ACROSS | The European Retail Real Estate Magazine

Opinion

Destination Outlet

Mayte Legeay, Senior Asset Manager Europe at Resolution Property. Image: Resolution Property

Outlet retail has long been established across Europe, but the sector has tended to suffer from being seen as second best to its big sister, the shiny shopping center. As a long-term owner and operator of retail outlets across Europe, Resolution Property has been at the forefront of evolving this sector to capitalize on creating offers that can’t be replicated online.

By Mayte Legeay

With the well-documented turbulence in the retail sector prevailing as physical stores come under intense pressure to compete with online offers in order to meet the demands of today’s discerning shopper, outlets have stepped into the spotlight.

Recent research by FSP indicates that total turnover and sales are more than 2.5 times greater today than they were in 2008 across Europe’s 235 outlet centers. Despite the financial crisis and the shift towards online shopping, sales actually grew by 45% from EUR 11.5 bn in 2013 to EUR 16.6 bn in 2018. This rise significantly outstrips the mere 0.8% growth of European retail sales during the corresponding period. Even when times are tough, people still like to shop, and this has fueled the industry’s expansion even as conventional retailers struggle.

Clearly, outlets are no longer regarded as uninspiring out-of-town retail units for brands to offload old stock at discount prices. If you visit an outlet destination today, you will be welcomed by an entirely new concept – one that offers leisure, entertainment, restaurants, and cafes as well as a line-up of leading global brands. It is this destination appeal of a strong retail and leisure mix together with a unique price point that has now firmly positioned this sector as part of the mainstream shopping experience. A key component of the maintained solid performance of the sector has also been bolstered by the shift in retailers’ acceptance of this channel as part of their integrated strategies. More and more aspirational fashion brands consider outlets to be a crucial distribution channel and an opportunity to enhance their consumer profile.

Outlets have also been strengthened by the growth of tourist visitors, resulting in more and more tourist attractions being incorporated into schemes – a trend that Resolution moved to capitalize on late last year, with the acquisition of Billund Designer Outlet in Denmark. Situated adjacent to Legoland, Billund is a tourist hotspot for Danish, Norwegian, Swedish, German, and Dutch visitors. In 2017, tourism visitors to Billund rose by more than 33%, to 4 million visitors. Due to open in 2021, Billund Designer Outlet is set to become a hub for premium global brands seeking exposure to a captive audience.

Across the rest of our European portfolio, we’ve also seen growing sales and footfall bolstered by tourism. The line-up of leading global brands at our outlets, including Galleries Lafayette, Guess, Gant, Nike, Levi’s, Lacoste, Fossil, Puma, and Le Creuset, is a big draw for visitors. At Honfleur Normandy Outlet in France, both sales and footfall have risen by 20% above initial targets since it opened in November 2017. Data from one week in August alone reported tourists accounting for 45% of visitors, and, on average, tourists spent 10% more than shoppers who live within 60 minutes of the site. Similarly, our Designer Outlet Soltau in Germany welcomed 1.4 m visitors in 2017 and has seen a constant increase in annual turnover since its opening in 2012, supported by rising sales and footfall.

With the expectation of a visitor experience at an outlet entirely transformed, tourist-led schemes that feature unique leisure experiences and exceptional customer service provide the perfect backdrops for outlet schemes. As such, we anticipate that many outlets will become global tourism attractions in their own right. Continuing to redefine the perceptions of what an outlet shopping experience entails to both consumers and retailers is vital to ensuring that this sector continues to thrive as it moves into the mainstream retail landscape.

 

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