The strategic importance of outlet centres increased in 2020
Outlet centres come in a wide variety of formats, sizes and location types. While 2020 was a turbulent year, the annual review of occupiers listed at more than 270 European outlet centre websites reveals that the sector is in a strong position for recovery in 2021.
At the close of 2020, the European outlet industry comprised 6,427 brands, occupying 15,457 stores
The number of occupied stores grew by 1.1% in 2020 however, the number of brands present declined by 0.9%
763 brands either made their debut or returned to the European outlet industry
The average number of outlet stores per brand increased by 1.9%, but is just 2.27
While the presence of fashion brands increased by 1.4%, the industry’s core lifestyle brands expanded by 4.6%
The strategic importance of outlet centres increased for brands in 2020 and this was reflected in the expansions of Boss, Dune London, Karl Lagerfeld, Kate Spade, Lacoste, Levi’s, Maje, Prada and Tommy Hilfiger
Despite the impact of Covid 19, the number of F&B stores increased by 13%
An absence of long-haul tourists led to a 1% dip in occupancy at Tier 1 centres. However, stores at Tier 2 and 3 sites which typically serve large domestic markets, increased by 1.6%
There was a clear difference in the fortunes of enclosed and uncovered outlet centres
Strong management was instrumental in attracting higher quality brands. The most successful operator was Neinver, which increased critical mass by 6%. Retail Outlet Shopping (+5.7%) placed second and Via Outlets (+4.2%) third
Covid 19, political change and structural shifts, combined with diverse maturity and development patterns to produce contrasting national and regional fortunes in 2020.
European Outlet Industry – Occupier Change 2019-20
Source: Ken Gunn Consulting
The number of brands operating in Central Europe grew by 2.1% and the number of occupied stores increased by 2.7% as new outlet centres opened at The Outlet Moscow and Via Jurmala, Riga. Balancing this growth however, the more mature Polish market experienced a noticeable dip, with the number of brands declining by 5.7% and the number of occupied stores by 3.2%.
Western Europe also produced relatively strong growth, with the number of brands increasing by 1% and the number of stores by 3.7%. The Netherlands performed strongly, with Amsterdam The Style Outlets helping to lift the count of brands by 8.9% and the number of occupied stores by 16.4%. Germany also experienced strong growth as conversion of former shopping centres at Marl and Bremerhaven increased the number of outlet brands by 4.2% and the number of stores by 9.2%.
Southern Europe witnessed the greatest reduction in brands (-3.6%) as domestic brands reduced their outlet presence in Italy and Greece. This was partly offset by international brands, which increased their presence in all countries (+1% more stores in Italy), increasing the total number of occupied stores by 0.6%. In Spain this trend was amplified by the openings of Malaga Designer Outlet and La Torre Outlet Zaragoza, increasing the number of occupied stores by 8.4%.
Northern Europe was the weakest region, with the number of brands declining by 2.4% and the number of occupied stores dipping by 2.9%. The United Kingdom ended the year with 2.8% fewer brands and 3.2% fewer occupied stores. 85% of brands which left the United Kingdom’s outlet industry in 2020 were domestic brands, suggesting that the dip was driven by a combination of ongoing structural change plus Covid 19, rather than Brexit related divestment.
763 brands either made their debut or returned to the European outlet industry after a period of absence. These include Hublot, Lazy Jacks, 12 Storeez, Off-White and Christian Louboutin.
Fashion vs Other Categories
Source: Ken Gunn Consulting
In 2020, the number of fashion brands increased by 1.4% to 3,453 and the number of fashion stores increased by 1.5% to 8,533. This contrasts with non-fashion categories which ended the year with 2.8% fewer brands but 0.7% more occupied stores. Fashion outperformed non-fashion merchandise across all regions except Northern Europe, where brands serving the formal wear and family markets continued to restructure in the face of changing consumer demand.
Within the fashion segment, the number of shops occupied by brands which specifically target the outlet industry’s core 25 to 55 year old customers increased by 4.2%. This category accounts for 51% of all fashion brands and recorded positive growth in all regions of Europe. 2020 was therefore a year in which the strategic importance of outlet centres increased for many brands, as illustrated by the expansions of Boss, Dune London, Karl Lagerfeld, Kate Spade, Lacoste, Levi’s, Maje, Next, Prada, Tod’s and Tommy Hilfiger.
The Food & Beverage category has grown in importance, from 7.2% of all outlet industry brands in 2015 to 12.7% of brands in 2020. Since 2017, annual growth has been double digit and this trend continued last year with 16% more brands and 13% more stores across Europe.
The well publicised disappearance of long-haul tourists from early 2020 led to 1.3% fewer brands at Tier 1 outlet centres. Midscale domestic family brands were also badly affected by Covid 19 measures, leaving 2% fewer brands at Tier 4 and 5 centres. However, the strong recovery of domestic markets between lockdowns boosted Tier 2 and 3 sites, which ended 2020 with 1.6% more stores.
Operational management played a key role in maintaining occupancy and attracting higher quality brands in 2020. Across Europe, the most successful operators were Neinver, which increased portfolio critical mass by 6%, Retail Outlet Shopping (+5.7%) and Via Outlets (+4.2%).
The Impact of Design
Source: Ken Gunn Consulting
Circa 37% of European outlet centres are enclosed and with the pandemic leaving consumers wary of crowded indoor spaces, this translated into brand decisions. Throughout 2020 there was a 2.4% reduction in the number of brands at enclosed outlet centres compared to a 3.3% increase at sites with uncovered designs. This trend was repeated in all regions except Western Europe, where a decline of 4.0% in brands at sites with enclosed designs was offset by new outlet stores at two repurposed shopping malls.
Compared to traditional shopping malls, the European outlet industry has responded positively to the challenge of Covid-19. For many brands, outlet centres are now more important than before the pandemic, while the actions of enlightened operators and investors has maintained an attractive proposition for consumers. This was clearly reflected in the strong ‘bounce back’ trading performance which followed last year’s lockdowns.
It is impossible to fight a war without casualties however, with brands increasingly in need of profitable, high growth locations and consumers seeking high quality, great value outdoor experiences, the European outlet industry is in an excellent position to recover strongly in 2021.