The Czech Republic made it to the Top 20 countries ranked by the most expensive retail street for the second time in Cushman & Wakefield’s annual Main Streets Across the World 2019 chart. It climbed to No.18 thanks to Na Příkopě, a street where the prime rental value is €235 per sqm per month. The Czech Republic is the only country in the Central and Eastern European region to make it to the Top 20 this year (it appeared in the chart last year for the first time ever), confirming its reigning position on the Central European market.
Prague is one of the most attractive destinations in both the European and global context
The global success of the Czech Republic, that is to say, of Prague and its most expensive retail street, Na Příkopě, stems from several key reasons. One of them is the concentration of retail in a single location: the centre of Prague is a compact high street destination outlined by the notional triangle of Wenceslas Square, Na Příkopě and Pařížská.
Other advantages of central Prague include a large amount of both local and international visitors, the unique architectural design of the local properties, high concentration of sights and tourist attractions, perfect infrastructure and great public transport accessibility. All this contributes to very high footfall, which exceeds 120,000 people a day in the busiest spot.
Jan Kotrbáček, Partner & Head of CEE Retail Agency Team, Cushman & Wakefield: “In addition, the local retail market is relatively young compared with western countries, since good quality retail on an international scale has been built here only during the last 30 years since the fall of the communist regime. This is why it still has great potential for further improvement.”
Macroeconomic and demographic parameters play a great role as well. The GDP keeps on growing across the CEE Region (and is set to grow faster than in the West in the future) while the purchasing power of the local citizens is growing too. The Czech Republic also benefits from a high number of visitors – they generate 50 per cent of Prague’s retail turnover. Prague has been regarded as a highly attractive and safe tourist destination for a long time, boasting 7.9 million visitors and 18.3 million overnight stays a year. Prague’s importance is underscored by the development of the Prague Airport where the number of tourists served has been growing significantly – it has almost doubled over the last 10 years. We expect this trend to continue: Prague has the ambition to become the principal traffic node for the entire region, in particular for flights from Asia and America.
The Czech Republic plays a key role as the gateway to the region, including for retail. It works for the brands that come to CEE for the first time – the Czech market is a great place to test their future success. Primark is one of the brands to have chosen this strategy recently; it plans on opening a shop in Prague next year.
In turn, premium brands prefer Pařížská, which represents Prague’s prime luxury segment and follows Na Příkopě closely in terms of rental value. Celine opened its shop in this main street of Central European luxury retail last year and there are rumours that Chanel and other major brands will follow suit in the near future.
Czech retail is not just Prague – the second most important destination is the centre of Brno, which has made great progress in the last year. It is of great interest to F&B operators that people intentionally seek there; the retailer profile has been stable during the last few years, and the demand for the local retail space is growing. Its capacity will continue increasing as more areas undergo revitalisation.
Prevailing trend: flagship stores
Prague’s high streets also respond to the trends that are currently moving the entire retail market: “Retailer structure is changing; we see growing interest on the part of the leisure segment, which comes up with leisure concepts attractive for tourists such as various museums, and the F&B segment, or catering facilities. One specific example is the Time Out Market with its food hall concept, which will become part of the Savarin project in the centre of Prague,” Jan Kotrbáček explains.
Another key trend is the concept of flagship stores – dominant shops that replace quantity with quality. Big brands take the route of having fewer shops, which are more prominent and attractive and offer customers a close encounter with and experience of the brand, often in the experience centre format. This is how retailers respond to the growing competition of online shopping – they want to be close to the customer and offer an attractive physical presentation. This is why major retail players need to be present in the key locations where their target audience can be reached and where an attractive and exclusive environment, underscoring the exclusivity of the concept and the brand itself, is available.
Prague is the perfect place for this: its historic centre has unique genius loci, which works as a great backdrop for flagship stores. It is also a good marketing medium for the concept because the local centre is alive 24 hours a day, 7 days a week and 365 days a year. All these benefits attract the interest of big brands and companies – and their good business performance is a signal for more retailers that this market works.
Quality retail environment and public space will retain attractiveness
Jan Kotrbáček says: “The big retail market players are more careful these days; they do not accept compromises and choose only the very best locations and properties for their shops: city centres or key shopping centres that they can associate with and where their shops can present the brand magnitude. Since Prague is one of the dominant destinations and develops along with the market, I see the future of its centre as promising and believe that it will retain its value in the future.”
The quality of the retail environment and public space is a major factor influencing this perception of Prague. In this context, the planned revitalisation of Wenceslas Square is a major feat, as it will greatly improve the attractiveness and value of the destination.
Czech high streets can also benefit from Prague’s coordinated work with visitors. To fully unlock the potential of tourism for this segment, it is necessary to focus on improving the profile of the arriving tourists instead of targeting just quantity. The Czech Republic should present itself as a high-quality destination and work strategically with a promotion that will attract more affluent clients, who will, in turn, spend more in the country.
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