With consumers arguably seeking out bargains more eagerly than ever before and retailers particularly conscious of stock levels and supply chain efficiency in these austere times, it is perhaps no surprise that UK designer outlet shopping is on the rise.
For years, renowned high street retailers such as Next and Marks & Spencer have used outlet shopping centres to shift out-of-season stock for up to 60 per cent off the recommended retail price, but a growing number of new brands have joined them by opening stores in these locations throughout 2011.
Reiss and Fiorelli each unveiled their inaugural outlet stores at sites owned by sector specialist McArthurGlen earlier this year, adding to recognisable retail names such as Adidas, Calvin Klein and Burberry which have all worked with the property firm for some time already.
The latest retailer to stride onto McArthurGlen’s cut-price catwalk is Parisian clothing brand The Kooples, which launched its first venture into the designer outlet retail market on Wednesday (December 21st) with a store opening in the real estate developer’s York Designer Outlet.
Having only arrived in the UK towards the end of 2010 and with just seven standalone stores to its name on this side of the English Channel, the early move into outlet shopping shows the high regard in which new businesses to these shores hold for this type of retail.
McArthurGlen’s Northern Europe Managing Director (MD) Henrik Madsen told Retail Gazette that, although not an option for some retailers, designer outlets are becoming a popular part of the artillery for many traders gunning for success in an increasingly tough industry.
“As well as The Kooples, Jaeger has just opened at out our Ashford outlet centre in Kent,” he explained.
“McArthurGlen tenants range from great high street multiples to niche brands and luxury retailers.
“It is certainly a concept that has become much more accepted among brands, as companies look at it as a way of complementing their traditional business and opening new distribution channels.
“Financing has become more important. In the past, if you had a few million pounds worth of stock in the warehouse it didn’t matter – it really matters today.”
The Kooples views the York Designer Outlet as a platform to increase sales, and the company said this week it chose to lease space because of the 3.5 million local shoppers and tourists who visit the destination each year.
It also acknowledged that brand adjacency – The Kooples is positioned alongside Aquascutum, Gieves & Hawkes and LK Bennett at the York centre – was a major factor behind its decision to open at this particular site.
Individual retailer concerns aside, Madsen believes the increasing popularity of outlets lies in their relevance to the modern retail landscape.
“With the current climate so volatile it is more difficult to judge how things will be month-to-month, therefore they could see certain seasons not being as good as they should be, leading to extra stock,” he explained.
“There is a financial pressure in households across the UK and it does appear they are trying to shop a bit smarter, which involves coming to our centres.”
In this role as Northern Europe MD, Madsen holds responsibility for the performance of seven UK outlet centres, as well as the company’s designer outlet villages in Austria, Germany and the Netherlands.
In total, the company has 20 outlets across Europe, but despite uncertainty surrounding the future of the eurozone at present, it retains ambitious plans for further development in the new year and beyond, with Germany currently offering “a huge opportunity” due to its relatively immature outlet shopping market but sizeable population.
McArthurGlen holds a 21 per cent share of the European outlet shopping market, and this is set to grow with the opening of the group’s 21st outlet in Neumünster near Hamburg, Germany in autumn 2012.
In addition, two new designer outlets in France are at the planning stage, while expansions to six of its existing centres across Europe, including Veneto, near Venice in Italy, are on the agenda.
According to the MD, the UK has space for one or two more outlets, although there are no new development plans on the horizon in this country.
“In the UK, outlet shopping is quite an accepted phenomenon,” Madsen stated.
“Our model is based on minimum rent, but turnover top-up. All the time we try and offer favourable payment terms.
“The better a retailer performs the better for everyone. Ensuring the marriage between brand and consumer works is a very big piece of what we do.”
With many high street retailers approaching next week’s quarterly rent day with about as much excitement as a turkey shows at this time of year, there is an argument that the wider retail property sector should show similar flexibility in rent negotiations to help prevent the stuffing being knocked out of businesses in the new year.
That is not Madsen’s major concern, however. While the high street is set to change beyond all recognition in the next ten years for a plethora of reasons, the Scandinavian is focused on developing an already-thriving, low-cost, out-of-town retail operation.
Prior to joining McArthurGlen in September 2007 as Regional Director for the UK, he held a number of positions within the fashion industry, including Senior Vice President at Kenneth Cole and senior roles at IPI SpA and French Connection, but instead of fighting the cause of one specific brand the MD is now focused on the sector as a collective.
“We work with every brand, talking about whether the demographic is right for them, price points, stock selection and exactly what they are trying to get out of it,” he said.
“We are in an environment where we are probably becoming more relevant to the consumer and the brand.”
More new names have been lined up to be added to the list of McArthurGlen’s fashion brand leases by next spring, although Madsen wants the names kept under wraps for now.
These arrivals alongside The Kooples, combined with the expected continuing need of consumers to shop for a bargain, should ensure that McArthurGlen and designer outlet shopping remain a la mode in the eyes of the British public for some time yet.