Insight around the world - Nordic Region
MARCEL KOKKEEL, CEO, CITYCON
The Nordic region is the European retail property market’s best- kept secret. International retailers have traditionally overlooked the region, judging each national market as too small and disparate.The advent of multichannel retailing though means retailers can dispense with a country-by-country approach. Drawn by the region’s compelling growth story,retailers are now discovering the appeal of this market of 25 million inhabitants.
Nordic countries – Denmark, Sweden, Norway and Finland – are among Europe’s leading economies, consistently near the top of the rankings for per capita GDP (€34,400 in 2011), annual GDP growth (2.7% in 2012) and other measures of economic health. All Nordic countries show the highest score in Europe's happiness index, measuring well being and perceptions of work, social and personal life.
Yet when it comes to international retail brand penetration, Nordic countries lag behind the rest of Europe.The average number of retail brands available in the Nordic countries is 45% lower than in the rest of Europe. This anomaly might lie in demographics. Urbanization came relatively late to the Nordic countries, as the rise of the service economy and the decline of industry helped power the migration to the cities well into the 1970s.
Immigration and the appeal of the urban lifestyle, with its easy access to job opportunities, education, healthcare, culture, entertainment and shopping, is rapidly drawing ever-growing numbers of people to metropolitan areas.Today, Helsinki and Stockholm are two of the fastest-growing cities in Europe. Indeed, Denmark, Finland and Sweden all have highly urbanized populations, of 85%, 85% and 87% respectively.
While international brands have been slow to fill that gap, Nordic consumers are increasingly fashion-hungry.In Finland,spending on clothing rose 75% to €4bn from 2000 to 2010. Finns are no longer content to wear what local players offer and want more individuality or international fashions. In Sweden, the booming economy and style-conscious population are enticing international brands to open in prime locations in Stockholm.
Nordic citizens are tech-savvy and front-runners in adopting new digital and mobile technologies: in 2011, the average internet penetration in Nordic nations reached 91.9%, while Britain scored 84.2% and the European average was only 73.1%. Smartphone penetration is also very high. For all their advances in the digital sphere, surprisingly Nordic people lag behind in online shopping.Average online purchases made up only 8.5% of total Nordic retail sales in 2011, while the European average was 8.8% and Britain was way ahead with 13.2%. This trend will surely change rapidly in the future.
The Nordic online retail paradox highlights, therefore, the window of opportunity for international retailers wishing to enter the region and capture the growth on offer.