoland secured 3,000 sq.m in Forum Istanbul. Quick hamburger restau-rants opened 4 stores in Istanbul and Crate & Bar-rel added a 4th store in Ankara Next Level.  As the confl ict between Russia and Ukraine has continued, with strong cur-rency devaluation, rental values fell sharply in Ukraine (down 36% on Khreschatyk in Kiev) and even more in Rus-sia, with a 44% decrease on Tverskaya in Moscow and a 60% decrease on Nevsky in St. Petersburg. In Asia Pacifi c, retail rents declined sharp-ly in Causeway Bay, Hong Kong (down

14%), as Chinese demand for high-end goods dropped. Hong Kong was particularly affected due to the corruption clampdown since 2012. Rents at Causeway Bay already dropped 7% in 2014. Many tenants have re-negotiated leases and reduced retail space to increase store profi tability. In November 2015, British high-end retailer Burberry said that it could downsize its Hong Kong unit. Louis Vuitton has strongly denied rumors that it would close 20% of its Chinese stores. It said that the Chinese network would re-main steady in 2016, with plans to refurbish

some units. Despite India’s opposition to foreign investment in multi-brand

retail, retail rents increased by 13% in Connaught Place

(Delhi), by 15% in Anna Nagar 2nd Avenue (Chen-nai) and by 15% in DFL Galleria (Gurgaon). In Tokyo (Japan), rents

jumped by 20% in Omo-tesando to €7,987/sq.m.

Many luxury retailers have fl ocked to Japan this year, like

Burberry, Moncler, and Brunello Cuci-nelli, along with food and beverage brands such as Shake Shack burgers, Dominique Ansel Bakery and Guzman y Gomez Mex-ican food. Manila (Philippines), Australiaand New Zealand have attracted a growing number of international retailers this year.

*Data ending in June, 30, 2015. Ranking only includes the most expansive street in each country.

The 10 most expensive shopping streets in each country (Source: Cushman & Wakefi eld, November 2015)

Rank 2015

Rank 2014 Street City, Country €/ sq.m/

year*

%change(local

currency)

1 1 Upper Fifth Avenue New York, USA 33,812 + 4 %

2 2 Causeway Bay Hong Kong 23,178 -14 %

3 3 Champs Elysées Paris, France 13,255 + 0 %

4 4 New Bond Street London, U.K. 12,762 + 12 %

5 6 Via Montenapoleone Milan, Italy 10,000 + 25 %

6 8 Bahnhofstrasse Zurich, Switzerland 8,643 + 0 %

7 5 Ginza Tokyo, Japan 8,520 + 3 %

8 7 Myeongdong Seoul, South Korea 8,519 + 0 %

9 9 Kohlmarkt Vienne, Austria 4,620 + 4 %

10 11 Kaufi nger/Neuhauser Munich, Germany 4,440 + 1 %

At Causeway Bay, Hong Kong, retail

rents decreased by 14% in 2015, after a

7% drop in 2014

January 17-20, 2016NRF Big Show

Javits Convention Center, New York, USAHow do you build a brand that young peo-ple desire? Who are the global leading-edge retailers? How do you match the pace of change with an agile retail proposal? These are topics to be discussed during this event, with over 33,000 participants including:• Terry J. Lundgren, C.E.O., Macy’s• Kevin A. Plank, C.E.O., Under Armour• Matthew Shay, President and C.E.O., Na-

tional Retail Federation• Neil Stern, Partner, Ebeltoft USA, McMillan

Doolittle• John White, Chief Operating Offi cer, Fossil

www.bigshow16.nrf.com

March 8-11, 2016Foodex Japan Makuhari Messe, Chiba, JapanFoodex will take place in Tokyo for the 41st consecutive year from March 8 to 11, gather-ing food retailers and manufacturers around food innovation topics. Foodex reported over 77,000 participants in 2014.

www.jma.or.jp

March 9-14, 2016Japan’s Retail Trip Tokyo, JapanIn parallel with Foodex in Japan, a retail business tour organized by Missions MMM is delving deep into Japan’s fascinating retail market. Tokyo is a retail laboratory with a very high level of services, products exclusively sold for the domestic market and solutions for an aging population.

