International Outlets – Looking to the Future

A model that has maintained its appeal during unprecedented times, the outlet market continues to thrive and it has a bright future ahead. Here, RLI provides an overview of the sector before experts in the field offer their views on the industry.

Due to their nature of being largely out of town and open-air, outlet centres and destinations have become more attractive shopping destinations for the general public during the last couple of years and this seems to be continuing as Covid-19 begins to dissipate in certain countries.

According to the most recent Outlet Centre Performance Report (OCPRE) by ecostra GmbH in partnership with the French research institute Magdus, which is considered to be the ‘benchmark’ for the European outlet industry, the outlet operator Value Retail has achieved something truly unique by taking first, second and third place in the rankings.
Gold went to “La Roca Village” in La Roca del Vallés, Spain, north of Barcelona. Silver went to “Kildare Village” in the north of Ireland and bronze to the previous serial winner “Bicester Village” in the British county of Oxfordshire. All three centres were developed and operated by Value Retail.

“This is indeed a very special achievement, which should not be underestimated,” Dr Joachim Will, Head of ecostra commented on this result. “It is well known in the market that Value Retail, in its centres, charges by far the highest rents in the outlet sector. At the same time, the brand manufacturers surveyed now confirm to us that their outlet stores also achieve the best returns there. Obviously, it is worthwhile to operate shops in Value Retail centres despite the high rents.”

The report continues by saying that outlet stores continue to be significantly more profitable for brand manufacturers than their own brand stores in the cities high streets. Here, the survey results of OCPRE have never shown a different picture over the past 14 years.

So as we continue to move through 2022, the future for the outlet industry appears bright and while it has not been dampened by the pandemic, its next steps will be on more-assuredly stronger ground than that of traditional retail and over the next few pages industry experts offer us their thoughts on the outlet sector.

Otto Ambagtsheer, CEO – VIA Outlets

The outlet sector continues to perform robustly through 2022 despite initial concerns around the Omicron variant, the wider political instability from Ukraine, general rises in inflation and of course petrol price rises. Whilst we are seeing signs of these sensitivities in the same way as all retail markets, the sector remains more attractive than full price retail for those shoppers seeking best value for money without compromising on shopper experience or brand choice. As a result, the outlet channel remains an ideal solution for brands and shoppers alike.

Health and safety continues to be at the forefront of everyone’s minds in 2022, and therefore outlet centres – because their predominately open-air design – are in an increasingly good position to attract visitors for days out.
We see the outlet industry being further boosted by the arrival of digitally-native brands – those which have traditionally never had an offline presence and are now using fashion outlets to test a bricks-and-mortar concept. They want to access and engage with a new type of customer in a physical way, and this industry is especially useful for them with the flexible leases we offer.

A trend we see bigger than ever in 2022 is the omni-channel mindset. After various periods of confinement over the past two years, many consumers have become routinely familiar with online shopping, whilst simultaneously desiring ‘real’ in-person experiences. Not only do they now expect the best of both worlds, but they switch quickly and effortlessly between online and offline – which means brands and landlords need to join them in becoming channel agnostic. Additionally, the pandemic has brought about new ways of shopping such as virtual personal shopping via WhatsApp and live-stream shopping, and the personalisation that these channels have offered will need to be translated into shopping in the physical world by utilising data in better and more meaningful ways.

Finally, the S in ESG – Sustainability will grow further as a key differentiator to create an even more positive and regenerative approach to outlet shopping – not just when developing or redeveloping centres but as an integral part of any retail experience. We see an increased engagement with brand partners on sustainability issues will be needed, whether it be shop-fits or brand partners’ own responsible initiatives – as well as the implementation of the CRREM tool to set targets for the reduction of energy consumption and GHG emissions – all in line with what is required from the commercial real estate industry to limit the effects of climate change.

