Asia is the New Land of Opportunity for U.S. Retailers

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Picture1Will Asian shoppers buy into the classic all-American look? United States-based mid-level casual apparel brands, are hedging their bets that “preppy” rugby polos and chic velour track suits will entice Asia’s rapidly growing middle class to buy U.S. goods. Newly released JLL research shows that U.S.-based brands are flocking to Asia faster than any other, knowing an untapped market awaits:

  • Approximately 21 percent of retailers expanding into Asia are U.S.-based, followed by Italy and the United Kingdom
  • More than one third of mid-tier retailers[ii] migrating to the market are U.S.-based
  • North Asia and Greater China stand out as the markets for greatest returns for retailers

“Rising income levels in Asia mean that an all-new consumer base can afford to purchase fashion and luxury items for the first time,” said Michael Hirschfeld, Senior Vice President of JLL’s National Retail Tenant Services. “Middle-class buyers are rapidly turning to the urban core, creating dense areas with top-shelf demographics – a perfect entry point for international retailers.”

In the coming decade, urbanization will drive wealth creation and mold consumer buying habits in the Asia Pacific region. Established U.S. mid-tier brands are expected to grow in peripheral Asian markets, while luxury retailers are anticipated to focus on the core markets, like Hong Kong, as many brands view it as a stepping stone to enter Mainland China. Shanghai and Beijing will also remain top targets, as the markets’ retail sales grew an average of 15 to 17 percent during the last three years.

“While the growth of luxury goods sales in China has cooled since 2013, it hasn’t been across the board,” said Jane Murray,Head of Asia Pacific Research for JLL. “Light luxury U.S. retailers are performing with strong same-store sales growth in China. There are strong growth prospects in the market, and though expansion will be very methodical and selective, we expect U.S. brands to continue to develop their footprint in the region. One of the major drivers is increased Chinese tourism, with the Chinese estimated to be the largest luxury spenders worldwide.”

While gateway U.S. cities remain top targets for growing retailers, major U.S.-based brands have simply run out of locations to expand at home without over saturating their presence. Asia is set to account for 40 percent of the world’s economy by 2020, growing twice as fast as the rest of the globe and JLL anticipates that established brands will begin to target outlying tier two and tier three cities. The region’s rapid growth and the purchasing power of its emerging 1.3 billion middle-class consumer base during the next six years is expected to continue to pique the interest of U.S. retailers.

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