By Nicky Lovell
Over the past year retailers and–by proxy–retail landlords across the UK and Europe have found themselves facing trading conditions so tough that many businesses on both sides of the landlord and tenant relationship simply may not survive. As even well-loved brands have entered into CVAs or fallen into administration, those operating in the retail space have had to demonstrate real innovation, perseverance and agility to find opportunities and manage risk in these uncertain times.
The outlet retailing model, which had already been weathering the storm of online retail well before Covid-19 hit our shores, has proven its resilience particularly well over the last year. The flexibility of the model is fundamental to its strength, allowing operators to adapt rapidly to change in ways that traditional retail models are simply unable to replicate. It should come as no a surprise that outlet retailing has been the go-to destination for all manner of brands and operators during these months. In fact, we have now seen as many independent brands considering the outlet model for their first bricks and mortar presence, as there are national retailers looking to shift the large quantities of stock gathering dust on the shelves of their high street stores. The flexible rental approach frequently adopted in the outlet sector ensures that occupants and landlords are able to respond to rapidly changing consumer trends. It also enables retailers to form a clear picture of costs and outlay and make accurate decisions about the purchase of new stock.
In this market, we have to be focused on helping new operators to open and trade at speed–sometimes within days. As a result, many operators can still look to outlet as a strong, robust proposition for trialing their products, clearing old stock, accessing high levels of footfall and testing multi-channel retailing in attractive locations. It can be a particularly successful approach for local businesses with a deep and comprehensive understanding of the particular needs of their customer base in that catchment, something many national brands are unable to match. Landlords who ensure the tenant mix is optimized and consistently in line with ever-changing customer requirements will benefit from a growth in patronage, and in so doing will enhance relationships with their existing tenants, enabling them to future-proof their businesses.
Our experience over many years shows us that outlet customers are very clear in what they expect in terms of choice and convenience: value for money combined with a “good day out”. To that end, we aim to offer a location-specific mix of brands and leisure activities. Not only must we provide customers with what they want, but also–important in the Covid-19 pandemic–give them a sense of safety and confidence to be able to shop in spacious, open retail environments with ample, free surface parking. For all that is encouraging about the more widespread adoption of a different leasing model, asset management in outlet retailing is not for the faint-hearted! A high degree of agility and adaptability is needed–the churn of operators is constant; but it is the same churn which helps to keep the choice of brands fresh and relevant and make the model so compelling for brands and customers alike.
As we brave the tough early months of 2021, we will start to emerge from the Covid-19 crisis to discover a retail landscape that has irrevocably changed. In such a new, challenging environment, partnerships between operators and landlords will need to be stronger than ever.