High-end labels go Eastern
Luxe brand companies all over are jumping on the bandwagon and moving East. In search of new markets and higher profit margins, retailers are tackling markets in the Middle East and Asia Pacific, with brands such as Christian Louboutin, Jimmy Choo, Manolo Blahnik and Stuart Weitzman appearing in luxury malls throughout these areas. According to experts, the Eastern market is becoming increasingly attractive versus the U.S. market: Fortunes are rising, no brand fatigue is yet apparent, and availability is at a high point.
“If you’re looking to expand, you’ll do it now,” Kazuko Morgan, EVP for real estate firm Cushman & Wakefield in California, told WWD.
For example, Shanghai has more than 9 million square feet of new retail space that will be available before the end of the year, with an added 8.7 million anticipated in 2011, according to Knight Frank China’s research. Moreover, the city’s retail rents may be rising dramatically, but are still a steal compared with other international destinations.
“In the current climate, China’s retail market has greater potential as an investment vehicle than almost any other retail market in the world,” Andrew Weir, partner-in-charge of real estate at KPMG China, wrote in a report released by the firm. “Despite the global financial crisis, China’s retail sales have continued to grow at double-digit rates, while retail sales have stagnated in many other markets.”
The Middle East likewise appears an enticing deal, and one Christian Louboutin is taking advantage of. The designer has open stores in Dubai, the United Arab Emirates; Beirut, Lebanon; and Jeddah, Saudi Arabia, plus has another five more stores in the works before 2013.
“The Middle East is a strategic territory for us because it’s very much a market for shoes and handbags, and fits with our aim of opening more retail stores. The region makes up 3 percent of our global business, and we believe we can easily double that in the next two years,” said Alexis Mourot, COO of Christian Louboutin.
Australia is also on the list for international expansion. Nathan Clark, national director of retail agency for the real estate firm Colliers International, reports there is ample space for upscale brands to make their mark Down Under.
“With credit markets improving, retailers with a strong balance sheet are quickly gaining the confidence to expand into markets previously viewed as too expensive or difficult to penetrate,” he said.
Singapore is another Eastern market ripe and ready for expansion. The city’s 800,000-sq.-ft. retail mall at the Marina Bay Sands resort, for example, has attracted more than 10 shoe brands, including Jimmy Choo, Manolo Blahnik, Bally, Crocs, Birkenstock, Hush Puppies and Skechers.
“As a global brand, you need to be located in these key cities [to take advantage of growing demand] in that market,” Manolo Blahnik said.