Retail expansion: Innovation and diversity instead of additional store locations

While Austria’s classical branch-based retail sector rarely expands nowadays and increasingly closes or downsizes locations, many new concepts are searching for the best spaces. Clothing, food retail, and gastronomy continue to be the most expansive.

Location supply exceeds demand

According to a current and annually conducted survey of more than 800 branch stores and franchise systems by RegioData Research, around 420 Austrian retail and retail-related companies are planning to expand this year. However, these companies only seek around 1,100 locations – significantly fewer than just a few years ago.

On the other hand, there is a roughly estimated supply of around 5,000 potentially suitable vacant spaces in Austria. But most of the expanding companies are looking for busy prime locations – which are hard to come by or very expensive. And that also means poor cards for all secondary areas with low frequency.

Austria remains attractive for international retailers

New, international retail and service companies keep coming to Austria, however, in contrast to the past, these companies are content with just a few or even a single location, which then opens as a so-called flagship store, mainly in the Wiener City, the Donauzentum or the Shopping City Süd. Examples from recent years include Manufaktum, Tods, HEMA, Urban Outfitters, Blockhouse, Wagamama, and several exclusive clothing labels. Area-wide expansion with new store types has become very rare. Many companies have also significantly reduced their original plans in this regard and are focusing their activities on online retail.

Expanding industries: Clothing, gastronomy, food retail

As in previous years, the clothing and food retail sectors including gastronomy, show the most expansion. Although brick-and-mortar clothing retailers are under massive attack from online retailers, who are still on the rise, almost 100 sales divisions are planning to expand their locations. However, it is no longer the large “classic” branch stores – many of which are closing or downsizing their stores- but often very specialized store types: very exclusive, very innovative, very cool. The situation is similar in system gastronomy, which is also looking for the most locations this year, even though the wave of new companies entering the Austrian market has flattened considerably.

The latest gastronomy trends continue to be hamburgers, Asian food, Mexican and vegan – and all as emotionally charged as possible. In food retailing, significantly more new, specialized types of businesses are entering the market, following the current trends toward vegan, organic, environmentally conscious and regional products.