Global consumer demographics in the Middle East and Asia Pacific are extraordinary
80% of American companies are considering going global.
Recent research from Boston Consulting Group shows that brands will need a footprint in 405 cities by 2020 to reach 75% of middle and upper class households, vs. 345 cities today.
Trilogy Brands has built and maintains exclusive relationships with the premier fashion and lifestyle retail conglomerate companies that develop, own and operate the most prominent businesses in the Middle East & North Africa, Asia Pacific, and Latin America regions with a unique collection of international brands supported by solid management and considerable financial standing. Mall owners and operators in these regions are the largest owners of brand rights. This ensures that they bring the ultimate shopping experience to consumers and continue to attract foot traffic to their properties.
The world is changing at an unprecedented pace both in terms of scale and scope. We’ve always experienced change, but the kind of change we’re seeing right now is a paradigm-shifting kind of change. Brands can no longer define their consumer as a local consumer. Consumers are everywhere in the planet and they want to experience iconic and hot American brands now. Global is the new local.
Malls are reinventing themselves as experience destinations. Going forward, the most successful retail spaces will be those that include entertainment. Augmented reality and robotic kiosks are main draws on malls globally. Consumer expectations are becoming limitless—whether it’s instant delivery, intuitive commerce or compelling store experiences. Interfaces for retail have moved beyond the smartphone into an omni-channel, and the digital and physical worlds are blurring in new ways with virtual, merged and augmented reality. We’re now contemplating a world in which retail is everywhere. Frontier-less retail, a retail and consumer landscape with no boundaries. Geographic territories become increasingly meaningless as retail and brands go "truly global". Headquarters offices become less emphasized, and decentralized hubs become the new norm of efficiency and collaboration for global brands. Change, challenge, opportunity, speed, inclusiveness, and innovation become key strategies for brands competing to remain relevant and engaged with consumers.
China and Asia Pacific - Massive scale
China is the world's largest e-commerce market and in 2017 it has passed the US as the single largest retail market with total sales of $4.88 trillion compared to the US at $4.82 trillion. Chinese consumers are becoming increasingly wealthy, increasingly selective, and open to new experiences, lifestyle and travel. China and Asia Pacific emerge with new retail trends: Heightened demand for premium food and multi-sensory food experiences, health and fitness revolution, luxury brands investing in Chinese e-commerce platforms, and a unique Chinese approach to virtual reality shopping. While Seoul remains a potent beacon for fashion and beauty in the region, Japan has begun to exert a growing influence on Chinese shopping behaviors.
China is the biggest retail market in Asia, with a population of over 1.4 billion, an ever increasing middle class, highest brand awareness, rapid consumption growth, new consumption trends, and over 5,000 malls, the world's only mag lev metro, and the latest entertainment and theme parks including Disney and Legoland in various cities in China. Out of the world's top 10 global retail destinations, China and Asia Pacific have 4 cities in the world rankings: Shanghai, Beijing, Hong Kong, and Singapore (in contrast, Europe has 4 cities: London, Russia, Paris, Madrid; and the US has 1: New York).
It would be wise to recognize about China, that tertiary markets such as Yangzhou, Nanjing, Urumqi, Guiyang, Xinjiang, and Zhuhai for example, are where the majority of economic growth will come from, fundamentally because they have a lower starting economic base and are less saturated markets. These cities will represent the largest socio-economic rise in human history. McKinsey estimates that 75% of China's population will be middle class consumers by 2022, compared to just 4% in 2012. And the vast majority of the population will be millennials, who (according to CBRE Global Major Report) spend almost 50% of all disposable income and 10 days a month on: Leisure, going out to eat/entertainment/cinema/live events, and in non-essential items.
Key retail and consumer markets to watch: Singapore, Beijing, Hong Kong, Singapore, Seoul, Bangkok, Tokyo, Manila, Phnom Penh.
