"Get Real and start talking", says Outlet Centre Experts

More than 150 people from 28 countries across three continents attended the second International Council of Shopping Centers (ICSC) Outlet Conference held in London last week.

The continuing evolution of this specialist retail sector was apparent as delegates expressed widely differing views on issues such as centre branding and joint working.

The emerging outlet centre industry should learn from the US where developers and retailers took years before they began working together, according to David Ober, of US company PA Outlets Management Services, who has been working in the industry since the early 1990s.

He said: “If retailers and developers don’t build good working relationships the only people that will benefit will be the third parties, the go-betweens, who get your money but don’t give a whole lot back.”

Ober pointed out the greatest successes occurred in the US when joint working occurred, and developers and retailers showed ‘the knee, not just the ankle’, during discussions and negotiations. He also warned that if the industry doesn’t talk, failures will come.

“Too many centres are proposed in Europe and some will fail, like they failed in the US when retailers got too greedy and developers were too afraid to allow the retailers to get together. Only developers who have a weak design and strategy should be afraid. The lenders already know everything because they are lending to both developers and retailers – so you might as well share the information with each other.”

Across Europe, with its population of 459 million people in the EU-25 countries, 142 factory outlet centres are trading with a further 34 proposed to open within the next 12-18 months, according to figures announced by Brendon O’Reilly at outlet services company GVA Grimley.

As borders across Europe open up, allowing migrants to flow more freely between countries, the factory outlet centre concept is quickly taking hold in more countries as these ‘new Europeans’ become increasingly brand-aware.

“With Polish workers moving to the UK and other Western European countries for employment, the country they leave behind has opened its borders up to workers from The Ukraine who are now discovering for themselves the delights of brand shopping in the new Polish factory outlet centres,” said O’Reilly.

“Whilst not strictly speaking in Europe, The Ukraine still has huge potential for European developers which they are beginning to acknowledge,” he added. “Surprisingly, with a population of over 58 million, many of whom are hugely aspirational, there are currently no factory outlet centres open here, although two are proposed.”

However some countries are reaching saturation point for outlet centres. The UK has 48 factory outlet centres with one more at Gloucester Quays due to open in early 2009, but all is not doom and gloom for this retail sector in Western Europe as new retailers begin to look at their competitors already trading successfully through factory outlet centres and begin to want a piece of the action for themselves.

O’Reilly highlighted apparel retailers Fat Face and Tula and UK department store brand John Lewis who are all now establishing stores in factory outlet centres.

In Western Europe, he reported that the nation of brand-shoppers which is Italy has room for growth. Currently in this country there are 17 outlet centres with three more proposed in a population of 58.5 million. In Ireland, too, where despite a population of just 4 million the number of people with a significantly high disposable income indicates expansion potential.

However, the jewel in the crown of opportunities, according to O’Reilly is Germany. Despite a challenging planning regime, the recent relaxations in the country’s Sunday trading laws have heralded an upsurge in development interest. Currently Germany has just five outlet centres with five proposed in a country which has a population of over 82 million.

O’Reilly also highlighted a 25% growth in the number of recent transactions in European factory outlet centres by predominantly institutional funding.

Ober presented a vision of a vibrant outlet centre market in the US, where every one of its top 30 centres is in expansion mode with US retailers looking for more opportunities.

The Asian outlet centre industry is following the massive development of shopping centres in the region as nine outlet centres have opened offering in China, Japan and Korea totalling 5.3 million square feet.

With six centres in Turkey, one in Dubai and 16 in Australia, New Zealand and South Africa, the factory outlet centre is now a truly global phenomenon.