Carlos González, Managing Director – NEINVER

Despite it being hard to gauge a clear outlook in the midst of international conflicts, ongoing supply-chain issues and diminished purchasing power caused by inflation, we remain optimistic about outlet sector performance.
Last year we saw a general rebound in retail and shoppers coming back into stores across our outlet portfolio, drawn by the lure of the outlet proposition and our ability to respond quickly to changes. Despite the challenging year, our outlet business recovered steadily over the course of 2021, reaching pre-Covid-19 figures in H2 2021, and despite the significant challenges we face in 2022, we do not expect momentum in the sector to wane. In fact, rising prices mean that consumers are more value-conscious than ever and are now driven by both price, but also experience, particularly on the back of an extended period of restrictions. The outlet business provides just what the consumer is looking for: an enticing combination of product, price and experience.

Outlet leasing terms and conditions are particularly relevant in the current retail climate and we expect our centres’ commercial offer to remain dynamic, creating an additional incentive for customers. Even as we see some firms becoming more cautious when it comes to their expansion plans, major international brands, as well as strong local ones, continue to open in dominant outlet centres and new brands are using the outlet channel to make their debut in bricks-and-mortar. In terms of brand mix, we are also seeing a greater number of younger-focused brands opening across our portfolio, with some of our schemes increasingly targeting younger shoppers than they used to several years ago.

Covid-19 exacerbated the need for easy access to products and services and up-to-the-minute information, and tech tools will therefore continue to play a defining role in the sector, with digital services and tools such as virtual shopping and loyalty programmes helping centres to adapt to ever more digitally savvy shoppers. While invisible smart tech solutions such as geolocation systems and tracking tools will continue to help analyse consumer behaviour and adapt aspects such as marketing, leasing and facilities management, and support brands’ strategies.

In the coming years, there will be plenty of opportunity for value creation in the outlet sector as schemes adapt to the evolving ESG scenario, keeping ahead of the new sustainability regulations and requirements, whilst also responding to consumer expectations for sustainable and socially conscious shopping experiences.

Giles Membrey, Managing Director – Rioja Estates

First, we had Brexit, then we faced a pandemic, now we have a war on Europe’s doorstep. Hopefully the situation in Ukraine will be resolved soon, but the effects of the conflict will be felt for years, maybe decades, to come. So, what does the future hold for outlets?

Outlets have proven to be very resilient when it comes to the pandemic: domestic tourism has turned them into destinations where, thanks to the easy introduction of social distancing measures, consumers have felt safe. But the situation in Ukraine and the growing spectre of inflation, pose new challenges. A rise in the cost of fuel and raw materials as a result of the current conflict will have an impact on any future developments and, although increased inflation tends to have a positive impact, existing outlets will also have to adapt.

Sustainability is increasingly important for investors and brands. However, sustainable options are often not the cheapest so any increase in fuel, raw materials, or indeed labour costs, will see sustainable alternatives come under the spotlight even more, even if any increase is relative. Developers, funds, and brands should also remember that sustainability is becoming more and more important to consumers, so my advice to them would be that they resist the temptation to value engineer these options out of any future schemes, purely on the grounds of cost, if they want to attract consumers. At Rioja Estates’ new Malmö Designer Village project, as well as looking at sustainable, locally sourced materials, we are also developing one of the first ground source heat pump systems with solar panelling, as well as providing power direct to each unit. Attention needs to be given to operational costs too, so in addition, we are looking at water efficient products across the scheme along with a wide range of sustainable facilities management initiatives such as EV fast charging points.

My feeling is that going forward visits to outlets are
going to become increasingly experiential and this will need to be reflected in every aspect of customer service including accessibility and public transport (especially with rising fuel costs in mind), as well as the recreational, leisure, and food and beverage offers. It is important to create excitement AND experiences for the consumer.

Undoubtedly there are challenges ahead. Rising costs will need to be offset, potentially through higher prices and increased rental revenue as a result of greater sales density, but we should be encouraged. Visitor numbers have been on the up and there is more and more product going into outlets, which is giving consumers more choice. Furthermore, there is an increasing number of investors looking at outlets and more brands coming into the market. If they adapt, then I believe the future looks very bright for outlets.

