The week prior to our Thanksgiving, from November 19-21 , MAPIC (le marché international professionnel de l’implantation commerciale et de la distribution) hosted its 20th annual international retail property market conference at the Palais de Festivals in Cannes on the fabulous French Riviera. There were more than 8,400 participants from 75 different countries in attendance this year. Of the attendees, more than 2,400 represented retailers, 2,300 represented developers and 340 represented investment companies. At least 1,500 different brands were represented. The presence of approximately 520 new retail brands has been touted as a reflection of increased confidence in the retail market.

This year’s MAPIC conference offered more U.S. focused sessions than prior years. The USA panel discussion, moderated by G&S’s David Rabinowitz, “This Land Is Your Land: Tips from the Experts for Expanding Retail Into the USA,” was jam-packed, leaving standing room only for those later to arrive. The attendees who were lucky enough to squeeze in were treated to a robust discussion on different strategies for entering into the retail market here in the USA – ranging from initial occupancy of retail space on “High Street” of a large metropolis (namely, Manhattan), to entry by way of presence in U.S. malls.

The two primary considerations that appear to be driving foreign retailers’ decisions with respect to the preferred point of entry are:

(1) who is the U.S. customer; and (2) what is the strategic purpose of the first few U.S. stores?

The first issue is one that every retailer, be it domestic or foreign, must consider in deciding where to either set up shop or expand geographically. The central factors are where is the U.S. customer located (i.e., is the customer an urban or suburban dweller) and what is the customer’s price point. Is the U.S. customer willing to pay the higher prices that retailers need to charge to justify a location on “High Street” or, instead, is he or she more economically conservative or even a bargain shopper, which would lead retailers more toward a suburban mall entry plan? The second issue is more a consideration of foreign retailers that are already established in their own country (or continent). The question boils down to whether such a foreign retailer wants to enter the U.S. market for purposes of growing revenues or, instead, to “make a splash” by expanding its presence to the U.S. market. In other words, is the entry strategy more about marketing than direct economic aspirations? If so, our sense is that a foreign retailer will favor the showier “High Street” entry location over a mall. Alternatively, if the move is instead revenue-driven, suburban malls seem to be the favored entry point.

One general observation was that European retail professionals generally appear to view Manhattan as the preferred initial port of entry into the USA, while Asian retailers appear to prefer Los Angeles. Another observation, which is consistent with what we were hearing at year’s conference, was that many of the smaller retailers seem to prefer to enter the U.S. using a local operating and/or financial partner. European retailers are familiar with this model because they use it when expanding into neighboring European countries, fueled by an already “proven concept” (albeit not yet proven to the consumers in the newly entered nation). Help in finding domestic (i.e., U.S.) operating partners was often high on the list of topics that European retailers wanted to discuss with the U.S. retailers in attendance at the conference.

Each year, one of the countries represented at MAPIC is the “featured nation,” meaning the retail issues, projects and development sites specific to and/or within such country are highlighted and addressed in a number of presentations and panel discussions during the conference. The United States will be the “featured nation” at next year’s conference, so MAPIC 2015 promises to be even more U.S. focused than was this year’s conference. S’il vous plait, take advantage of the excitement surrounding U.S. retail felt by your international counterparts and join us next year in Cannes from November 18-20, 2015!