The Savills 'Retailer Attractiveness City' ranking, reveals that New York, Paris and London have demonstrated that they retain the key fundamentals of a successful retail location and are set to bounce back quicker this year than other destination cities.
New York topped the ranking, closely followed by Paris and London, as all three benefits from a strong domestic market, explained Savills. In comparison, cities such as Hong Kong, which came fourth, are dependent on a steady stream of inbound tourism and have faced sharper declines and will face a longer road to recovery.
Marie Hickey, director of retail research at Savills, said in a statement: “These cities all benefit from affluent domestic markets and have already demonstrated far higher levels of resilience over the last 18 months.
“New York (ranked 1st), suffered relatively less during the pandemic due to a robust domestic tourism market and a lower penetration of ecommerce in Paris (2nd) has steered costumers to its bricks and mortar luxury stores.”
Middle East a growth area for luxury physical retail
Savills also adds that the pandemic has created opportunities for retailers in several emerging markets, such as the Middle East, which is already showing signs of retail demand. In Dubai, many luxury brands are represented by mono-brand stores through local franchises but with the recent change in government policies, Savills is seeing international brands looking to take back full control of their stores.
While in other regions with affluent domestic populations such as Saudi Arabia, Cairo, and Bahrain, luxury retailers are looking into opportunities, such as buying businesses and establishing larger teams on the ground for events and activations to build their brands.
Athleisure, homeware, and wellness sectors to fuel physical retail demand
Savills research also reveals that retailers that sustained growth during the pandemic will “fuel future demand,” and successful sectors such as athleisure, homeware, and wellness, will continue to trade well both online and offline.
Prior to the pandemic, the physical store was already evolving and with the increasingly digitised consumer landscape, Savills states that physical retail will not only allow brands to reconnect with their customers but will also become aspirational destinations “that straddle leisure and entertainment”.
Sam Foyle, co-head of Savills Prime Global Retail team, added: “Some successful brands within these sectors are capitalising on their strong revenues during the pandemic. With a rebasing of rents in some markets, and units in great locations being available and far cheaper than in 2019, now is an opportune time to acquire new sites and grow their physical footprints.
“Additionally, for dynamic luxury brands, the current market may make it possible to relocate existing stores to larger units in stronger locations, as well as providing opportunities for new luxury entrants.”