By Nicky Lovell
Though rumors of the death of the UK high street are exaggerated, it is certain that retail has been extremely challenged and in the throes of major transformation. While there is clear decline in some categories and locations, new channels are concurrently seeing growth and addressing new patterns of consumer demand, too. There is a dramatic state of flux. One category – the outlet – has weathered the storm more successfully than conventional shopping centers and high streets. The outlet remains an important asset class, with a market value estimated to grow to £3.6 bn by 2020 (Savills, 2017). As they attract increasing investor interest, outlets continue to outperform, enjoying a concentrated consumer spend that is attractive to retailers.
CBRE (2019) noted that the UK has the highest outlet floor space per capita in Europe, a clear measure of success, with the resilience of outlets often boosted by strategies to extend dwell time. Continuing the Europe/UK comparison, Savills reported that UK outlets see, on average, twice as much space allocated to food and beverage provision than those on the continent. The driver is consumer demand, with 34 percent of visitors identifying leisure facilities as more important in outlet centers than other retail environments.
Experience garnered through effective asset management at Affinity has shown that leisure and amenity are critical to outlet growth strategies, a far cry from old “park, spend, leave” models. An investment to bolster leisure at Affinity’s Devon Outlet center will see a new cinema, hotel, and restaurants, squarely addressing the local community, tourists, and visitors, while contributing to job creation, boosting the local economy, and meeting clear demand for leisure. Of course, leisure is not the primary factor in outlet success – nor is value retail.
As an active asset manager, we have adopted a responsive, nimble strategy to delivering an outlet model that blends value brands and outlet propositions to create a more rounded and robust occupier mix. This presents a diversified, bespoke consumer offer. This is achieved by operating a very flexible approach, favoring open A1 planning consents, which permit most types of retail and offer retailers more flexibility, whether to test their models or consider which option – discount or full price – suits them best. It allows us to evaluate tenant mix and fine-tune it to demand. Of course, some retailers still favor a tried and tested approach to outlets.
Increasing dwell time is also addressed by a real focus on local communities, which, considering their out-of-town locations, has not traditionally been integral to outlets. Strategically, we have found that outlets should connect and reflect local communities, not operate disconnectedly in silos. Attracting families is key, while local independent retailers have also proven an active part of the mix. The leisure offer may be bolstered by amenities such as gyms, game areas, children’s clubs, and soft play.
By employing this diversified offer, an overall uplift in visitors has been sustained, in turn, supporting new leasing and occupier expansion, and securing a combined occupancy of 96 percent across the portfolio. This approach has proven effective, bucking downward retail trends, and demonstrates how an active asset manager can carefully steer a center towards increasing success.