Changing consumer behaviour favours Outlet Shopping

Traditional retail continues to be challenging thanks to volatile European economies, but leading European outlet development company, Neinver, reported a 7 per cent increase in visits to its centres this year resulting in a 15% sales uplift, delegates heard at this year’s International Council of Shopping Centres (ICSC) European Outlet Conference in Milan.

Consumers are not ready to give up the increasingly popular pastime of shopping, according to Neinver’s Eduardo Ceballos, who spoke at the conference, but they also don’t want to go to multiple places to shop.

He said: “Outlets deliver on both these accounts, as well as offering the lowest prices on goods.”

Two decades of expansion across Europe has delivered 190 factory outlet centres across the region serving 70% of the European population, and although some markets, such as the UK and Italy are considered to be mature with limited growth potential, significant new development opportunities exist in Germany and Central and Eastern Europe, the conference heard.

Holding back development in Germany, which currently has just six outlets serving a population of over 80 million people, is the country’s restrictive planning regime, which requires developers to secure both federal and regional planning permissions, often a long process with no guarantee of success.  It is estimated that there is potential for a further 20- 30 outlets in the country and currently around plans for around 15 are being considered. However, in France, recent changes in the previously tough planning system have resulted in the success rate for planning applications rising from 45% to 74% since 2008, which should encourage a retail development boost to the country’s struggling economy.

Brendan O’Reilly, Managing Director of Fashion House Group, warned that a the lack of debt finance is hindering growth for outlet developers as well as traditional retail developers, but with growing institutional recognition for the sector when brands seek funding to expand, commercial lenders are demanding that they have an outlet strategy to add a further distribution channel as well as to liquidate old stock.

However, with global investors looking towards Western Europe rather than what it sees as a currently more risky Central and Eastern Europe, the most likely country for outlet investment will be Germany.

The ICSC conference is the largest dedicated outlet conference in Europe with delegate numbers continuing to grow.

Chair of this year’s ICSC European Outlet Conference, Iestyn Roberts of Freeport Retail, said: “The continuing economic downturn favours outlet shopping over traditional retail as outlets continue to make money, but as the point of differentiation with the high street narrows the outlet sector must continue to innovate and attract new shoppers to maintain its role as a great visitor destination.”

He added: “Outlets have always been more innovative than traditional full-price shopping malls and where outlets lead, others will follow.”