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RETAIL PROPERTY IN FRANCE · PDF fileLEBONCOIN Paris 9 17 bis boulevard Haussmann ... Showroom Vorwerk, 5 bd des Capucines Showroom Maisons du Monde, 100 rue du Bac Customer experience

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  • 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

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    Source: INSEE

    30.000

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    42.000

    48.000

    54.000

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    Oct.20

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    In

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    42.000

    43.000

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    Jan.2

    014

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    Jan.2

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    Oct.2

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    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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    % 14

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    14

    %

    0%

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    0

    10

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    30

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    60

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    80

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    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

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