Opinion

PRIDE OF PLACE: THE FUTURE OF OUTLETS IN GERMANY

Once again, Germany has come out on top as the country where brands are most eager to find outlet space, according to a report released at Mapic by ecostra. Its annual survey of mainly fashion brand manufacturers put Germany as their No. 1 destination, with 59% of all responses.

BY HENRIK MADSEN

It’s no surprise that brands are focused on Germany. This is Western Europe’s most populous country, with over eighty million residents, 19 international airports, and great transport links – plus, according to ecostra, all German outlets perform significantly above the European average on brand partner profitability. It is also the country with the least amount of outlet space per inhabitant in all of Europe.

At McArthurGlen we are creating more space with a new development at Remscheid near Cologne. Due to open in 2017, it will be the only designer outlet in this densely-populated, wealthy area. In fact, we are doubling our presence in Germany – with Remscheid and with the majority stake we have just acquired in the popular Ochtrup outlet near Munster, where we also plan to expand. These two new centers join our existing German portfolio of McArthurGlen Berlin and the recently extended McArthurGlen Neumünster, Northern Germany’s largest designer outlet, as well as our centers in Roermond in the Netherlands and Salzburg in Austria, where over 50% of our customers come from Germany.

Space is one thing, but if the outlet industry is to succeed in satisfying brand partners and delighting customers, it must provide a high quality – and aspirational – shopping experience. Simply expanding GLA is not enough. That means taking pride in our centers and delivering a world-class customer experience: excellent service, a compelling variety of food and leisure offerings, and the ability to invest in the look and feel of our designer outlets.

The old “factory outlet” model has been very successful in Germany, but customers are becoming more demanding. Our new joint venture partner in Ochtrup, the fashion and retail entrepreneur Thomas Dankbar, recognizes this, saying he teamed up with McArthurGlen “to take Ochtrup to the next level.” The leader of one of Germany’s biggest high street conglomerates recently explained to me how he is changing his outlet strategy. He spends millions on positioning his brand in relation to his customers on the high street – great store fit, beautiful window displays, superb customer service, and so on. Now he wants to maximize that investment by operating his outlet stores to the same standards.

Outlets are highly profitable for brands. To quote ecostra once again: “Stores in outlet centers are more profitable for brand manufacturers than their own shops in the inner cities, and also more profitable than their own online stores.” But the days of “stack them high and sell them cheap” are over. There will be a growing alignment between high street, online, and outlet, and this will result in a better-looking business that is more consistent and more profitable all round.

We will nurture our partners’ brand image and place an even greater focus on the customer journey: first contact online, the journey to our centers, parking, in-center experience, leisure offerings, and service. Outlet customers are shopping the brand, too, not just the price. In our centers, the only thing that should feel “discount” is the price tag.

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