Outlet sector delivers growth and profit

GVA Grimley Outlet Services is a leading player in the Outlet sector and is the only independent, pan-European Outlet practice currently in a position to manage, operate and market Outlet Centres. The European Outlet market started slowly but grew rapidly as the concept was embraced by retailers and consumers. The first European Outlet Centre opened in the UK in 1984. There are currently 145 Outlet Centres across Europe with the potential for another 150 within the EU and a further 150 throughout Europe.

The potential for outlets in Europe
- Sector growing 20-25 percent per annum, over the medium to long term
- Mature tenants seeking new markets
- New entrants seeking an 
outlet strategy
- Institutional funds acquiring most product sold during the last 
18 months
- Outlets counter cyclical marketplace

The UK has reached the saturation point but Southern European countries have an established outlet market with room for growth and the newly emerging markets in Eastern Europe, Russia and the Ukraine offer huge growth potential with strong predictions of high prime yield potential and good prime rents.

The booming marketplace is due to a number of factors including mature tenants seeking new markets, new entrants seeking an outlet strategy to get them into the marketplace, consumers looking for value at a good price and investors and developers creating strong Outlet offers. Interestingly, institutional funds have acquired all products sold during the last two years.

Developers, investors, financial institutions as well as independent bodies look for opportunities to obtain Outlet developments or to include them as an anchor within a larger leisure or destination sites. It is long-term investment with high returns. The financial indicators such as internal rate of return, discounted cash flow or net profit Value show huge potential which is why the demand is growing, especially in Eastern Europe.

What does an outlet need to offer the retailer and the consumer?
The Designer Outlet concept started in the US in the 1970s as a way for manufacturers and brands to sell off surplus stock or previous seasons’ merchandise at 30 – 70 percent below regular retail prices. Manufacturers realised the importance of controlling their brands and the industry grew. Having swept across the US the outlet concept then hit Europe in the 1980s. 

Understanding the consumer and what they are looking for is the key to a successful Outlet. The Outlet shopper profile varies from location to location but on average they are 30 – 55 years old, 65 percent female, visiting 3 – 4 times per year, peak times include weekends and public holidays, they will travel an average of 90 minutes and provide high conversion and spend rates.

Consumers have money to spend within the Outlet sector so it remains in growth despite other economic highs or more importantly lows and more brands are demanding retail space and creating Outlet specific offers. But, currently consumer and retailer demand far outweighs the supply of Outlet centres. With the positive potential for all those involved in the sector and the strong and growing marketplace it really is the age of the Outlet and an opportunity not to be missed.

Brendon O’ Reilly, Director of GVA Grimley Outlet Services says:
‘The Designer Outlet sector is booming across Europe with good returns for investors, an increasing demand from retailers and a growing consumer market as those that strive for quality are looking for it at an affordable price. It has a rosy long-term outlook which 
is impressive when most other areas 
of retail are feeling the pinch’.