• Ken Gunn

Attention Brands

Outlet centres are no longer a ‘no-frills’ vehicle for managing the clearance of unsold stock. Today they are vibrant and attractive destinations which allow brands to drive volume and high margin sales in enhancing environments.


Shoppers typically visit outlet centres between 4 and 8 times a year. As a result, the impact of outlet centres on full price retail centres is negligible. Even in the most developed markets such as Italy, outlet centres account for less than 5% of clothing & footwear sales.


Research by Soysal and Krishnamurthi of Kellogg School of Management in 2016, shows that outlet is an essential part of a brand’s business model. Customers who started shopping at an outlet, increased their annual full price retail store visits for that brand from about 3.5 to 5. Over the course of a year, on average, these customers spent 34% more than they used to spend at the full price store.


The overlap between consumers, between the off price and the full price, is very, very limited. With the off price and the old collection I can talk to a customer that will maybe never come into our full price shops. On those, I can start creating the desire to move to full price.

Marco Bizzarri, Chief Executive Officer, Gucci


In 2019, the European outlet community comprised 7,112 brands, occupying 15,551 outlet stores in 27 countries. Since 2014, the number of brands in the European outlet industry has grown by 15% and the number of stores by 23%. 116 brands have 20 or more stores (compared to 87 in 2017) however, the average portfolio is less than three stores.


Outlet centres offer brands many benefits:


  • New Customers: outlets open the door to new customers who otherwise wouldn’t shop the full price stores

  • Higher Margins: Outlets allow unsold stock to be quickly cleared from full price channels, ensuring a clean, focussed and up to date offer at flagship locations

  • Quality Environment: Outlet stores are as close to full price concepts as possible, preventing brand degradation

  • Reduced Off Price Reliance: Outlet allows complete control of the brand’s image, price and location where the goods will be sold

  • New Market Entry: Retailers can soft test entry into new markets using outlet at much reduced risk compared to full price locations

  • Profitability: Outlets often have lower overheads than full price channels, resulting in EBITDA that exceeds their full price locations by an average of 500 to 700 basis points


In 2019, the European outlet industry comprised 212 major sites with a total gross lettable area of 3.9 million sqm and sales of €18.8bn in 2019. Differences in brand line up, retail mix, site maturity, design, purchasing power and operational approach has created a clear hierarchy of sites, which is reflected in trading performance. Within sites, top brands can achieve sales densities which are 4 to 5 times greater than centre average, so even lower tier sites can present significant opportunities for the right brands


Hierarchy of European Outlet Centres

While the outlet concept works successfully across 27 European countries, the community is highly fragmented:

  • Only 15% of brands operating outlet stores in more than one country so that potential adjacencies in the UK are very different to Italy or Spain

  • Operators and advisors are strongly regionalised

  • Lease terms can be very different between countries and operators

  • Guests can be local, domestic, regional and global but every site is unique

  • Players use different definitions for key concepts such as sales density (ie with or without VAT?, based on trading space or unit area?)

Successfully navigating Europe's outlet centres requires experience, expertise and insight. If you are thinking about joining the outlet community or perhaps need support to grow sales or expand in new territories, Ken Gunn Consulting is your ideal guide:

  • Over 200 outlet studies in 35 countries, totalling 3.5 million sqm

  • 20 years advising investors, developers, operators, consultants and brands

  • Independent, impartial and evidence based advice

  • Unique database of sites, brand locations, catchments and trading performance

  • Understanding of consumers and trading opportunities from the ground up

  • Relevant and achievable advice, always in the best interests of our clients

We love discussing outlet centres, so please do not hesitate to get in touch.


ken@kengunn.co.uk


©2019 by Ken Gunn Consulting