Retail Expansion: quality over quantity

2016 will, in all likelihood, not see any exciting new market entries in Austria – the retail sector still continues to be cautious when it comes to acquiring new stationary outlets. Whereas just a few years ago the motto was still “fast and everywhere”, now it is “with moderation and targets” .
The looming growth of online and also the current selection of available locations are holding back expansion plans into and within Austria. On the retailer side, requirements for new locations have changed. Hip shop-in-shop concepts or stand-alone locations are no longer interesting. Instead, retailers are looking for floor space which has already proven its worth, for instance in shopping centers or city centers. In the latest edition of the study “Who is Expanding in Austria – 2016”, 416 out of 516 sales lines looking for new locations indicate that locations in shopping centers would be of interest, and 442 would not pass up prime locations in city centers.
Considering the fact that most of the locations being searched for are actually replacements, i.e. another location is simultaneously being closed, we can expect that total stationary retail space will decline this year as well. The current market concentration trend from 2013 will therefore continue.
However, this disinterest in expansion is not present in every sector. Apparel retailers still have their eyes open for attractive locations, albeit more selectively than before. 151 apparel brands are searching for locations. Food retail has likewise remained unaffected by the current trends, as 49 sales channels indicate their interest in opening new outlets. The former Zielpunkt locations will mostly be taken over by the market leaders REWE, Spar, and Hofer. But they may also be of interest to certain niche players (ethnic and organic stores). The situation is similar in the apparel sector, where it is not just Hennes & Mauritz or C&A – smaller mono-label stores are also searching for new locations.
Demand for locations has also increased somewhat among retail-related businesses such as services (hairstylists, etc.) and gastronomy. Combined with the shift in location requirements among all the top players of all sectors, we can expect the sector mix of retail zones to change in the near future, specifically toward offering more services. At the same time, market concentration in retail will continue.

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