The Growing Importance of Outlet Centres in Luxury Brand Strategy

Outlet retail is often seen as a threat to luxury brand equity. Yet evidence from Europe’s outlet centres suggests the opposite: when carefully managed, outlet stores can strengthen luxury brand strategy rather than weaken it.

Armani store in the luxury quarter at Outletcity Metzingen

For many years, financial analysts have viewed the presence of luxury brands in outlet retail with suspicion. The concern is familiar: too many outlet stores risk diluting brand equity and undermining the exclusivity that luxury brands rely on.

Yet the reality emerging across Europe’s outlet centres suggests a different story. Rather than weakening luxury brands, outlet retail is increasingly becoming a strategic tool within luxury distribution strategies.

The scale of luxury presence in outlet centres remains relatively modest. Excluding affordable luxury and premium segments, 66 luxury brands are currently present at European outlet centres. Together, they operate 379 stores, representing just 2.4% of all outlet units. The presence of luxury brands has grown gradually over time. Store numbers increased sharply during the COVID-19 pandemic but declined again as the European economy recovered.

More Brands, Fewer Stores

The data therefore tells a nuanced story. Luxury brands are not rushing into outlet retail — but they are becoming increasingly selective about how and where they participate. In 2025, there were 5% more luxury brands but 8% fewer stores at European outlet centres than in 2021.

Across the broader clothing and footwear sector, outlet centres now host 2% fewer stores and 5% fewer brands than in 2021. While the number of brands has improved slightly, this has not translated into a proliferation of luxury stores.

Among the leading luxury brands in outlet, only 16 brands operate 10 or more stores in Europe. Armani leads with 33 stores, followed by Dolce & Gabbana (20), Versace (17), Gucci (16), and Roberto Cavalli (16). Overall, however, the average luxury brand operates 5.7 outlet stores, significantly fewer than the typical international brand presence of around 25 outlet locations.

While the count of stores is driven by commercial needs, the presence of luxury brands has slowly increased

Even among the top twenty brands by store count, expansion remains measured. In 2025, seven brands reduced their presence, five expanded, and eight remained unchanged. The net increase of five openings was offset by nine closures, suggesting that luxury brands are adjusting their outlet strategies carefully in response to evolving business needs.

Rather than indicating a dramatic shift in luxury strategy or a widespread dilution of brand equity, these changes point to a gradual and selective move toward outlet centres. In other words, luxury brands are not rushing into outlet retail — they are approaching it cautiously.

Leading Luxury Brands by Store Count

Armani, Dolce & Gabbana and Versace are the leading Luxury Brands at European Outlet Centres

A Generational Shift in Outlet Shoppers

The generational profile of outlet shoppers has also evolved.

When the European outlet sector was first established, customers were predominantly from the Baby Boomer and Generation X cohorts — generations characterized by strong brand loyalty and a preference for in-store shopping. For these consumers, the combination of prestigious brands and attractive value was compelling.

Today, the generational balance is shifting toward Millennials and Generation Z. These consumers are digital-first and socially conscious, but they also appreciate quality and exceptional value. Their shopping behavior is more omnichannel, but physical retail environments that offer experience, convenience, and discovery remain highly relevant. For luxury brands, this makes outlet destinations particularly attractive.

Leading Outlet Centres by Presence of Luxury Brands

Bicester Village is the leading European outlet destination for luxury brands

Luxury Discounting Goes Mainstream

The growth of online retail has significantly disrupted traditional luxury shopping patterns. Research by Bain & Company and Fondazione Altagamma shows that 40% of luxury goods are now sold at a discount, while 21% of luxury goods turnover occurs online.

Rather than representing a threat, this shift suggests that outlet centres align well with contemporary luxury consumption patterns. Outlet destinations offer high spend per visit, extended dwell times, and relaxed guests — often in “tourist mode”— conditions in which luxury brands tend to perform particularly well.

Prada store at Bicester Village, Europe's leading outlet destination for luxury brands

Why Expansion Remains Limited

While the outlook for luxury outlet retail is positive, several structural constraints limit rapid expansion.

First, 76% of established luxury stores are located in Europe’s 18 Tier-1 outlet centres. These destinations account for only 15% of all outlet stores, yet they achieve nearly three times the sector’s average sales density. As a result, occupancy levels are extremely high and opportunities to add further retail space are limited.

Approximately 20% of luxury stores are located at Tier-2 and Tier-3 centres, which theoretically offer greater capacity for expansion and potentially more competitive lease terms. However, these locations may lack the quality of environment, adjacency brands, sales density, or operational expertise required to support luxury retail effectively.

Securing luxury brands in these locations often requires substantial investment—and there is no guarantee of long-term tenancy. For example, of the seven outlet stores Prada opened in 2020, five had closed by mid-2023.

For investors and operators, this highlights the importance of approaching luxury leasing strategies with careful financial discipline rather than purely aspirational positioning.

The Structural Limits of Outlet Growth

Another longstanding assumption within the outlet sector concerns the ratio of full-price stores required to generate sufficient outlet inventory. Historically, this ratio has been estimated at 10–15 full-price stores for every outlet location, and it is often assumed that luxury brands require an even higher count of flagships due to their more selective distribution.

Prada provides a useful benchmark: with 209 full-price stores and 13 outlet stores in Europe, it maintains a ratio of roughly 16:1. However, several luxury brands operate with one outlet store for fewer than ten full-price stores.

This does not necessarily indicate significant room for further outlet expansion without a broader shift in brand strategy. It may also help explain why financial analysts sometimes raise concerns—particularly when they fail to recognize the positive role that outlet stores can play within a balanced luxury distribution strategy.

A Controlled Channel for Luxury Brands

Both the outlet sector and luxury brands face structural constraints that naturally limit overexpansion. These constraints make it unlikely that luxury outlet presence will ever grow dramatically or uncontrollably.

Luxury brands and outlet operators therefore share a common challenge: balancing exclusivity with accessibility. Structural constraints within both sectors naturally limit overexpansion and prevent overexposure. The outlet channel is therefore becoming more strategic — not less.

For this reason, the growing presence of luxury brands in outlet centres is unlikely to become a flood. Instead, it is more likely to remain a carefully managed channel — one that allows luxury brands to reach new customers while protecting the prestige that defines them.

This blog was originally published as an article in Across Magazine. To view the original please follow the link