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News Release

Prague

Czech Republic  –  La Palme D’Or in CEE and SEE regions in respect of the high street and luxury brands

New retail research report on the CEE & SEE region


Prague, 14th November 2011 - Jones Lang LaSalle releases a “Retail Barometer across CEE & SEE”. The report provides a comprehensive review of retail market situation in the 97 million region comprised of Poland, Romania, Czech Republic, Slovakia, Hungary, Croatia and Serbia. The research underling the paper was supported by web-surveys amongst key retailers and developers & landlords having assets in multiple countries.

Beatrice Mouton, Jones Lang LaSalle’s Head of Retail in the CEE & SEE region comments: ”The report reveals some of the similarities but also differences between the single countries. Out of the seven CEE & SEE nations, Croatia and Serbia are the only non-EU members; however, both aspire to join soon. The retail barometer across the region is biased towards a fair situation with some countries such as Poland outperforming the rest of the region and Hungary being the most challenging at the moment.”

Key figures and facts from the report are as follows:  
• The current retail supply in the region will grow by further 2.5 million sqm by 2013 whereby 45 new retail centres will be delivered to the market in 2012 alone. This implies that a number of prime, institutional quality assets will be added to the current retail provision.
• The Czech Republic features the highest retail density (231 sqm per 1,000 people) compared to the rest of the region. Poland ranks 2nd with 197 sqm per 1,000 inhabitants, Croatia and Slovakia follow suit. Although Czech Republic and its Capital Prague are well supplied in retail space and one of the most mature markets in terms of stock across the region, over 166,000 sqm are under construction in the main cities and scheduled to open by 2013. 
• Shopping centres are winning a market share across the region, being a preferred expansion route.  With shopping centre rents softening, retail parks have lost their main competitive advantage as the cost differential between the average shopping centre and the average retail park has significantly narrowed.
• Franchising is a popular business model for expanding into a new country but, identifying the right franchise partner, with the required experience and the necessary financial backing, remains a challenge. Moreover, whether to franchise or not depends on the overall business strategy of the retail chain: some labels prefer breaking into new markets directly (examples include H&M, C&A, New Yorker, Deichmann, Takko and Humanic), while others develop the brand exclusively via franchise, such as Debenhams.
 
Key findings about Czech Republic from the retailer market sentiment:
• 42% of the Czech Republic’s future pipeline comes from extensions. Examples of such include Centrum Černý Most in Prague and Avion Ostrava.
• The Czech Prague has the most developed prime retail area (between Na Příkopě and Václavské Náměstí), being the preferred destination for flagship stores and international brands seeking to enhance their exposure on the Czech market. After the Czech Republic, the other country which has a strong prime retail zone is Hungary with activity exclusively focused on Budapest.
• The most developed market for luxury merchandise is in Prague. Despite the crisis, shops selling high-end labels, such as Prada, Gucci, Fendi, Dolce & Gabbana, and Bulgari, continue to spring up along Pařížská, Prague’s most sought-after luxury street, to join the existing brands: Hermes, Ferragamo, Louis Vuitton, Burberry, Cartier, Dior, amongst others. Capital cities in other CEE & SEE countries have attracted up-market labels but, not yet to the extent the Czech Republic has.
• Major entrants for 2011include Desigual, Foot Locker, Dolce & Gabbana and the luxury Italian lingerie brand La Perla.
 
Beatrice Mouton adds: “Austrian and German retailers tend to be more represented in the Czech Republic, Slovakia and Hungary. Whilst Spanish, Italian, French and to some extent the UK brands, have a stronger presence in Poland and Romania; however, they are also appealing to Croatian and Serbian consumers. Unsurprisingly, concepts tend to be more successful in countries with closer cultural and historical proximities. Interestingly, Poland and Romania have a wider choice between international and national retailers, while smaller countries, such as Serbia, Hungary, Croatia and the Czech Republic, remain dependent on international brands.”