Matt Slade, Retail Director – Quintain

Historically, outlet centres have far outperformed the wider retail sector – and there is nothing to suggest this upward trajectory is set to falter any time soon.

Even with inflation on the rise – coupled with the cost-of-living crisis – world-renowned flagship brands continue to signal a strong vote of confidence in the outlet model and, in particular, its understanding of relative value.

At London Designer Outlet, for instance, a number of big brands including Nike, adidas, Calvin Klein and Tommy Hilfiger have all significantly expanded their store footprints in recent months. This is evidence of the growing awareness among retailers that the shoppers who frequent outlets, by and large, spend more than they would at a full-price store to take advantage of the greater value.

And while many outlet regulars will sadly see their disposable income ebb over the coming months, an increasingly frugal consumer base will also see an influx of shoppers who ordinarily shop at full-price stores turn to outlets, seeking out better value for money.

Our own continued success also suggests a growing preference by brands to take up space in outlet centres that are strategically located in urban centres, close to public transport connections and residential areas.

Though travel is no longer restricted as it was during the pandemic, Covid-19 has almost certainly left a long-lasting impact on consumer behaviour, highlighting the obvious merits of there being a range of stores and other amenities on your doorstep. Moreover, as petrol prices rocket, the virtues of localism are only set to gain further traction – with concepts like the 15-minute city we are pioneering at Wembley Park, for instance, negating the need to travel long distances to visit restaurants, shops and indeed, outlet centres.

The use of turnover-based rent structures by outlet destinations is appealing to retailers too, now more than ever. This shared risk inspires greater confidence in brands, which appreciate the fact that the landlord has as much of a vested interest in ensuring solid sales performance as they do.

The driving force behind the continued success of the outlet sector will be three-pronged. Not only will it be spurred on by consumers honing in on better value for money, but also brands investing in their stores via upsizes and other enhancements, as well as the growing appeal of turnover-based rent structures to retailers themselves.

Showing Resilience in Difficult Times

A turbulent couple of years have meant that the retail industry has undergone multiple changes in a very short space of time. Despite this, the outlet sector has shown incredible resilience during difficult times with its fresh approaches and innovative tenants. Here, RLI takes a closer look at a selection of projects that highlight why the sector continues to be a beacon of hope for the wider market.

Florentia Village, China’s leading brand of luxury designer outlets under the Italian real estate development group RDM, celebrated its opening in Chongqing, the second Florentia Village in Southwest China after Chengdu back in February last year. Florentia Village Chongqing is the first international outlet brand in the city and the seventh Florentia Village outlet location, following the brand’s counterparts in Tianjin, Shanghai, Guangzhou, Hong Kong, Wuhan, and Chengdu. The total construction area is over 60,000sq m and accommodates more than 100 brand stores. The luxury outlet mall chain, operated by Italian real estate entity RDM, is set to open its first property in Vietnam this year as part of its Southeast Asian expansion plan. The move comes following Florentia Village’s expansion into China over the past year, with the opening of Florentia Village Chongqing. The group is also looking at expanding into Indonesia, with the country acting as the second location for Florentia Village in Southeast Asia.

TORG International has added another project to its outlet portfolio, Tubize Outlet Mall (TOM), in the heart of Belgium, 25minutes South West of Bruxelles. The 15,300sq m outlet will be part of a major mixed use new neighbourhood development, the so-called “Confluents” including residential, leisure and diversified gastronomy. Located on a former industrial site of over 80ha, TOM will benefit from one of the most densely populated catchments in Europe with over seven million people living within an hour as well as an above average purchasing power. It will attract visitors from Flanders, Wallon Brabant and Hainaut. TOM is being created as a convivial and sustainable living space. It will not only include a major leisure attraction on 6,000sq m, but it will also showcase the largest urban green roof in Europe with over 8,000sq m dedicated to gardening. Shoppers will simply need to walk onto the TOM roof, made accessible, to buy their vegetables. With energy self-sufficent buildings, TOM is qualifying for the BREEAM certificate of excellence for sustainably built environments.

