CBRE: Hong Kong and New York are world’s most expensive retail destinations
London — Hong Kong is the world’s most expensive retail destination, with retail rents at $3,864 per square foot, according to the quarterly rankings of global retail rents from global property advisor CBRE Group. CBRE cited the city’s significant inbound tourist traffic and continued increases in domestic wealth as fueling demand from international fashion and luxury retailers.
The CBRE rankings saw little change in the first quarter of 2012 compared with the previous quarter. New York retained the number two position, at $2,475 per square foot. Both New York and Hong Kong experienced significant increases in retail rents quarter-over-quarter.
The remaining top five rankings were also unchanged from the prior quarter: Sydney was third, at $1,112 per square foot, followed by Tokyo, at $1025 per square foot. London, at $956 per square foot, completed the top five as competition for prime locations in the city’s West End contributed to an annual rental increase of 5.6%.
Globally, total retail rents increased by a modest 0.8% quarter-over-quarter in the first quarter of 2012 as concerns over the eurozone debt crisis and weak global economic growth continued to affect consumer and retailer confidence. Despite these fears, occupier demand for prime space in many major cities remained strong, and prime space was in short supply in many markets.
“Despite concerns over the eurozone and a slowing world economy, retailer demand for prime space in major cities remains strong; however, prime space is in short supply in many markets,” said Ray Torto, global chief economist, CBRE, in a statement.
This mismatch between demand and supply means that activity levels are not as high as they could be. Equally, retailers continue to target the best locations in the more mature markets of Western Europe and the wealthier markets in the Asia Pacific region.
Three Big New Retail Partnerships
Retailers can’t seem to get enough of partnerships these days…be it with hot designers, each other or television shows. Below is a quick recap of three new couplings that have the industry buzzing.
1. Nordstrom and Topshop: Looking to add more fashion sizzle to its offerings, Nordstrom has entered into a joint venture with Topshop, the British fast-fashion giant known for its runway-inspired threads and rock ‘n’ roll attitude.
Under the arrangement, Nordstrom will open Topshop and Topman (the men’s unit) departments in 14 locations across the country in early September. The departments (the women’s will run about 2,500 sq. ft., and the men’s about 1,500 sq. ft.) will be outfitted with mannequins, visual merchandising and store fixtures supplied from the United Kingdom. The merchandise mix will include limited-edition pieces created especially for Nordstrom. An expanded selection will be available on Nordstrom.com.
The alliance is a win-win for both retailers. It gives Topshop, which to date has opened three stores in the United States, a low-risk, inexpensive way to introduce its brand across the country. And it gives Nordstrom something just as critical in today’s supercharged competitive landscape: a lock on exclusive merchandise.
The deal also raises the Seattle-based retailer’s cool quotient and style profile significantly, which, combined with Topshop’s affordable prices, could help attract the type of younger, less affluent style-conscious shoppers that tend to stay away from department stores.
2. Target and Neiman Marcus: In a deal that already has style mavens swooning, the discount chain and luxury department store company will sell a limited-edition, holiday gift collection with items created by 24 top designers selected from the roster of the Council of American Fashion Designers. To say the line-up is impressive is an understatement: It includes Marc Jacobs, Tory Burch, Rag & Bone, Diane von Furstenberg and Caroline Herrera to name a few.
The collection will include more than 50 items and run the full gamut, from home to men’s, women’s and children. Prices will range from $7.99 to $499.99, with most items under $60. (Both retailers will offer the same merchandise at the same prices.)
The collection will be available in dedicated spaces in Target and Neiman stores nationwide on December 1, as well as online on their respective websites. Let’s just hope that the merchants have the capabilities and the goods to support the frenzy that is likely to ensue when the collection goes live. A replay of the Target-Missoni madness would not be in keeping with the spirit of the holiday!
3. Lord & Taylor and Project Runway: Department store retailer Lord & Taylor is headed to the runway—that is, the one hosted by celebrity/model Heidi Klum. The chain has signed on as the exclusive retail sponsor for the 10th season of Lifetime’s hit show, Project Runway, which kicks off on July 19.
As part of the retailer’s sponsorship, the show will feature a custom-built “accessory wall” with an edited assortment of Lord & Taylor’s shoes, handbags and accessories, which contestants will use to complete their looks during each challenge. In addition, the retailer will host a challenge at its Fifth Avenue flagship, with the show airing on Aug. 30. As part of the grand prize, the retailer will offer the winner of "Project Runway" the opportunity to sell their collection at the store.
The partnership will also be promoted through store windows and social media platforms. It should give Lord & Taylor the opportunity to create some nice buzz for itself. And what retailer couldn’t use that?
More As I See It entries.
Coupon activity on upswing, as are sales
No Wonder Walmart’s U.S. sales are on the upswing. Kantar’s Marx media solutions group this week in its mid-year report noted free standing insert pages for Walmart increased nearly 82% to 2.5 billion pages during the first half of the year.
That is a stunning increase, so it is worth noting that the Marx definition of an FSI page includes any type of promotion piece that appears in either the News America Smartsource or Valassis Red Plum coupon delivery vehicles inserted in Sunday newspapers. Also included in the tally would be any ad pages contained in the Valpak blue envelope for products, which indicate they are available at Walmart.
With 2.5 billion pages under its belt during the first half of the year, Walmart is ranked at the top of the list, compared to just a few years ago when it availed itself of FSIs to a lesser degree and was ranked 16th.
Second on the mid-year list was Walgreens, up 71.1% to 1.4 billion pages. Target was ranked third, but it actually declined 11% to 940 million pages, while Family Dollar increased to 932 million.
“Retailers may gain a competitive advantage by participating in retailer FSI promotions to capture a greater share of shopping trips among households that use coupons,” said David Hamric, Marx general manager. “For consumers, coupons are a proven way to save money on a specific item. For retailers, coupons can increase the overall retail value of each shopping trip by adding more items to the shopping basket and increasing the budget by the value of the coupons.”