CAPE TOWN-The retail world is getting smaller, with chains exploring new frontiers both in terms of geographic expansion and even business type, said speakers at the International Council of Shopping Centers' World Summit, which concluded here today. And there's still plenty of room for expansion.
“There are vast tracts on the planet that have never been reached by modern retailers,” said John Strachan, global head of retail of Cushman and Wakefield, London. “Wal-Mart is in just 15 countries. Timing and opportunity will be the key to success.”
Globalization is encouraging a number of chains to explore new frontiers. “We are spread out in countries where no one else will look,” said Ishwar Chugani, executive director of Dubai-based Giordano Fashions, including managing 15 stores in Iran. The 1,900-store fashion chain was founded in Hong Kong, but now has 150 stores in the Middle East, as well as locations in Egypt. It has recently entered India with three stores, with plans for 20 units in two ears. “We're looking at countries I've never heard of before.”
Better malls also must be more open to newer growing chains, said Salim Sacoor, a member of the executive board of Sacoor Brothers, Sao Domingos de Rana, Portugal. The company, with stores in Portugal and Spain, recently expanded to Dubai. It is planning to open 40 stores in three years, including units in Turkey and Russia in 2008. It also is negotiating to open stores in Poland and Ukraine, and assessing Singapore, Malaysia and South Africa. “There are some innovative companies that don't have the opportunity to be in better locations,” Sacoor said.
In rapidly growing China, retailers have become developers to fulfill their own expansion plans, even though total investment in property development thus far this year has risen 29% during 2006, said Ji Xiao-An, chairman of Beijing Hualian Group.
But all the retailers face challenges in terms of competition, and even dealing with rapid growth. “Competition is going to get more fierce,” Chugani said. “Differentiation and finding a niche is paramount to our survival.”
“Sometimes we are doing things too fast,” Ji said. Projects are going up before a detailed analysis is complete, resulting in high costs and competitive projects in close proximity. In addition, “the design of shopping centers in China lack character and are similar in structure. They all position themselves similarly.”
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