Amsterdam a ‘gateway’ city for international expansion

Amsterdam, along with Barcelona and Warsaw have been named as “rising stars” in the European retail market, as they offer big opportunities for expanding international brands, according to a new report from property firm Savills.

While London and Paris took first and second place in the European Retail Destination index, Savills has called Amsterdam (third), Barcelona (fourth) and Warsaw (fifth) as ‘gateway’ cities as they performed “very strongly relative to their size and offer” which the property firm states enhances their attractiveness to expanding international retailers.

Savills examined the total number of standalone stores the top 10 global fashion brands/groups (based on global turnover) have in each city relative to the population to generate an ‘opportunity’ score, then compared this to total annual retail sales and total retailer occupational costs. Based on this approach, while Amsterdam, Barcelona and Warsaw may have lower total retail sales than Milan and Munich, their relatively low occupancy costs, 3,395 euros, 3,477 euros and 1,725 euros per square metre per annum respectively, and high opportunity scores, imply “greater profitability at a very high level”. This means that all three cities have good potential for retailer expansion.

Amsterdam, Barcelona and Warsaw named “rising stars” in the European retail market

The report also notes that Warsaw and Amsterdam are forecast to see strong sales increases over the next five years of 3.8 percent and 1.8 percent per annum respectively, with Warsaw expected to be the fastest growth market of all the 11 European cities examined. Both cities are also supported by strong operational fundamentals in the form of low unemployment rates of 6.1 percent in Amsterdam and 6.4 percent in Warsaw, which suggests stable retail spend levels by the resident population.

Barcelona, meanwhile, is the largest European destination for international tourism spend once London and Paris are excluded. The city receives total visitor expenditure of 8.3 billion euros a year and is increasingly appearing on the radar of international retailers.

Savills research director, Marie Hickey, said: “For certain brands, particularly within the luxury space, markets with a relatively affluent population and large number of high-spending international tourists are likely to have the strongest appeal. This explains why London and Paris have seen an influx of new luxury brands over the last three years.

“But smaller European ‘gateway’ cities will also prove attractive, particularly those where high-spending international tourist arrivals are increasing. The real appeal of these smaller ‘gateway’ cities is likely to be within the midmarket and ‘aspirational’ retailer tier. As these types of brands account for the majority of the retail market, the appeal of the gateway European cities looks set to continue.”

Savills European retail group chair, Larry Brennan, added: “Amsterdam, Barcelona and Warsaw are all solid performers, where the total occupational cost is relatively low compared to retail sales volumes, so we expect international expansion to pick up pace in these markets in the near future. Warsaw is set to be particularly strong as it is considered by many retailers as the gateway market to other central eastern European countries.”