Author: Marketing, 22 May 2018

FSP’s European Outlet Shopping Report reveals impressive sector growth 

FSP, the leading retail property consultancy, today launches its annual European Outlet Shopping Report.  The report has found that strong performance, occupier brands fuelling expansion and impressive development activity are the state of play for the European outlet industry in 2018. The findings launch today at an industry event in association with KLM Retail.

Outlet growth remains strong

Today’s report shows that outlet is one off the most successful retail channels for growth, avoiding the ongoing decline affecting traditional high streets and full-price shopping malls.  Sales have risen by 45% from €11.5bn in 2013 to €16.4bn in 2017, 10 times the general rate of growth in European of retail sales. 

Luxury outlets lead on performance, with 46% more growth than the industry average. 

A key trend in market share has emerged with four operators – McArthur Glen, Value Retail, VIA Outlets and Neinver - accounting for 55% of total European centres. This has risen from 47% since 2013.
This year, 9 new outlet centres will open across Europe with total gross lettable area of 132,500m2.  This is a 17% increase in new floor space compared to 2017 and continues the improvement in new development since 2016.  Highlight schemes include The Icon Designer Outlet at London’s O2 Arena, Zsar Outlet Village in Finland, The Village at Villefontaine in France and Prague The Style Outlets in Czech Republic.  

Western Europe leads on opportunity for expansion

With outlet floor space provision in Europe increasing by nearly 50%, Western Europe currently presents the strongest expansion opportunities, for brands in particular. FSP’s findings show that 47% of total purchasing power falls within this region, despite Western Europe accounting for 30% of outlet floor space and just 36% of turnover.  Looking at potential for further development, the report identifies Germany as offering real potential, with opportunities to improve on the many first generation schemes in France also strong. 

In terms of other European locations:

• Provision is currently least in Central Europe: low purchasing power has traditionally limited brand appetite for expansion, necessitating a more midscale offer at most schemes.  Despite being home to nearly 30% of Europe’s population, the region accounts for just 14% of outlet floor space and 7% of sales

• More floors pace has been added in Southern Europe than any other region since 2015.  As a result, there are just 88 residents for every m2 of outlet floor space compared to an average of 150 residents across Europe - suggesting additional provision will require innovation. 

• Northern Europe has seen relatively limited development in recent years. While gaps still exist,  growth in this mature market tends to be driven by extensions, asset management and innovation, rather than new development.

Brand-led growth

FSP’s European Outlet Shopping Report shows that growth in the market continues to be driven by brands; in 2013, FSP recorded 4,774 brands in the European outlet industry, with this number reaching 5,461 in 2018, an increase of 14%. Looking at the brands operating today, 2,568 are newcomers since 2013 and 44 of these now have portfolios of five or more stores including Montblanc, Dr Martens, Liu Jo Uomo, O Bag Store, Rebel Queen and Galleries Lafayette.

Consolidation of brand portfolios emerges as a defining feature of the 2018 European Outlet Industry.  FSP found that 40% of the brands trading in 2013 are no longer trading today, such as Ecko Unlimited, Ventilo, Guru and McArthur. This is partly due to the constantly changing needs of brands to dispose of excess stock but also the efforts of operators to drive sales performance.  In addition, leading brands are clearly optimising their portfolios to focus on the best performing sites; in addition to opening 10 new stores, Hugo Boss closed nine while Benetton has opened 12 new stores but closed nine.

 

Outlet Breakfast Seminar

In many parts of Europe, outlet is a mature business which requires, skill, hard work, innovation and well-judged investment to be successful. The age of growth through expansion may be coming to an end in some parts of Europe but the age of asset management has a lifetime of opportunities ahead. Our report aims to show the huge potential that remains in this growth market and to help new investors target the right assets for acquisition.

Ken Gunn, MD at FSP

In an ever more challenging retail environment, and whilst outlets across Europe continue to outperform full price retail, there can be no complacency amongst owners, managers and brands as to continuing success as the sector is not immune to the key issues generally afflicting the retail industry today. Outlets must continue to evolve and need investment and strong management to stay ahead of the game and enhance the customer experience with one of the key drivers for that being the fusion of leisure and outlets.

Ian Kitchen, partner of KLM Retail

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