The retail sectors that need more space not less

Some key retail markets are set to buck the trend for declining physical space, with the health & beauty sector leading a demand for stores, according to a report from global real estate advisor CBRE.

The company examined six major retail markets, in China, America, Spain, Germany, Italy, and the UK. It focused on projected retail space requirements over the next five years in grocery, apparel & footwear, health & beauty, and home & garden sectors.

Health & beauty is forecast to outpace other sectors with it demand for space, growing by 8.1 per cent in China. Germany is expected to see growth of 4.5 per cent, Italy 4.2 per cent, the UK 1.7 per cent, the US 1.6 per cent, and Spain 1.1 per cent.

“Technology, innovation and social media have been key to the Health and Beauty sector’s success and will remain an integral part of its strategy in the years ahead,” says CBRE director of global retail research Natasha Patel. “We’re seeing brands introduce virtual make up screens, allowing consumers to visualise what products look like before committing to a purchase, and creating an experience that draws consumers into the physical store. The sector has seen brands create a joined-up omnichannel approach with their social media networks and physical store, so much so that there is evidence of brands using analytics of their social media profiles to drive their store leasing strategy.”

The home & garden is also expected to grow significantly, especially in China where it is expected to require an additional 20.4 per cent of its current physical space.

“Grocery, Health and Beauty, Apparel and Footwear, and the Home and Garden sectors have a real opportunity to redefine bricks and mortar retail, and we expect to see steady demand for retail space in many markets for each of these sectors,” says CBRE head of EMEA occupier transactions David Close.

“Although the retail sector is in a transformational stage, the physical store will remain a vital driver of customer acquisition, retention and revenue. Our research demonstrates that despite an increase in online sales, consumers prefer the omnichannel retail experience, and will continue to use the store as a critical part of inspiration, education, testing, and engagement.”

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