Strategically located near the E19 motorway to Antwerp and Mons, TOM is also at the crossroads of Belgian cities like Namur, Liège, Ghant or Ostende or Lille and Roubaix in Northern France. Construction of the entire project is well advanced with an opening planned for late 2023 and it is being developed by Start Concept.

Set to open in 2023, this 27th project of McArthurGlen will be the first and only luxury Designer Outlet to the west of Paris. Located near Monet’s Giverny, one of the most prestigious cultural and tourist sites in France, and just 45 minutes by car from the French capital, their newest Designer Outlet is set to become a key attraction for its fashionable local population and for the 40 million tourists who visit Paris every year. With 20,000sq m of contemporary retail space, the new centre is already attracting interest from brands, with 70 per cent of the 100 available units either leased or in advancec negotiations and the upcoming centre has been thoughtfully designed to bring together international fashion, local culture and artisanal design. The centre will also be home to an artisan village, the Maison des Métiers d’Art, an immersive destination dedicated to promoting and showcasing the very best of Norman and French craftsmanship.

McArthurGlen has partnered with celebrated designer, Mathieu Lehanneur, to create the architectural concept for the space. The Maison des Métiers d’Art has been developed in collaboration with the Chamber of Commerce and Industry (The CCI) and the Chamber of Crafts and Artisanship of the Eure (The CMA).
Construction of the 12,500sq m first phase of Tbilisi Outlet Village, situated 30 minutes outside of the Georgian capital has progressed well since the project celebrated groundbreaking in September 2021. The opening is now set for spring 2023. Being developed by Georgian Outlets & Resort Group (GORG) in close collaboration with TORG International, Tbilisi Outlet Village is aiming to become the number one outlet in Central and Eastern Europe.

Sixty per cent of the space is already leased and these include the signings of many top brands. The first phase will feature 70 units with a second phase planned in the following three years that will mean the outlet will reach a total of 20,000sq m and 110 units. Tbilisi Outlet Village is expected to attract more than seven million visitors in its first three years alone, including a significant number of cross-border travellers from Azerbaijan, Armenia, Russia and Turkey. The outlet’s location is particularly well suited – south-east of the capital, directly on the busy E60 motorway. It benefits from a strong catchment made up of Tbilisi’s 1.4 million people in a country of close to four million people. Financed by the Domus Group with the support of TBC Bank, one of Georgia’s leading banks, it is a strategically important project for Georgia’s national economy, especially in the post-pandemic period.

NEINVER, the leading outlet operator in Spain and Poland and the second-largest operator in Europe, has announced a steady recovery at its outlet business in 2021, particularly during the second half of the year as restrictions began to ease. The company recorded over €909M in brand sales across its 17-centre outlet portfolio, a 24 per cent like-for-like increase on 2020 and welcomed more than 35 million visitors over the course of the year, a 16 per cent like-for-like increase. One of its latest projects, Amsterdam The Style Outlets is a scheme from NEINVER and Nuveen Real Estate that features 115 units and is home to such top international brands as adidas, Bjorn Borg, GUESS, New Balance, Nike, O’Neil, PUMA, Salomon and The Kooples and it is set across 19,000sq m. From its first day of operation, the outlet centre has complied with the ‘Shop Safe, Stay Safe’ guidelines drawn up in collaboration with the inspection and certification organisation SGS, to ensure the safest measures against the spread of the Covid-19 virus.

Fashion Outlet Slovenia is being developed by HG Invest in cooperation with FOC Retail Service GmbH and Outlet Evolution Services. On an area of more than 20,000sq m, 70 shops and several hundred new jobs will be created in two phases. The first phase will be opened in 2023 with phase two scheduled for 2026. The upcoming outlet is set to be positioned directly next to the motorway exit for Šentilj on the Austrian border in the north-east of Slovenia. The development will only be a half hour drive south of Graz, the second largest city of Austria. The village atmosphere that will be created will incorporate modern and typical regional elements of Slovenia construction style and architecture. The tenant mix is targeting an international feel that focuses predominantly on fashion brands. This will then be backed up by offerings in market sectors covering outdoor, shoes & accessories, home and kidswear. Michael Lungkofler, Head of Center Management and Managing Director FOC Retail Service, said: “In combination with up to 20,000sq m of rental space, 1,500 parking lots and up to 70 sports and fashion brands as well as a specially-configured gastronomy concept, the development will be an attractive and unique shopping destination for a full-day or weekend excursion.”

