Nick Brady believes McArthurGlen’s latest outlet centre in the West Midlands has already become one of its “strongest performers” – even after it endured challenges to get there.
“The centre was built amidst the chaos of Brexit, a recession, and the Covid-19 pandemic,” he told Retail Gazette.
McArthurGlen officially opened the first phase of its brand new designer outlet centre in mid-April, located just 30 minutes north of Birmingham. Part of a £160 million investment, the site is poised to be the only stand-alone shopping centre to open in the UK this year.
McArthurGlen Designer Outlet West Midlands also marks the firm’s first UK opening in over 20 years and will span 285,000sq ft once fully open, create 1000 new jobs, and support around £20 million of employment income each year.
The group is in the process of building a centre in the west of Paris as part of its wider expansion plans, which is due to open in the fourth quarter next year. It is also working on a new extension in Italy, as well as several others across the rest of Europe.
Since non-essential retailers were allowed to reopen in England and Wales from April 12, Brady said the West Midlands centre was 145 per cent ahead of footfall expectations and was 70 per cent leased with “strong retailers” – such as Kate Spade, Hugo Boss, Tommy Hilfiger and Calvin Klein.
He told Retail Gazette that there was evidently a pent-up demand for bricks-and-mortar as people were happy to return to stores.
“Whether they were queuing or not, people were happy with the brand mix in the environment. The feedback we received has been very positive,” the managing director of leasing said.
With regard to McArthurGlen’s other centres, Brady witnessed a consistent performance since reopening with a “strong bounce back in footfall”.
“The bounce back in the UK has been stronger from what we saw after lockdown one,” he said.
“It just shows the resilience of physical retail as well as the demand for the outlet market.”
Brady said McArthurGlen’s centres had to quickly to implement hygiene measures during the reopening after the first lockdowns last year, and were now “safe” and “clean”.
“The safety and cleanliness of our centres was of paramount importance,” he said.
Despite the rise of online retail, Brady is confident that physical retail is still in demand and that retailers should sell at every point they can – whether that’s online, full price, wholesale, or outlet.
He said the outlet sector was a “strong part of the omnichannel piece” for the retailer and offers them a “great opportunity to showcase” in their environment.
“What we’ve seen over the past two weeks with the reopenings is that people still want to shop,” Brady explained.
“We like any business have been closed over long periods, but we have performed well through reopening, we’ve performed well in our third quarter and our fourth quarter.
“We obviously haven’t performed as well as 2019, but last year was still quite a positive year for us. Not only at a transactional level, but also from my perspective in the leasing, and how we fared relative to occupancy and attracting new brands.”
In the UK, the occupancy rate for McArthurGlen’s outlet centres is currently around 93 per cent, which according to Brady is decent considering recent high street statistics.
The latest vacancy monitor from the BRC and Local Data Company revealed that 13.7 per cent of all shops in the UK were empty during the quarter to the end of December. Vacancy levels jumped from 13.2 per cent in the previous three-month period, as the monitor reported the 10th consecutive quarter of rising vacancies. Shopping centres saw a particular surge in shuttered stores, as the vacancy rate jumped to 17.1 per cent from 16.3 per cent in the third quarter.
Brady said he was “encouraged” by the occupancy levels across McArthurGlen’s portfolio in the UK and across mainland Europe.
Despite CVAs and insolvencies, the outlet centres still have high occupancy rates and turnover-based rent is a big part of McArthurGlen’s business model, which is more akin to what the retailers are looking for.
“Based on where we are with occupancy levels, and the model that we have – which is that relationship with regard to turnover, it means that we have a more robust business option for the retailers to look at,” Brady said.
“It’s not fully fixed base rent – which usually doesn’t present an opportunity for retailers to perform well.”
Furthermore, Brady noticed a trend in which there has been a spending increase since reopening.
“People have saved-up money in their pockets and are willing to spend it. The fact that we have a Marks & Spencer store and a Huge Boss store under one roof is incentive for people to come to us,” he said.
“The customer experience is ultimately key for us”
“We’ve seen that over the years, our dwell time has increased a lot. If customers didn’t like our offerings, they wouldn’t stay as long.
“The customer experience is ultimately key for us.”
Brady was previously the regional leasing director for McArthurGlen Group, a role he took up when joined in 2007, before being promoted to his current role in August last year.
“I’ve been here for 14 years and I’ve always worked in the leasing team,” he recalled.
“Although I started off as the leasing manager for some of the centres in the UK, I also brought in my experience as regional director working in both the UK and across our European markets as well.”
Brady said that throughout his career, he learnt that the outlet sector was a strong one.
“A lot of my work consists of working with our brand partners to grow them within our portfolio,” he explained.
Another part of Brady’s work includes working with retailers on McArthurGlen’s expansion plans.
“We have a business partnership relationship with our retailers so we’ll sit down and talk about where their strong markets are and where they would like to focus on,” he said.
Brady added that Covid-19 has been the main challenge for McArthurGlen Group in the past year and the challenge now is having to sustain the bounce back in footfall since reopening.
“We’ve set ourselves a high bar,” he laughed.
“The continual challenge that we’ll have is opening new centres – which are challenges we are up for because we know the demand is there.
“We’re always looking at opportunities. The real focus for us throughout the rest of this year is to get our 26 centres reopened.”