Cushman & Wakefield Inc., one of the world’s largest real estate service firms, recently appointed John Strachan as the global director of the company’s retail services division. Strachan, formerly head of the company’s European retail operations, will be responsible for integrating the company’s multiple local retail teams, and ultimately, help retailers cross borders and tap into the most opportunity-rich markets across the globe. Strachan recently sat down with WWD to discuss the need to partner with local operators, why retailers may never want to own their own businesses in India, and how quickly we are approaching a global retail market.
WWD: Why was now the time to bring together the retail operations of Cushman & Wakefield globally?
Strachan: We’re still nowhere near a truly global retail world, but every year it moves a little bit closer to that. On the demand side, there are more and more retailers that that we work for in parts of the globe that are asking us for services in other places. Our company now has the basic building blocks to do on a global scale what we’ve already achieved across Europe. The European platform isn’t perfect, but our teams in different markets talk to each other regularly about their ideas and introduce their clients to each other, and we want to try and replicate that on a worldwide basis.
WWD: Aren’t retail and real estate both still local businesses?
Strachan: Yes. Unless you have local teams, local knowledge, local expertise and local questions, you can’t begin thinking about a continental or global battle. You can’t have a retail or real estate team that flies in and out of a market. That’s why it’s important for us and for our clients to build from the bottom up. You have to have credible local expertise before you can do anything.
WWD: Where are you growing your business now?
Strachan: We have six offices in India and we’re building four more. The main interest has been in the commercial sector, but since the government of India is beginning to lift the regulations for retailers, we’re starting to build up our teams in Bombay, New Delhi, and Bangalore, in addition to other cities in the country. There’s no way to have a global platform without a strong presence in the key cities in India, and the same goes for Shanghai, Beijing, Singapore, Hong Kong, and Seoul. You will start to see brands like Nokia and Apple and other universal brands in flagship stores in all the major cities, if they’re not there already. You’ll also see companies like The Body Shop, Aldo and Sephora, in all of the different sectors of retailing that inevitably will go global in the near future.
WWD: What are the most opportunistic retail markets today?
Strachan: In terms of the key developing regions of the world, the obvious answers are Russia, India, China, and probably Central America or northern Brazil.
Most U.S. retailers have a difficult time in the European market. Every market in Europe is different with different languages, laws, lease structures. But you can go to India or China and enter one of the biggest consumer markets in the world, and as along as you studied that one culture and became an expert in that market, you can cover an entire subcontinent. In Europe there are 30 different systems, cultures, and geographies to learn.
WWD: How should retailers prepare for “going global”?
Strachan: Increasingly the model for retailers who are expanding across country lines is to use a joint venture or franchise model. It’s a very popular model for growing in India or in the Far East. It happens in India all the time and I don’t think it’s necessarily because of the 51 percent ownership restriction. I think a lot of retailers, like Wal-Mart, Carrefour, Tesco, and Ikea would go the joint venture route even if they could own 100% of their business, because they just need to bring their brands, merchandise and retail experience, and can leave it to their partners to handle all of the local operations.