Retail vital to economy, ICSC group reminds EU
Publish Date: May 30, 2013
Shopping centers and retailers are critical to Europe’s economic health, these days more than ever. That was the message retail real estate leaders delivered on Wednesday to European Parliament officials in Brussels, in a meeting organized by ICSC Europe. Roughly 20 percent of the European economy revolves around retail, amounting to €2.5 trillion (about $3.2 trillion) of last year’s nearly €13 trillion in total goods and services, according to European Union data.
“The European economy is highly dependent on shopping centers,” Rafael Pelote, head of market intelligence at Sonae Sierra, told the gathering. “Twenty-five percent of retail sales in Europe occur in shopping centers, and by 2015, shopping centers' sales will be over half a trillion euros.”
Retail is also a massive employer, providing some 18.5 million jobs — nearly 14 percent of the nonfinancial workforce in the 27-country EU.
“Shopping centers have generated over 4 million jobs in Europe,” Pelote said, “and there is a strong impact in indirect employment in related industries such as construction, architecture, design and other types of services. We estimate that there are up to two million indirect jobs generated by this industry.”
Shopping centers are transforming Europe’s physical environment too; much of the new retail real estate investment is now geared toward revitalizing older areas and enhancing public transportation hubs. Trinity Leeds, a 1 million-square-foot project that Land Securities opened in March, has helped revive the northern U.K. city of Leeds. The shopping center attracted some 2.7 million visitors in its first month.
The post-Olympic legacy of Westfield Stratford City, a £1.45 billion (about $2.2 billion) mall built next to one of the 2012 Olympic Games’ East London venues, includes some 8,500 permanent jobs, nearly 2 million square feet of shopping space and a public transportation hub. According to one economic forecast from 2011, the Stratford City development that encompasses the Westfield mall will be generating up to £140 million in taxes per year by 2020.
Liverpool ONE, a downtown retail-entertainment project, has catapulted the city of Liverpool from the 17th most popular shopping destination in the U.K. five years ago to one of the U.K.’s most popular today, with some 26 million visitors annually, according to Miles Dunnett, head of asset management for Liverpool at Grosvenor Fund Management, London. “What it’s left us with now is a city where we’re back in the top five in the U.K.,” he said.
“A lot of investment is really taking place in integrated locations,” said Alexander Otto, CEO of Germany’s ECE, which manages 187 shopping centers in Europe and Qatar and has 14 more either in the planning or under construction. “They include mixed-use projects, they include revitalized train stations and traffic hubs, and often are really developed over many years in close conjunction with the cities, with the city governments.”
Europe’s retailers now reach 500 million consumers within the EU, plus many more outside Europe. Three of the world’s top 10 apparel and footwear retailers are European — Inditex, which owns Zara; Hennes & Mauritz, and Next — according to the 2013 Forbes Global 2000. Similarly, four of the top 10 food retailers in the world are European — Tesco, Carrefour, Ahold and J Sainsbury — and so are five of the top 10 apparel/accessories companies: Christian Dior, Adidas, Swatch Group, Hermès International and Prada.
According to Euromonitor, European retail sales totals have grown from €2.272 trillion in 2007 to €2.372 trillion in 2012.