Middle East, North Africa and India - Focus on lifestyle
The Middle East has long been the vanguard of major international retailers’ expansion strategies with a region comprised of 22 countries and at least 40 strong sub-markets. Brands can grow much faster and more successfully under a franchised or licensed arrangement with a mega-regional partner rather than by operating as an independent. Dubai and Abu Dhabi in the UAE have long been the entry point for many international brands. The sheer amount of retail space in Dubai alone –one square meter for every one of its 2.3 Million residents- coupled with extreme weather have made malls places to be, not just to shop. Jeddah and Riyadh in Saudi Arabia offer unbeatable locations as the gateway to the economic capital of the largest economy in the region, while Doha in Qatar is gearing up for the World Cup bid in 2022. Markets like Egypt are increasingly relevant, while Lebanon, Kuwait, Oman and Bahrain offer strong underlying country fundamentals.
Key retail and consumer markets to watch: Dubai, Abu Dhabi, Riyadh, New Delhi, Cairo.
Latin America - Rapid urbanization
The Latin American middle class is also mushrooming, fueling consumption boom. Internet penetration is at 43% and growing as broadband infrastructure, connectivity speeds, urbanization and economic health continue to grow. Developing markets such as Mexico, Venezuela, Peru, Brazil, Argentina, and Chile, have outpaced the US, the EU, and the world average for GDP growth over the last decade according to JWT Intelligence. Given its proximity to the US, cultural proximity to the growing Latin demographics in the US, fast growing middle class and incomes, and the high role internet plays in their purchases, this highlights the increasing importance and opportunity for US brands into key emerging markets in Latin America.
Centro Santa Fe in Mexico City, for example, is one of the largest shopping centers in Latin America with over 4.3 million square feet of gross built up area encompassing 500 stores, a corporate tower, 450-room hotel, 22 theaters, department stores: Palacio de Hierro, Liverpool, Sandborns, Sears, Saks Fifth Avenue, and 20 million visitors a year (1.5 million visitors per month).
Key retail and consumer markets to watch: Mexico City, Caracas, Buenos Aires, Lima, Santiago, Rio, Sao Paulo.
For retailers seeking a wide swath of consumers, the Middle East and North Africa, China and Asia Pacific, and Latin America are the most promising markets in the world. Retailers and brands in the mid-range, see a very aspirational component to the people living in these regions. There is nominal competition from local retailers. Salaries are very broad and so is the range of nationalities. Per capita GDP is the highest in the world, largest markets the world, and more importantly, fastest growing middle class and the highest per capita spending in the world, among those key markets.
Most market research revolves around the near future. It is the most relevant time frame. We are not speculating on the distant future. The demand is here today, for Trilogy Brands can bring both sides to the table to ink deals.The time to capitalize on this opportunity is today.
Trilogy Brands is partners with Hilco Global, one of the largest distressed investment and advisory companies in the world. Hilco is among the largest valuation companies in the world, known for its international expertise with offices in North America, Europe, Asia-Pacific, Central and South America. Hilco is a strategic partner with management expertise in both opportunistic and distressed situations. Hilco acts as a principal and operator of strategic brands. Recent consumer-focused investments include Halston, Haute Hippie, HMV, Polaroid, Altec Lansing, Aeropostale, and more.
Hilco is a preeminent global authority on deriving maximum value solutions for assets with deep experience in major apparel, retail and restaurant industries, particularly in areas of asset monetization, valuation, and advisory.
Hilco has the ability to act as advisor, agent, investor, and/or principal in every transaction. Hilco's Real Estate team focuses on innovative and strategic solutions for restaurants, including repositioning of leases, restructuring, asset protection, rent reduction, renewal, sublease, assignments, termination, and sale leasebacks, including property brokerage and principal acquisition services. Hilco has produced more than 1,500 real estate appraisals annually and more than 40,000 lease transactions resulting in over $4 Billion dollars of value for clients.
Over the last 30 years, Hilco has built one of the most successful retail practices in the global marketplace that focuses on servicing retailers from strategy to execution. Hilco's Retail Solutions team focuses on performance enhancement and cost optimization for retailers, as well as managing of store closings and inventory disposition. Hilco is the largest provider of retail inventory solutions in the world having monetized over $150 Billion dollars of retail inventory.