www.missions-mmm.com

March 20-23, 2016Franchise Expo Paris

Porte de Versailles Exhibition Center, Paris, FranceThis 4 day summit is a networking opportu-nity for entrepreneurs who are eager to start businesses alongside global retailers. More than 460 international chains are expected at the event, with an array of master franchi-see and franchisers. The show reported over 35,000 visitors in 2014.

www.franchiseparis.com

April 12-14, 2016World Retail Congress

Madinat Jumeirah, Dubai, U.A.E.In partnership with Majid Al Futtaim, this fo-rum gathers more than 1,000 retail execu-tives including:• Jean-Christophe Babin, C.E.O., Bvlgari• Alberto Baldan, C.E.O., La Rinascente• Andy Clarke, C.E.O., Asda Wal-Mart• JC James Curleigh, President, The Levi’s

Brandwww.worldretailcongress.com

GLOBAL RETAIL NEWS www.globalretailnews.com < N° 16-169 > December 2015 (All rights reserved)12

PEOPLE AGENDA

A NEW BOSS AT AUCHAN RETAIL

Newly created Auchan Holding has been com-pletely reorganized into three independent com-panies: Auchan Retail (sales of €51.2 billion in 2014, including 35% in France), Immochan (sales of €635 million) and Oney Bank (€383

million).

Wilhelm Hubner (aged 52) is the new Ma-naging Director of Auchan Retail since mid-November. A qualifi ed engineer, he is in charge of Auchan’s global retail business in 16 countries, covering hypermarkets, super-markets, convenience stores, drive-through and e-commerce. He was previously Head of Auchan-Russia.

Hubner has worked his entire career at Au-chan. He started in 1987 as a Department Manager, and later he held various positions at Auchan-France, including Director of Veli-zy’s huge hypermarket (France’s largest with sales of €282 million in 2014) and C.O.O. for the Paris region. Joining Auchan-Russia in 2010, he managed the hypermarket bu-siness, and the Russian subsidiary. Hubner has a practical leadership style and is des-cribed as a “go-getter” who is able to make decisions quickly.

INDIA. FROM

BENETTON TO JABONG

For the 1st time in Indian e-commerce, a C.E.O. from a traditional retai-ler is heading an online venture. While losing market share to Myntra and Shopclues (funded by Tiger Global investor), the online fashion we-

bsite “Jabong” poached Sanjeev Mohanty, former C.E.O. of Benetton. Based in Gurgaon, he is C.E.O. and M.D. of Jabong beginning in early December. The German group Rocket Internet owns 22% of Jabong and could sell its stake shortly. Mohanty previously worked at Arvind Lifestyle, Levis Strauss and Madura Garments. He spent 11 years at Benetton-India, growing Be-netton’s store network from 19 to more than 800 stores, and a footprint from 9 to 150 In-dian cities. He was also managing Benetton’s business in Pakistan, Nepal and Sri Lanka. Last year, sales of Benetton-India reached US$300 million. This fashion retail expert is also involved with humanitarian causes.

BIRCHBOX EXPANDS

AWAY FROM THE WEB

Online retailer Birchbox (US$125 million sales in 2014), which sells subscriptions to a beauty box, has recruited 4 well-known managers to roll out physical expansion in 2016.

Beauty expert Philippe Pinatel is appointed as Chief Operations Offi cer. As a graduate of London Business School, Pinatel started at Clarins in 1998. He joined Guerlain one year later, running the Chinese and Korean bu-sinesses, ending as Managing Director. Since 2010, he moved to retail, entering Sephora in North America in charge of the Canadian market. Benjamin Fay is newly appointed as Vice President of retail development and customer experience. After 8 years at Apple (retail development team), Fay’s mission will be to translate Birchbox’s D.N.A. into a store concept and design. Andrew Lande-Shannon joins Birchbox as Design Director, in charge of in-store merchandising. He previously worked in creative roles at Prada, Theory and Abercrombie & Fitch. Finally, Douglas Simpson (ex-Banana Republic and Bed Bath & Beyond) is appointed Vice President of Re-tail. He also worked 7 years at Juicy Couture, where he opened 60 stores.

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Wilhelm Hubner Sanjeev Mohanty

Philippe Pinatel