RETAIL PROPERTY IN FRANCE
2017 summary & 2018 outlook
R E TA I L
RETAIL PROPERTY IN FRANCE
SUMMARYE
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In 2017 the French economy obtained its highest rate of growth since 2011, even though household spending declined year on year
due to higher inflation and lower purchasing power. Consumption should be kick-started in 2018, and particularly in 2019.
Following a very poor 2016, 2017 could establish a new record in terms of overnight-stays by tourists in Paris. The largest cities in
the provinces (Bordeaux, Lyon, Toulouse, etc.) have also been attracting more visitors, whilst the Cote dAzur has been seeing a
return in foreign tourists.
The performances of different activity sectors remains very mixed, with major upheavals in 2017 demonstrated by new
consolidations (Bricomarch/Bricorama, Gifi/Tati, Gamm Vert/Jardiland, etc.), and other brand separations, planned or in progress
(Besson, Andr, etc.).
Brands are constantly adapting their networks to the new reality of retail. Whilst many are selling or moving their stores, they all tend to
promote Phygital experience.
The trade-off that brands weigh before anything else is secondary sites and locations, but prime sites can equally be affected
(accelerated turnover, downwards pressure on rental values). No format is safe, and the success of a site lies in its intrinsic qualities
more than the type of asset.
The Parisian market remains dynamic, and holds a place separate to the rest of France thanks to its international showcase status,
backed by the return of foreign tourists and important upcoming projects in the heart of the capital.
Nearly 3.9bn has been invested in the retail market in 2017 ; a decline of 19% year-on-year, and 14% of the total amount invested
in France, marking the lowest since 2008.
The spread of asset type is much more balanced than in the previous 3 years. High streets remain the most sought after, with a
39% share. The share of shopping centres rose quite sharply, but not matching the pre 2016 level. Close to the 2016 record, volumes
invested in the retail warehousing sector remain well above their long-term average.
2
Economic
environment
RETAIL PROPERTY IN FRANCE
ECONOMIC ENVIRONMENT
Indicators improvingEconomic indicators for FranceAnnual growth in %, unless otherwise noted
Indicator 2016 2017e 2018f 2019f
GDP 1.1 1.9 1.7 1.8
Inflation 0.3 1.2 1.4 1.2
Household consumption 2.1 1.2 1.5 1.7
Household income 1.8 1.6 1.7 2.5
Household confidence 99 105 - -
Unemployment (throughout
France)10.1 9.6 9.6 9.2
Household gross disposable income
Composite indicator, end-September of each year
After several years of weak growth (+1.0 to 1.1 % between 2014 et 2016), 2017 saw the French economy reaching its highest growth rate since
2011 (+1.9%) thanks to the rise in business investment and a rebound in exports, even though the contribution from foreign trade remains
negative.
The improvement in the business climate could be associated to the reforms undertaken in recent months, and the new economic policy
guidelines, which would also contribute to the recovery of public finances.
Sources: INSEE / Banque de France
Unemployment slowly improvesUnemployment rate in metropolitan France
In %, as defined by the ILO, Data adjusted for seasonal variations
9.4
8.1
4
6
8
10
12
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 17
Metropolitan France
Ile-de-France
Source: INSEE
4
RETAIL PROPERTY IN FRANCE
ECONOMIC ENVIRONMENT
After a sharp rise in 2016 (+ 2.1%), household consumption lost strength in 2017 as a result of higher inflation rates, lower purchasing
power, and a slight rise in the savings rate, which in 2016 reached its lowest level since the early 1990s.
After a slight acceleration in 2018, the rebound in household consumption should be more pronounced in 2019 and 2020 due to tax cuts and
improved financial income.
Growth spurt in sightRetail sales volume in France Previous years prices and chain-linked volumes
A return of confidenceHousehold opinion
Composite indicator, Data adjusted
for seasonal and working-day variations
80
90
100
110
120
130
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17
Source: INSEE
30.000
36.000
42.000
48.000
54.000
60.000
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Oct.20
17
In
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42.000
43.000
44.000
45.000
46.000
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014
Jan.2
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Jan.2
016
Jan.2
017
Oct.2
017
Source: INSEE
5
RETAIL PROPERTY IN FRANCE
ECONOMIC ENVIRONMENT
Tourism : 2017 a record year?Change in number of arrivals and overnight stays in Ile-de-FranceChange in % for 20162017, at the end of October
An encouraging outlookEstimates raised for arrivals of international tourists
Per continent, between 2010 and 2030, in %
Source: OMT
+162%
From January to October, the number of overnight stays hotel in Ile-de-France increased by 11% thanks to the combined increase in business
tourism and French (+ 6.9%) and foreign (+ 13.9%) customers.
Prospects look encouraging. 54% of tourism professionals in the Ile-de-France region surveyed by the CRT (Comit Rgional du Tourisme dIle-
de-France) anticipate an improvement in activity in 2018. In the longer-term, Paris will benefit from the growth in world tourism, with international
arrivals expected to increase by 3.3% between 2010 and 2030 (+ 2% in Western Europe).
18%
1%
19%
20%
12%
3%
15%
8%
12%
36%
19%
2%
20%
21%
10%
5%
14%
8%
12%
34%
USA
UK
China
Germany
Spain
Near / Middle East
Belgium
Italy
Netherlands
Japan
Arrivals Overnight stays
Source: CRT Ile-de-France
+166%
+57%
+66%
6
RETAIL PROPERTY IN FRANCE
ECONOMIC ENVIRONMENT
The year 2017 saw fresh movement in consolidations (Bricomarch / Bricorama, Gifi / Tati, etc.) and brand separation projects (Besson, Andr).
Some sectors were more shaken-up than others, for example fashion, even though sales will be returning positive in 2017 after a long 10 year
decline.
Although many players are selling or moving their premises, all are adapting their networks to the new reality of retail (promoting Phygital
and improving the overall shopping experience etc.).
Contrasting performancesChange in retail sales Performance of various retail sectors in France
ClothingAnnual growthEnd of November
FurnitureAnnual growthEnd of October
2,0 %
FoodQuarterly growthEnd of November
DIYQuarterly growthEnd of November
Sources: IFM, IPEA, FMB, Banque de France
0,9 %
0,4 %
0,3 %
Sector shake-upExamples of acquisitions
Recent, in progress, and upcoming
Sources: Knight Frank, presse
7
retail strategies and
retail formats
RETAIL PROPERTY IN FRANCE
RETAIL STRATEGIES AND RETAIL FORMATS
Steady pace of growthE-commerce revenues
Mobile breakthrough and click & collect
15
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.0
31
.0
37
.7
45
.0
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.1
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25
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14
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% 14
%
15
%
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%
0%
10%
20%
30%
40%
50%
0
10
20
30
40
50
60
70
80
90
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e
Turnover ( bn) Annual growth (%)
Source: Fevad
E-commerce has maintained a steady growth rate in 2017, with sales expected to exceed 80 billion euros (+ 14% over one ye
