Page 37 - October 2020

SPECIAL FEATURE: RETAIL EXPANSION

A Time of through its own transformation to take advantage of the brands are reshaping their footprints and reducing the

With all of this, any plan of expansion will have to go
number of points of sale, this naturally creates a window
New Opportunities opportunities being created. The digital-first approach in of opportunity for attractive locations being available in
expansion might be one example. Companies may now
the market. Finally, we are also seeing that community or
neighbourhood malls are gaining much more traction, and
more than ever first test their brand(s) through exclusivity
this again will offer retailers the opportunity to expand.
deals in certain regions with selective marketplaces, or may
first utilise their e-commerce store to test a market before
With the current global financial markets experiencing
entering with physical stores.
rates and an unstable real estate climate, motivation for
Partnerships will have to be reinterpreted as true high fluctuation in their stock exchange, low interest
collaborations, meaning that franchise operations will go good investments and new opportunities in retail may
to a much greater level of openness, optimising resources present themselves.
and rebalancing of efforts. Entering into new countries with Albeit with the current trends, some brands have already
these partnerships may be the answer to compensate the announced aggressive expansion plans for the next years
reduction in sales for those companies who have been - JD has announced that they have a plan to open more
affected by the decline in the markets they were operating than 5,000 stores between now and 2025. Inditex, although
in. The investment through the partnership model is less announcing the closure of 1,200 stores, has also planned to
capex intensive, and can recover the much needed lost open 300 locations and resize its current profitable stores
sales to cover the current opex. to increase their total operating square metre spaces by
The transformation that shopping malls are experiencing 2.5 per cent by the end of 2021.
is another aspect in the equation that may help brands Just as has happened in past years when the world has
to expand in a strategic way. Firstly, what we are seeing been struck by a crisis, it is known that when there is change
is the leasing structure being heavily impacted, leading to and transformation and where cash is king, opportunities
in some cases, a rent formula purely based on turnover and growth through expansion becomes available. The
and capex investment support, demanding a better challenge is, as always, to take strategic decisions for the
collaboration between tenant and owner. Secondly, as future amid the high unpredictability of present conditions.

JD.COM HEADQUARTERS INDITEX HEADQUARTERS
Beijing, China Arteixo, Spain

Bart Denolf, CEO at Sacoor Brothers discusses how, in the

reawakening of the current uncertain retail world which
is being heavily affected by the Covid-19 crisis and where

some new paradigms are being shaped, a well calculated and
strategically planned expansion plan might be just the right

answer. Or is this just madness in an environment where
most retailers are fighting for survival and most indicators are

looking rather negative for the near and medium future.

t is still too early to predict the medium-long term of consumers expect to engage frequently in brick-and-
implications of the Covid-19 crisis, but several mortar stores in the next six to nine months as opposed
upcoming trends such as digitalisation, sustainability to 59 per cent pre-Covid-19. However, independent
Iand purpose which were already emerging are now research also revealed that stores are still considered
being accelerated aggressively and might have their own more convenient, with consumers still favouring the offline
impact on the future of expansion. shopping experience.
Digitalisation especially will have a substantial impact Currently the digital trend is steering brands to reduce
on the “new” expansion of retail. According to the latest their physical footprints in areas where maybe an all too
analysis by CapGemini, the obliged reliance on online optimistic expansion took place previously to secure and
shopping will have a longer-term impact, therefore resulting sustain the operation. This necessary drastic and unexpected
in a significant decrease in consumers’ expectations of their cost-cutting measure was and currently is being taken to
interaction levels with physical stores. Only 39 per cent keep businesses “alive”.

36 RETAIL & LEISURE INTERNATIONAL OCTOBER 2020