Low infrastructure score pushes UK down to fifth in new world retail index

Ageing infrastructure is the major element stopping the UK being in the top three in the new Arcadis annual retail opeations index published today.

Jackie Whitelaw
20 July 2015

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Retailers in the UK enjoy some of the best operating conditions in the world, the index said. Market demand, access to new technologies, its favourable regulatory environment, and an increasingly confident economic climate mean the UK was placed fifth – the highests of any European country.

But it was held back from overtaking some of the South East Asian countries and the USA in the top slots because of its relatively low score, at 18th, on the quality of infrastructure metric, with the UK’s crowded roads and rail network in particular holding it back.

"We now need to look to the government for a clearer infrastructure investment strategy which will ensure we don’t lose out to other markets in the future” - Kevin Chrisp, Arcadis

Far Eastern markets dominate the top of the Index, with Hong Kong, Singapore and Japan taking top, second and fourth spots, respectively. The USA is third.

The Retail Operations Index ranks 50 international markets against five key metrics: overall quality of infrastructure; ease of starting a retail business; market demand; economic environment; and ease of operating. The UK enjoys retail market demand second only to the USA, globally.

 “It’s encouraging to see the UK place so highly in our first Retail Operations Index, leading every country in Europe as the best place for retailers to thrive. However, there’s more to be done if Britain is to claim one of the top spots in next year’s Index, said Arcadis UK head of retail Kevin Chrisp.

“Improvements to UK infrastructure will also be key to elevating our operating conditions in the long term. Some of our existing infrastructure – such as the crowded roads in the South East - remains in particularly poor condition. As such, we now need to look to the government for a clearer infrastructure investment strategy which will ensure we don’t lose out to other markets in the future.”

Other priorities for the retail sector according to Arcadis were to:capitalise on the move to an online market by beefing up delivery infrastructure; and to improve the resilience of digital infrastructure.

Elsewhere, Hong Kong provides the best conditions for retailers anywhere in the world, who benefit from first-rate infrastructure, a supportive environment for new market entrants, superior business conditions and a strong economic climate, Arcadis said.

Overall, the mature Asian markets offer retailers the strongest conditions, with Singapore and Japan places in the top five, reflecting the strength of their middle classes’ spending power and openness to foreign investment.

Despite its global economic superpower status, China ranks in 27th position due to lower ease of doing business, challenges faced by poor infrastructure quality in lower-tier cities and tighter regulations impacting those operating within the country.

Nevertheless, Chinese retail sales volumes are predicted to surpass the US in the next few years so, for many, entering the Chinese market will remain a priority despite a recent slowdown in economic growth.

The ten most favourable markets for retailers with quality of infrastructure score in brackets

1.    Hong Kong (1)

2.     Singapore (2)

3.     USA (13)

4.     Japan (8)

5.     UK (18)

6.     Canada (10)

7.     Germany (5)

8.     UAE (3)

9.     Netherlands (6)

10.  Sweden (12)

Read the report here