Updated: Nov 13
Known for their brand-led offers, outstanding guest experiences and exceptional value, outlet centres have seen a significant leap in retail and leisure brand growth in the past year, according to a newly-released industry report.
Figures just announced in Ken Gunn Consulting's European Outlet Industry Review (EOIR), calculate turnover for the sector at €21bn — some 13% higher than 2019 (the last comparable pre-Covid point).
The report, now in its 7th year, is the most detailed review of brand activity, development trends and trading performance and draws upon experiences from more than 200 consultancy mandates in 35 countries, over nearly 30 years. It is the only sector report that reviews the locations of every outlet brand in Europe, combining these with site performance to create vitality rankings for both outlet centres and the brands themselves.
4.07 million square metres of Gross Lettable Area in 30 countries
The EOIR identifies 212 major outlet centres across Europe with a gross lettable area of 4.07 million square metres. Outlet centres are placed into 5 performance tiers, based on their brand mix and productivity, and ranked according to their critical mass.
Nearly 600 new brands have entered the outlet scene since July 2022
Outlet centres remain the stellar performers within retail property sector. Brand growth in outlet sectors in the year to summer 2023 has seen a significant leap with 596 new brands and brand operators having entered outlet centres – taking the sector total to 4,446 brands. This is the clearest sign yet that the outlet sector is not just robust but in rude health. And it’s not just retail brands – Food & Beverage brands have increased by 9.5% and the number of F&B establishments by 11.3%.
Levi’s remains the leading outlet brand by presence with around 135 outlet stores. Guess is in second place with 129 outlet stores and Adidas in third place, with more stores (131) but some in slightly weaker locations than Guess. Nike has dropped from 3rd to 4th place following closure of some six outlet sto
res in Moscow, while Sketchers has added 11 new outlet stores, taking it to 97 European locations and rising 2 places.
Jack & Jones, Puma and Marc O’Polo have been Europe’s most active retail brands in terms of portfolio growth, while Hugo by Hugo Boss has doubled its count of outlet stores.
When it comes to Food & Beverage, Bollicine & Co has expanded its upscale champagne bar operation in the luxury outlet tier across Europe. Starbucks remains the leading F&B brand in outlets across Europe, with 53 locations. But there remains substantial opportunities to better align F&B propositions to suit the highly refined luxury and designer brand experiences across Europe.
Potential for consolidation and greater growth
There are only 27 operators in Europe who manage more than one outlet centre. While some operate multiple outlet holdings, many assets are under-managed and limited by narrow resources and weaker negotiating power. It’s logical to think that investors will attempt to consolidate individually-owned centres and smaller portfolios into larger, strategically managed, value added portfolios in the next few years.”
Top tier sites are highly prized by investors, command substantial values and rarely come to market. So the best opportunities are either through indirect investments in leading sites, acquisition of sites lower down the hierarchy or development of new locations.
Given the operational nature of outlet assets, picking those investments with the greatest prospects for success is a challenge for inexperienced investors. “New entrants should first seek out those advisers and operators who combine the depth of knowledge necessary to pinpoint winning opportunities, with the entrepreneurial expertise needed to unlock the substantial increases in value, which the outlet sector undoubtedly offers.
Despite high interest rates forcing a pause in the recent development pipeline, there is scope for floorspace to rise to 5 million sqm in the future. Parts of Europe lack an appropriate offer and outlet shopping has still to reach a number of growing economies, while provision in certain more affluent countries is well below the European benchmark.
The report, which includes detailed breakdowns and rankings of outlets by brand mass and quality, is now available at £1,450 + VAT via: https://kengunn.co.uk/#outlet-industry-insight