VIA Outlets – Europe’s fastest growing owner-operator of premium fashion outlet destinations – is investing €17.5M in Sevilla Fashion Outlet, its premium outlet destination in Seville, Spain. The outlet will enjoy an extension of 2,680sq m which will create space for 17 major brands to be added to the existing roster of more than 70 stores. With this latest investment, VIA Outlets has invested a total €30M in the centre since acquiring it in 2016. The extension will include the creation of an experiential multipurpose space designed to host meetings, events and cultural happenings, as well as serve to give the entire commercial area a more sophisticated appearance – highlighting the beauty of the local Andalusian architecture and making reference to some of the most iconic elements and characteristic materials from the city of Seville. One of the most striking aesthetic features of the project will be an innovative ventilated façade made from ceramic slats, which utilises a passive natural lighting design to create feelings of spaciousness and comfort. The extension to Sevilla Fashion Outlets has been designed by internationally renowned architects L35, which previously worked amomg others on the remodelling of VIA Outlets’ Freeport Lisboa Fashion Outlet.

In Malmö, Sweden’s third-largest city, Malmö Designer Village, Scandinavia’s largest professional outlet centre specialising in designer brands, is under construction. The first phase of Malmö Designer Village will open in the summer of 2025, while the second phase will be completed by the fall of 2027. The outlet will bring together premium fashion brands and iconic restaurants, seasonal events, and “multi-sensory experiences,” reflecting new trends in the retail market. The outlet is being built by international company Rioja Estates, which opened the new McArthurGlen West Midlands Designer Outlet centre in the UK last year. The total area of the first phase of the new outlet in Malmö will be 18,000sq m. It will include international and unique to the market premium brands. After completing the project’s second phase, its area will reach 27,000sq m. To ensure that the completed project represents the pinnacle of contemporary outlet retail design, it has chosen to partner with experienced outlet architects HMA and award-winning Swedish architects Krook & Tjäder to ensure that Malmö Designer Village pays maximum attention to key design considerations and always remains sympathetic to its surroundings. Rioja Estates is investing €120M into the project as it works towards completion.

When completed, Grantham Designer Outlet Village will be a state-of-the-art retail destination that will transform visitors’ shopping and leisure experience. It will be the UK’s only premium outlet with a visible frontage and direct access from the UK’s 3rd busiest highway (A1). Inspired by the surrounding countryside, its buildings are conceived as traditional forms with contemporary finishes and high-quality shop fronts. Under development by Rioja Estates, the outlet will offer a uniquely stylish retail and leisure experience for shoppers and tourists alike. Phase one will consist of 89 units with an area of 193,680sq ft; phase two will add a further 94,809sq ft and 48 units. A choice of dine-in or grab and go eateries, combined with an array of premium fashion and lifestyle brands along with landscaped areas for relaxation and children’s play, make Grantham Designer Outlet Village the ideal day out destination. Easily accessible by car and public transport, the scheme will also boast a VIP shopping lounge and relaxation areas to offer a premium shopping experience to guests who are members of its loyalty scheme.

Scotch Corner Designer Village is set to be the leading outlet and leisure destination in the north of England and it will serve an affluent shopper profile with a high volume of residents and tourists in a very accessible location in the UK’s number one tourist region outside London. Being developed by Scotch Corner Richmond LLP and set to open in autumn 2023, the scheme comprises 150,000sq ft of retail space and will feature 80 boutiques, restaurants and cafes in phase one. In addition, the site will be home to the UK’s largest Blue Diamond lifestyle, home and garden, which is already fully let and will encompass 160,000sq ft. The scheme is also a leisure destination with extensive landscaping, unique food offering, children’s and adult activities, restaurants and interactive experiences, dog walking and bike riding routes. The investment in Scotch Corner Designer Village is £100M for the first phase and will feature premium brands and restaurants including adidas, Hugo Boss, Skechers, Tommy Hilfiger, Calvin Klein, Joules, Dune London, Five Guys and wagamama.

