ACROSS: Which projects are in VIA Outlet’s pipeline right now?
OTTO AMBAGTSHEER: Having acquired eleven centers since 2014, we are now focusing on remodeling, with five projects currently underway: We are doing remodeling works in four of our outlet centers, specifically at the Sevilla Fashion Outlet in Spain, at Vila do Conde Porto Fashion Outlet in Portugal, at Zweibrücken Fashion Outlet in Germany and at Wroclaw Fashion Outlet in Poland. The fifth project is the expansion of the Hede Fashion Outlet near Gothenburg in Sweden. The total investment for remodeling thus far has been €125m.
ACROSS: How important is remodeling for VIA Outlets?
AMBAGTSHEER: Remodeling is extremely important for us. Combined with remerchandising and remarketing, it is a core component of our strategy, which is to transform our centres into premium shopping destinations, not only offering the best shopping experiences for guests and brands alike, but the opportunity to enjoy a day out with friends and family, eating, strolling and discovering new brands. We have seen great return on investment from the remodeling works, with remodeled centers reporting double-digit turnover growth in 2018 compared to 2017. This is a very strong track record. It proves that remodeling works–for the brands as well, which is fantastic.
ACROSS: How important are architectural concepts in regards to remodeling?
AMBAGTSHEER: The architecture plays a significant role is remodeling, which is why we work extensively with Stantec, an American architectural agency specialized among others in designing and remodeling outlet centers. Furthermore, we also engage local architects, for example the Spanish company L35 for Seville. Stantec usually develops sketch designs and local architects work on detail designs.
ACROSS: The outlet center business in general grows very dynamically. Can you tell us why?
AMBAGHTSHEER: If you look at the retail industry–for example here at this ICSC event–one sees that the online sector is the fastest growing segment. The second-fastest sector is the outlet segment. At VIA Outlets, we saw a 9.3 percent increase in brand sales and a 3.5 percent increase in footfall in 2018, despite the difficult wider retail market conditions. This is a solid performance and the first reason is that outlet centers are focusing more on the overall guest experience compared to traditional retail. If you go to an outlet center it’s a real day out–it’s much more than discount shopping, which you can find online as well. Discounts are definitely part of the experience–but there is so much more! The overall guest experience also includes the right F&B offer, customer services, and hospitality. But also, the right look and feel–created by remodeling efforts. Outlet operators who are willing to create this overall guest experience will beat the online sector. Online will never be able to offer any kind of experience like outlet centers can.
ACROSS: And what is the second reason?
AMBAGTHSEER: The brand partnerships with retailers are much closer than in shopping centers. We are working extremely closely with brands. I really think these are true brand partnerships. This is also due to the fact that rents include a turnover portion. If the brand is doing well, we do well.
ACROSS: You already mentioned the importance of F&B…
AMBAGTSHEER: Yes, this is why we will increase our current F&B share from below 5 percent to 10 percent. The concrete percentage depends on the respective location, the local culture, as well as local regulations. The offer in some centers is already big enough, we want to upgrade the quality. We are working very hard to achieve the right offer, which is a mix of good local concepts and popular brands like Starbucks.
ACROSS: How important are entertainment concepts?
AMBAGTSHEER: I think that will be the next phase. Fashion is key, since we are talking about premium fashion outlets, but the leisure offering can be complimentary to this. For example, we have a cinema and a go-kart area at the Mallorca Fashion Outlet in Palma. Fashion, F&B, and entertainment could be mutually beneficial to each other.
ACROSS: Your head office is located in London, right?
AMBAGTSHEER: Yes, approximately twenty people work for us in the British capital, primarily our finance team.
ACROSS: In what way will Brexit affect VIA Outlets?
AMBAGTHSEER: As we don’t currently have any outlet centers in the UK, we Brexit won’t have a big impact on us.
VIA Outlets recently started works on the extension of its Hede Fashion Outlet, located in Gothenburg, Western Sweden. The program will add an additional 2,700 sq m to the center, bringing the total to 19,000 sq m, and increase the number of stores by 15, bringing the total number to 75. Images: VIA Outlets