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European locations to watch in 2017

Barcelona by Jorge Franganillo

European cities still present a wealth of opportunity for expanding domestic and international fashion brands, despite ongoing Brexit uncertainty. Drapers takes a look at some of the key locations that should be on the radar for 2017

London, Paris and Milan have long been viewed as Europe’s fashion retail capitals and, despite concerns over political wranglings and the threat of terrorist attacks, these cities continue to be a big draw, thanks to their size and diversity.

But smaller cities such as Barcelona (pictured above) and Amsterdam present more immediate opportunities, thanks to their relatively high retail spend and tourist numbers, combined with attractive occupational costs, says Marie Hickey, director of research at property services firm Savills.

“While Milan performs very strongly in terms of sales potential, the city’s relatively high occupational costs (€13,900/sq m/year – or £11,890/sq m/year) may impact operational margins, although this may be offset by sales volumes,” she says (see graph, below).

Occupational costs in europe

Occupational costs in europe

“Munich and Barcelona, meanwhile, could offer an attractive alternative. They both lag behind Milan in terms of total retail sales, [but] they have significantly lower prime total occupational costs, with Munich being 49% cheaper than Milan and Barcelona 75% cheaper.”

For those looking to target the all-important millennial and “generation Z” – those born after 2000 – consumers, Madrid and Berlin stand out thanks to their large youth populations. But as youth unemployment is still a huge problem in many European cities, those with low levels of unemployment – and therefore consumers with more disposable income – could offer a greater appeal. Warsaw, Milan, Amsterdam, Munich and Dublin are probably most of interest, says Hickey.

Mark Burlton, global executive of CBRE’s retail occupier team, expects Spanish cities such as Madrid and Barcelona and German cities Berlin, Munich and Hamburg to continue to be on savvy retailers’ hit lists in 2017. However, he suggests cities such as Warsaw and Prague present interesting growth potential.

Hickey agrees Warsaw in particular is a good bet, as retail sales are expected to grow quickly over the next five years, while prime rental growth will remain flat for the year ahead. The city is also seen as a gateway to other central and eastern European countries.

“I think the most untapped market is still Russia,” says Burlton. “Geopolitical problems may put off some retailers who could do very well there but there is huge demand for UK brands from the local population.”

Taking the plunge: retailers going continental

Celine in barcelona

Barcelona

Parisian luxury brand Céline made its debut in Barcelona last year, while Japanese clothing giant Uniqlo is set to open its first store in Spain on Passeig de Gràcia later this year.

 

 

Dr martens in madrid

Madrid

Footwear brand Dr Martens selected Madrid for its first Spanish store last year, while contemporary fashion retailer AllSaints is set to open in the city later this year.

 

 

 

 

Uterque in warsaw

Warsaw

H&M fascia & Other Stories opened in Warsaw in 2016, as did Inditex-owned women’s accessories retailer Uterqüe during the same year.

 

 

 

Bottega veneta

Amsterdam

Luxury label Bottega Veneta opened its first store in Amsterdam last year, located on PC Hooftstraat, one of the most luxurious shopping streets in the city centre.

 

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