Nords want American brands.
That’s true across a host of sectors, from fashion to fast food, in the eyes of Marcel Kokkeel, chief executive officer of Citycon, the publicly listed developer that owns and manages of shopping centers in the Nordic and Baltic region. Add drug stores, sportswear stores and coffee shops to his wish list.
“In the Nordics there is a remarkable shortage of international brands compared to the average in Europe — 40 percent less penetration of international brands, which is actually strange if you look at the growth and if you look at mainstream retailers who could find a market of 25 million people with money in their pockets attractive. Gap is not there, TJX is not there. Victoria’s Secret just started to open,” he said.
His wish list includes Hollister, TJ Maxx, Victoria’s Secret and Walgreens. “The void is in down-to-earth, mainstream retail. We’re not interested in the Guccis.”
In New York recently to meet with investors, Kokkeel sat for an interview at the Plaza, to discuss plans for the 27-year-old, Helsinki-based Citycon. He said his company has doubled in size to five billion euros, or $5.66 billion, in assets in the last five years through acquisitions and developments enlarging existing shopping centers. The company has a market capitalization of two billion euros and 1.2 million square meters of gross leasable area.
Of the company’s 53 shopping centers, there are 20 in Finland, 20 in Norway, nine in Sweden, three in Estonia and one in Denmark. In addition, Citycon leases and manages 14 shopping centers in Norway on behalf of other owners. Citycon’s shopping centers attract more than 200 million visitors annually.
Among the projects in the works: a 350,000-square-foot addition to a 600,000-square-foot Iso Omena center in Helsinki, with the first phase seen getting done in August and the second phase in May 2017.
Also, Kista Galleria in Stockholm is adding 150,000 square feet, bringing it to 750,000 square feet of retail. “We’ll see even more food and restaurants and fashion. An Eataly would be great,” Kokkeel said.
Here, Kokkeel discusses market opportunities and retail brands on his radar.
WWD: Which are the fastest-growing cities in your region?
Marcel Kokkeel: Stockholm and Oslo are growing 1 to 1.5 percent per year in population. They are the fastest-growing cities in Europe. People are coming in from the colder parts of the north, for jobs. Oslo is fueled by the oil industry, and Stockholm is the base for such major companies as H&M, Ikea, Volvo and Ericsson.”
WWD: In terms of real estate, where is Citycon’s comfort zone?
M.K.: The nature of our shopping centers is always convenience; we have down to earth, everyday, smaller shopping centers typically in the 200,000- to 450,000-square-foot range, with a catchment that is close by. We are always in the heart of where people live and work. We don’t like out-of-town shopping centers. We don’t believe the future is there, unless the shopping centers entertain you. We want to be close to where people live and work, close in their minds, close to trains and buses. Forty percent of those under 25 don’t have driver’s licenses in Stockholm, and those that do don’t drive Ferraris.
WWD: Have you made any agreements recently to introduce some new brands to your properties?
M.K.: Yes, with Starbucks that just entered the Nordic market recently, Samsonite, Victoria’s Secret, Dunkin’ Donuts and The Athlete’s Foot.
WWD: Which fashion brands from around the world are important to your properties and have a significant presence?
M.K.: Some international fashion brands that are present in our shopping centers include e.g. Guess, H&M including COS and Body Shop. Also Zara, Nespresso, Michael Kors, Nike, Toys “R” Us and Tommy Hilfiger are brands you can find more and more in shopping centers in the Nordics.
WWD: Which Nordic brands are important?
M.K.: H&M including its COS, & Other Stories and Monki labels; Lindex, a successful Nordic brand; ICA supermarkets in Sweden; Kesko supermarkets in Finland; Flying Tiger is a very successful kind of joyful, fancy Danish dollar store rapidly expanding in Europe. Espresso House is a very successful coffee shop. It’s the local Starbucks. Joe & the Juice is a very trendy juice and coffee bar from Denmark. Polarn O. Pyret, is a Swedish high-quality children’s clothing company. Iittala for Scandinavian design and Clas Ohlson is a very successful modern hardware store. These brands operate in all the Nordic countries except for the supermarkets.
WWD: What other brands would you like to see in your properties in addition to Gap, TJ Maxx and Walgreens?
M.K.: Uniqlo would be a hit. It’s basic quality fashion would fit the Nordic down-to-earth lifestyle. Topshop, too, and Primark’s success is almost guaranteed.
WWD: What’s happening on the fast-food front?
M.K.: Fast-food chains are rapidly rolling out their concept all over the Nordics: Burger King, Subway, Dunkin Donuts. All those brands came relatively late to the Nordics. Burger King, Starbucks and Dunkin’ Donuts are in expansion mode. Burger King is rapidly expanding in Finland after coming back to the market in 2014. They have now 20 units, but the aim is somewhere between 50 to 100 in a couple of years’ time. In Sweden they have more than 100 units and in Norway and Denmark approximately 50 units each. Starbucks has now four units in Finland, but they are strongly expanding together with Kesko….In Sweden the amount is somewhere between 10 and 20 units, in Norway 11 locations and in Denmark around 10. Subway just opened its 150th restaurant in Finland and they are big in other Nordic countries, too. They have been voted the best fast-food chain in Finland for many years in a row. Dunkin’ Donuts is looking for a franchisee partner in Finland. They have entered Sweden in 2014 and have now six units there. They are also in Denmark.
WWD: Why is there less penetration of international fashion brands in Nordic countries?
M.K.: This question is at the heart of our statement that the Nordic region is “the best kept secret” in Europe. Most international brands think about larger markets first — Germany, China, Turkey, etc. They are not fully aware of the fact that the Nordic capitals are the fastest-growing capital cities in Europe. Apparently, brands tend to look at countries instead of the region.
WWD: Are there misperceptions around the world regarding Nordic people and their fashion aesthetic? In what ways do they dress differently from Europeans or Americans?
M.K.: Nordic people tend to dress themselves trendy but basic. No showing off. It might be a misperception that “down to earth” cannot be combined with “sexy, trendy.” The global success of Swedish fashion retailer H&M shows that especially the Swedes understand what customers like and how to dress them. And what about Ikea. That’s down-to-earth sexy stuff, affordable for almost everybody.
WWD: Roughly, what is the breakdown in space in your shopping centers between fashion, home goods and food?
M.K.: Currently approximately 25 percent fashion; 20 percent groceries; 20 percent leisure and home supplies; 10 percent services and offices; 10 percent health and beauty; seven percent cafés and restaurants; four percent other specialty stores, and two percent department stores. Citycon will grow its portfolio by enlarging the average size of centers in growing urban areas. Groceries will remain core-anchors with fashion, cafés and restaurants and health services rapidly increasing their fair share.