ICSC: Lack of local experience hampers early CEE retail expansion (EU)

International retailers are being frustrated in their ambitions to expand into countries across Central and Eastern Europe as they fail to find local partners who understand the scope of their expansion ambitions.

Andrew Hardy

Andrew Hardy, International Director at RED Projects.

According to Andrew Hardy, International Director at RED Projects, speaking ahead of ICSC's Romanian Retail Real Estate Conference, held in Bucharest in September: "Retailers haven't given up on these countries – they are prime expansion opportunities where fewer and fewer exist in Europe, but without sufficient financial backing, local partners lack the aggressive expansion strategy that many international retailers need to adopt."

There are exceptions such as Mango, which is increasing its partners to aid expansion and H&M entering Romania through their Polish operation, the lack of experience of many based in the country has energized some retailers to change their strategy and work directly with developers, or in some extreme cases, pull out altogether in the short term.

Hardy adds: "Romania's poor road infrastructure hasn't helped, but there is EU money available and now that the Government has a clear road transport strategy, it can begin to secure the necessary funding from Brussels. Within five years Romania should have vastly improved transport links which will help bring the country's infrastructure up to that of other EU countries."

Thanks to an influx of new investment and jobs into Romania following its accession to the European Union in 2007, along with its neighbor Bulgaria, Romanians have more disposable income than many as the mortgage and savings culture has still to take hold and living costs remain low.

So there is much to be positive about, as Romania faces up to many of the same issues of its Central European neighbors.

But Hardy points out that Romanian retail development could be speeded up by learning from international colleagues: "Elsewhere there are 50 years of retail shopping knowledge to draw on and the desire to share. Whilst some Romanian developers have sought to harness this knowledge, instigating the setting up of the ICSC Romanian National Committee, the less enlightened in Romania continue to 'go it alone' and demonstrate their glaring lack of experience. What secures international retailer investment into a country is a partners' clear understanding of their needs."

Hardy adds: When I talk to retailers about our shopping centers they want essential infrastructure details. Make retailers' lives easier, plan strategically, help them reduce their costs and they are more likely to become stronger partners – that's the message we need to get out across not just in Romania, but across every Central European Country seeking to boost their economy."

The 2010 ICSC Romanian Retail Real Estate Conference is being held at The Radisson Blu Hotel, Bucharest, Wednesday September 29. www.icsc.org/2010RRC

Source: Nicky Godding

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