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US Retailers Dominate Cross-Border Expansion

American retailers bullish on overseas expansion are eyeing Tokyo as a top international market.

According to the annual analysis on globalization from CBRE Group, published Monday, the Japanese capital is ripe with retail growth, attracting 63 new brands in 2014, as leasing momentum in core areas remained strong—despite an uncertain economy and the April 2014 increase of 8 percent in the country’s sales tax. Other Asian countries attracting an influx of new names include Singapore, Abu Dhabi and Taiwan’s Taipei.

CBRE’s report, which tracks the target markets of new brands in 164 cities in 50 countries, also discovered that U.S. retailers are the most active when it comes to expanding into new global markets, accounting for 26 percent of cross-border expansion last year, and choosing to put down roots in Asia (41 percent), Europe (33 percent) and the Middle East and Africa (12 percent) instead of expanding domestically (6 percent). In fact, North America was only a target for 3 percent of international retailers.

“Demographic shifts in many countries have resulted in changes in both spending power and shopping habits,” said Brandon Famous, senior managing director of CBRE’s retail occupier advisory and transaction services, noting that technology has enabled retailers to quickly and easily test many new markets. “Consumer traveling patterns mean that many brands are well known before they even enter a market and the pent-up demand for the chance to purchase locally creates a ready-made market before entry.”

Whereas the American retail landscape is dominated by two channels—high-end and off-price—mid-range fashion is the most active category internationally, accounting for 21 percent of global expansion, according to the findings. Luxury stores comprise 20 percent, followed by specialty retailers (16 percent).

And while the increased efficiency of online retail has made many fashion brands far more accessible to a global audience, Famous said, “Consumers continue to view the physical store as their preferred mode of purchase and, perhaps more importantly, as a point of social interaction. Consumers view shopping as a leisure activity and the continued expansion of brands and the development or improvement of shopping locations gives them the opportunity to embrace this.”