Our clients in the outlet industry come to us with a mix of needs. Developers, investors and operators want to understand how to maximise sales, income and asset values while asset managers and leasing teams want support to attract high spending customers and the most desirable brands.
Understanding how to change consumer behaviour lies at the heart of FSP’s outlet insight. FSP’s 2017 European Outlet Shopping report shows how successful outlet centres and operators are producing market leading performance by using insight and intelligence to shape a compelling visitor experience.
The report shows sustained growth in outlet centres, as the industry adapt to fit smaller markets, evolving customer retail and leisure trends, increasing numbers of brands and evolving competitive landscapes. We’re seeing innovation in design, location types, target customer and merchandise mix as outlet centres continue to outperform other retail formats. As a result the number of active brands in outlet expanded by 4% and the number of stores by 7% in 2016.
Importantly, operators are increasingly aware of the potential of evolving outlet centres into destinations, in line with ever-increasing customer expectations.
As for consumer-led trends, here’s the key themes coming through in outlet development:
An appropriate balanced retail mix
Our report shows that the winners in outlets – in the UK and Europe - are those that have got the balance right in terms of luxury and brand equity. Cheshire Oaks has got this spot on, with its ability to attract the right mix of high-end and accessible brands, in line with the aspirations of its visitors.
Changing outlet locations
As brands increasingly recognised that outlet is the entry point for new customers, rather than a dilution of brand equity, we are seeing a move away from remote, purpose built sites towards more authentic, urban locations. Gunwharf Quays and Outlet City Metzingen ooze urban diversity, while Hackney Walk is joining up new build with railway arches and existing.
With 200 outlet centres across Europe, the days of finding heavily populated catchments near capital and second cities have almost gone, leaving sites at a premium for those operators whose outlet product can only work in this type of market. Elsewhere however, innovative investors are working with more adaptable operators to create new opportunities. The exciting Honfleur Normandy project for example, will target older tourists from the UK, metropolitan tourists from Paris and under shopped catchment residents from Northern France. There are a number of similar concepts proposed in the UK, including Scotch Corner Designer Outlet in Richmondshire.
The speculative nature of visits to outlet centres and the appeal of quality brands at discounted prices mean that outlet shopping is a more akin to a leisure trip than a functional chore. Progressive operators are looking to increase sales by curating attractive destinations which package together desirable brands, great F&B and a strong leisure offer, so that visitors have more reasons to visit and more to occupy them than just shops. Gunwharf Quays has long been the UK’s most complete outlet experience but emerging schemes such as the O2 are likely to raise this concept to new heights.
For many outlet specialists, the trends above may not be particularly new. FSP believes however, that they remain under-exploited and increasingly important for future growth. In today’s digital and physical world, consumers and brands have more choice than ever before. The outlet centres which succeed will be those which best support brand values and innovate to become in the complete consumer experience for the unique markets which the serve.
For more information on FSP’s European Outlet Shopping report please contact us.