Springfields Outlet and Leisure goes from strength to strength enjoying 16 years of growth. 2021 weekly sales have consistently delivered double-digit growth up on 2019, culminating in the final week with sales up 19 per cent.

Springfields’ unique mix of retail, leisure and 25 acres of award-winning gardens is the winning formula for retail destinations today. Conceived, developed and asset managed by SLR Outlets for the UBS Triton Property Fund LP, this combination is exactly what guests are looking for. Giving everyone what they want with a perfect shopping experience set in an uplifting healthy green environment. A great mix of sensory experiences coming together to deliver positivity and enhancing visitors’ mental health. The latest offerings include the launch of The Parlour, a superb-quality upmarket restaurant capturing the popular Afternoon Teas market.

“Springfields is an ongoing success story, and we are looking forward to even more growth in 2022 as we get ready to open phase three in spring 2024. We had a vision when we designed Springfields to combine outlet and outdoor family leisure and have improved it every year,” said Ian Sanderson, Director of Springfields Outlet and Leisure and SLR Outlets.

The Boulevard is Northern Ireland’s only premier outlet shopping destination. Situated close to the Republic of Ireland border, it benefits from shopper footfall from Northern Irish capital, Belfast and one of Europe’s most exciting and affluent cities, Dublin, as well as the surrounding areas.

The Boulevard recently welcomed global fashion brand, New Look, to its impressive roster of tenants as it opened its first ever outlet store. Home to more than 50 other brands including Joules, Dune London, Molton Brown, Crew Clothing, Kurt Geiger, Nike, GUESS, Timberland, Jack Wills, as well as an Omniplex and several eateries, The Boulevard is the perfect option for fashionistas and families alike and has cemented its position as one of Ireland’s fastest growing retail destinations since landlords Lotus Property bought it in 2016. In 2022 The Boulevard reached international audiences with the launch of the hotly anticipated HBO Game of Thrones Studio Tour, with the attraction’s Park and Ride facility situated adjacent to the scheme, part of the 360,000sq ft Outlet Park. Attracting upwards of 600,000 visitors per annum, the Game of Thrones attraction has already made a positive impact since launch, with a reported sales increase of 25.9 per cent and Average Transaction Value up 37 per cent compared to the same period in 2020. The Boulevard reported its highest month of sales on record in December 2021 as well as an annual growth in sales of 23 per cent last year, compared to 2019. The Boulevard’s already strong roster of retail brands will soon be further bolstered by the arrival of a 3,000sq m M&S Simply Food and a 4,518sq m The Range which will open on Outlet Park summer 2022.

The Al Khiran Hybrid Outlet Mall in Kuwait is set to meet heightened shopper expectations by offering a combination of high value and dynamic experiences through a mix of premium outlet shopping, curated dining, immersive entertainment, large format events & exhibitions and recreational leisure experiences when it opens this year. The project area is spread over 350,000sq m, the total GLA of the upcoming outlet is 70,000sq m and it will be home to 300 retail stores. Al Khiran Hybrid Outlet Mall is being developed by the Tamdeen Group which has consistently delivered exceptional real estate including the award winning 360 Kuwait and Al Kout with a single-minded purpose; To Build Great Places. In addition to being the first hybrid outlet in the region, the Al Khiran Hybrid Outlet Mall will be the first outlet mall in Kuwait serving a catchment area of 4 million people in addition to the 2.5 million tourists that will be coming by road from Saudi. Al Khiran Hybrid Outlet Mall will soon be the main commercial centre in the South of Kuwait serving as the Central Business District of the area.