ACROSS | The European Retail Real Estate Magazine

Opinion

About a Sophistication

Daniel Losantos is the CEO of Neinver and is a member of the ACROSS Advisory Board. Image: Neinver

Outlet centers have proved to be one of the most successful businesses in the retail market.

By Daniel Losantos

This sector has been steadily rising in popularity among shoppers, visitors, and tourists since its introduction in Europe in the 1980s, with footfall and sales density figures increasing well above other formats. During the last decade, different drivers have helped bolster the outlet concept’s attractiveness to consumers. The presence of sought-after, well-recognized brands at top outlet centers has greatly increased since their inception, as retailers have widely embraced this shopping format and have integrated it into their distribution strategies, with some of them even creating dedicated outlet teams. An estimated 8,000 brands currently do business at outlet centers in Europe, nearly 20 percent more than five years ago.

Retailers have been attracted by the high performance figures of well-positioned outlet centers over the last decade, both during periods of strong and weak economic growth. The last global economic recession, together with improved pricing transparency and discounts on the high street, undoubtedly created more value-conscious shoppers, benefiting the “smart shopping” concept of outlet centers. Moreover, outlets not only give brands a reputable channel for their surplus, but are also a proven entry point for new consumers who will go on to make purchases at their full-price stores, helping to create new relationships.

Not just a Savvy Purchase

Another driver of the success of outlet centers over the last decade is the evolution of their core value proposition. Beyond the entry of new popular retailers, the traditional claim of quality brands at discounted prices has evolved towards a complete shopping experience that has drifted closer to the hospitality business than to traditional retail. Online competition has forced physical stores to refocus on their strengths and take advantage of their capacity to create memorable experiences. At outlet centers, visitors arrive with enjoyment in mind.

Amsterdam The Style Outlets Image: Neinver

Customers visiting outlet centers nowadays no longer expect to only make savvy purchases. They want a complete shopping experience, with the same high quality as the one found in a flagship store on the high street. To satisfy such demanding consumers, outlet centers have evolved into outlet destinations and have adopted a far more sophisticated image, with pleasant and sustainable architecture, value-added services, and thorough attention to every detail in a shopper’s journey.

In recent years, centers have complemented their commercial offer with services aimed at different target groups (with a special focus on tourists), more leisure and cultural options, quality food and beverage offers – indeed, the F&B provision at outlet centers has doubled since 2011 – and attractive outdoor seating and special events, among other features. Ultimately, the focus has completely shifted from the product itself to the shoppers, with the goal of delivering a memorable experience and creating places where customers love to return.

In the end, shopping at an outlet center today has no connection to the shopping experience from a decade ago, nor does it have anything to do with what things will be like in five years. Image: Neinver

In this quest to evolve with the consumer, innovative technologies are essential. Combining the physical and online worlds is a major challenge today. In fact, companies with a commitment to a strong omni-channel strategy can ensure loyalty from up to 90% of their customers. The main objective is to understand customers’ different touch points and provide an ongoing brand presence, regardless of the channel the consumers use. The future will belong to those who can combine the best of both worlds: “humanizing” the digital channel and making the offline channel smarter and more interactive.

In the end, shopping at an outlet center today is different from  the shopping experience from a decade ago, nor does it have anything to do with what things will be like in five years. Although there is still a long road ahead, outlets have shown that they are in a position to continue growing as one of the most successful retail channels, led by operators that understand brand needs in this specialized channel and that dare to innovate in order to stay ahead.

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