What are the challenges and opportunities for brand expansion to Benelux? Learn how to best tap the full potential of the Benelux retail markets.
When considering new regions for brand expansion, Benelux countries may raise concern about their small size as well as the many different languages and other cultural particularities. But taken together, the relatively small countries of Belgium, the Netherlands and Luxembourg represent an often underestimated powerhouse.
The retail sector plays an essential role in Benelux’ economy, offering many business opportunities for retail companies in various areas of evaluation.
The Benelux region (Graphic: Wikimedia Commons)
Key Factors of International Market Expansion
When evaluating any country or region for international retail expansion, several key factors need to be considered and brand expansion Benelux is no exception. Four of the essential factors are detailed here:
| Macroeconomics | How big is the population? How does the economy perform in terms of GDP, consumer spending, retail sales, etc.? |
| Retail Structures | What does the retail market look like? Is it a developing or a mature market? How many retail cities there are? Is there a dominant retail format such as hypermarkets or department stores? Is it a typical High Street or Shopping Centre country? |
| International Brand & Retail Footprint | How big is the international retailer presence? Is the country already a global brand market or are only few early movers present? |
| Market Entry & Distribution | Which possibilities does the country give to foreign retailers and brands to enter? Is it necessary to cooperate with a local company or do brands have free access to property and/or rent? Should brands operate own stores or cooperate with local partners? |
Now, let’s take a closer look at how the Benelux countries perform on these four key factors of brand expansion.
Macroeconomics
The Benelux countries represent an economic area of around 28 million inhabitants, with each country’s GDP per capita well above EU average. The economic development across the whole Benelux region is set for a moderate but stable long-term growth path.
The Netherlands is the largest Benelux economy with around 17 million inhabitants. The country is experiencing a small economic boom with retail sales continuing to increase and a resilient private consumption indicator.
Hop & Stork, Utrecht (Photo: Ryan Plomp)
Belgium, in turn, has around 11 million inhabitants. With rising consumer and business confidence, the country’s economy is recovering from the fallout of terrorist attacks in 2016.
With around 0.6 million inhabitants, Luxembourg is the smallest of the three Benelux nations. But Luxembourg is also well known as one of the wealthiest nations in the world. Retail sales and consumer spending are growing faster in Luxembourg than in its two neighbouring countries.
Retail Structures in the Benelux Region
The Benelux region is considered a so-called mature market and has approximately 350 retail locations available to mid-market brands. In its report ‘Destination Retail Benelux 2016’, JLL names 13 main retail cities across the Benelux Region: Amsterdam, The Hague, Utrecht, Maastricht, Rotterdam, Eindhoven, Brussels, Antwerp, Ghent, Bruges, Hasselt, Liège and Luxembourg City.
(Graphic: Brand Pilots, Map Data: Google, GeoBasis-DE/BKG)
Consumers in the Benelux consist of a mix of local shoppers, international tourists and commuters from the surrounding countries. But as retail structures across the Benelux are diverse, a closer look at each individual country is necessary too.
With 500+ (mainly small) shopping centres that cover around 6mn sqm of floorspace, the Netherlands make for nearly 80% of the Benelux shopping centre landscape. Belgium’s retail structures, on the other hand, are still dominated by out-of-town schemes with a strong focus on hypermarkets and retail warehouses as well as High Street locations in city centres.
And Luxembourg’s small but dynamic retail market boasts the second highest shopping centre density in Europe (after Norway). The country is also showing the third largest pipeline of new developments in Western Europe and is therefore likely to soon remedy its current lack of retail supply.
(Photo: Royal Hamilius Luxembourg City)
International Brand & Retail Footprint
Benelux, with its key retail cities, continues to be an attractive destination for international brands in their expansion. Established brands and global fashion players have long built a broad store presence in Benelux, while ‘new entry’ brands, such as Isabel Marant, continue to open their first doors in the Benelux countries.
Isabel Marant Store, Amsterdam (Graphic: Isabel Marant)
According to CBRE, Benelux is well positioned in the second tier in terms of brand presence: Belgium ranks 18, while the Netherlands rank 24 and Luxembourg 55. These solid results are due to the Benelux countries’ internationality, central location and easy accessibility. Therefore, the Benelux region is often used as test market and springboard for the rest of Europe. H&M, for example, chose Brussels as the first location in continental Europe for its new retail format Arket.
Arket Store, Brussels (Photo: Arket)
Market Entry & Distribution
In general, foreign companies can buy or rent properties in Benelux without restrictions. The majority of international brands operate both own and partner retail stores in Benelux, depending on their choice of cities (Tier 1 or higher), location quality (premium or secondary), footfall and so on.
As consumers in general don’t differentiate between a brand’s own store and partner retail, the brand has to carefully select and pick the best retail partner for the relevant product category. As the Benelux consists of three countries with diverse consumer behaviours between them, it’s crucial that the partner has local market expertise to be in a good position to choose the best locations for the brand.
Rotterdam shopping centre (Photo: Dieter de Vroomen)
If you want your brand to become a Benelux one, please don’t fall into the trap of thinking that conquering this market is a no-brainer. As past examples have shown, even expansion plans into so called ‘safe’ markets can fail if they are not based on a research-led and well-developed strategy with a solid roadmap for execution.
So first off, do some deep market research – the four criteria for brand expansion introduced here are a good place to start. Define, which cities offer enough retail potential (respectively location opportunities) for your particular brand and determine the number of stores a particular city can support at most without harming your existing business.
Having done your homework, you can exploit Benelux’ potential and opportunities for global retailers and brands. Good luck and all the best with your brand expansion to Benelux!
About the Author:
Isabell Guidastri has worked with brands on their local and global market expansion strategies, including many well-known retail powerhouses. She supports brands in their expansion and helps them find their footing in new markets. Traditional wholesale in Germany, brand expansion Benelux or South America, and franchise in Turkey are just a few of her recent virtual project travels. You can best reach her via email or read more of her work here.
