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News Release

London - Moscow

Jones Lang LaSalle releases parts seven and eight of Retail 2020 report


London - Moscow, 11 October 2010 - Jones Lang LaSalle published parts seven and eight of its Retail 2020 study: “Going East” and “A Perfect Storm?” Retail 2020, was launched on 28th May via a bespoke interactive website, examines the rapidly changing global retail landscape over the next ten years.

Part seven of the report “Going East” examines the continuing move from both Western European owners and occupiers towards the relatively underdeveloped and rapidly growing consumer markets in the East. The increasing saturation of retail space in Western Europe provides a strong incentive for retailers and investors to expand into Eastern markets, particularly India and China which have unconsolidated local retail markets but growing consumer populations.

Robert Bonwell, CEO EMEA Retail at Jones Lang LaSalle, said: “China and India are set to experience continued economic growth over the next decade and the rising wage levels will take retail demand levels into a higher orbit. The growing middle classes in these countries love Western brands, particularly luxury ones and are increasingly able to afford them. This is a long-term trend that no retailer or shopping centre owner can afford to miss, especially as China and India are the two highest populated countries globally.”
James Dolphin, Head of pan-European Retail Agency at Jones Lang LaSalle, said: “Whilst the European retail industry will funnel more resources into expanding across the Far East, there will also be moves closer to home. With stable governments, low debt levels and growing populations, the Nordic countries will prove attractive for expansive retailers, with many major international brands already formulating and working through a 'Nordic-wide' expansion strategy; whilst in Russia rising oil and gas prices will further increase consumer purchasing power and this should reap big rewards for new entrants by 2020.”

Egypt and Turkey are two other countries attracting interest. Turkey has been on retailer’s radars for several years but still presents plenty of growth opportunity over the next decade. Egypt however is only beginning to see genuine activity and will be a key emerging market for those players pursuing serious global strategies.”

Bonwell concluded: “Despite various opportunities in the East, successful expansion will remain a challenge and those who succeed will be the ones who manage to determine where the next retail hot spot is, when it will take off and establishing how much should be invested. It will be crucial to factor in relevant risks of entering a new market, such as volatile political systems, but also to put in place sophisticated expansion models which consider e-commerce growth patterns.”

“A Perfect Storm?” analyses the changes outlined throughout Retail 2020 that are likely to affect the retail sector over the next decade within the global macro-economic context. It considers the impact of a rising cost base set against low GDP growth, increased operational charges and persistent structural problems such as: unemployment, private and public debt, the return of the pensions crisis, and ecological and energy issues.

Robert Bonwell, CEO of EMEA Retail at Jones Lang LaSalle, said: “The Perfect Storm? demonstrates how conditions will certainly be different as we progress through the next decade. Retailers and shopping centre owners will be required to increase investment in new technologies, new markets and in understanding consumers in order to be a winner in the growing pressurised economic and retailing environment. Many of the solutions have been discussed before but now it requires a higher level of debate and greater partnership between retailer and landlord.”

Key findings of Retail 2020 which “A Perfect Storm?” include:

The changing face of the consumer - The consumer profile is changing: the baby boomers are retiring; the number of young adults is falling dramatically and more men than ever before are engaged in the whole ‘retail experience’. Consumers are more demanding than they have ever been and are gradually seizing power away from retailers and manufacturers, while the Internet and associated technologies continue to liberate consumer spending power.

The Internet - Online shopping will be key going forward and internet sales could account for 20% of total retail sales by 2020, doubling existing levels. Over the next decade the online retail landscape will dramatically change, with barriers to entry radically reducing and convenience to consumers increasing. Whilst many store-based retailers are already embracing the power of online shopping, few have launched entire new businesses and business models on the internet. Mobile internet will be a true impetus for change, and could provoke price deflation or even stimulate an end to fixed pricing altogether.

Retail Experience – Over the next decade there will be a growing need for retailers to provide sensational customer experiences and in-store services. Success in retail will be captured by retailers and shopping locations that help consumers savour time, and which offer a retail experience that is actually a lifestyle experience, offering shoppers an escape from daily stresses in relaxed surroundings. The barriers against change are weakening and the next decade will be one where space expansion will be lower but innovation will be higher, such as alternative delivery mechanisms from drive-thrus to local centralised pick-up points, for example petrol stations, dry cleaners and purpose-built facilities.

China and the East – The move by both Western European owners and occupiers towards the relatively underdeveloped and rapidly growing consumer markets in the East will continue over the next decade. The increasing saturation of retail space in Western Europe provides a strong incentive for retailers and investors to expand into Eastern markets, particularly India and China which have unconsolidated local retail markets but growing consumer populations.

Going Green – Environmentally sustainable measures will become even more crucial in new builds and running costs by 2020, and consumers will expect retailers to adopt strong green policies. While some investments will lead to lower operational costs, real returns will be long-term which could impact on short-term cash flows.

Guy Grainger, Head of Retail Agency in England at Jones Lang LaSalle concluded: “The backdrop to the entire Retail 2020 report is the change in retailing we will experience over the next ten years due to technological advancement and changes in consumer behaviour. The recession has left its mark, both in consumers’ psychologies and on the retail landscape. However, there will be winners from the present difficult set of colliding circumstances and the continuing Retail 2020 debate is all about how to be successful in the future.”
 
Notes to Editors
 
• Retail 2020 website is www.retail2020.com

• Retail 2020 follows on from the Retail Futures, 2010 report, published ten years ago by Jones Lang LaSalle, which successfully predicted many of the forces which shaped the consumer and retail landscape between 2000 and 2010.

• Retail 2020 explores the shape of retail to come, covering dimensions such as sectors, locations, formats, offers and geographies, as well as profitability (growth, costs and business models), and was initially launched on 28th May 2010. The aim of Retail 2020 is to provide a pertinent assumption base around the future of European retail.

• Jones Lang LaSalle and the Retail 2020 web portal intends to lead the conversation for the retail industry as a whole on the future of the sector and the implications this has for the real estate sector, but also offer blogs, videos, news, interactive polls and client profiles.
 
 

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 149 million square meters worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $40 billion of assets under management.
In Russia and CIS Jones Lang LaSalle have offices in Moscow, St. Petersburg, Kiev and Almaty. Jones Lang LaSalle, Russia was voted Consultant of the Year in 2004, 2006, 2007, 2008, 2009 and 2010 at the Commercial Real Estate Awards, Moscow and Consultant of the Year at the Commercial Real Estate Awards 2009, St. Petersburg. For further information, please visit our Web site http://www.joneslanglasalle.ru