Retail outlet centres have seen a significant leap in retail and leisure brand growth in the past year, according to a newly-released industry report.
Figures announced in the Ken Gunn European Outlet Industry Review (EOIR), produced by long-time respected sector analyst Ken Gunn, calculate turnover for the sector at €21 bn — some 13% higher than 2019 as the last comparable pre-Covid point.
Gunn’s 2023 EOIR reviews the locations of every outlet brand in Europe, combining these with site performance to create rankings for both outlet centres and occupiers.
It found nearly 600 additional brands have appeared on the outlet scene since July 2022.
The report, which is in its 7th year, is the result of studying outlet centres and retail operations in 35 countries and identifying 212 major outlet centres across Europe with a gross lettable area of 4.07 million m2.
Outlet centres remain the stellar performers within retail property sector,’ said Gunn, who has studied the sector for 30 years.
‘Brand growth in outlet sectors in the year to summer 2023 has seen a significant leap with 596 new brands and brand operators having entered outlet centres – taking the sector total to 4,446 brands.’
‘This is the clearest sign yet that the outlet sector is not just robust but in rude health. And it’s not just retail brands – Food & Beverage brands have increased by 9.5% and the number of F&B establishments by 11.3%.’
Levi’s, Guess, and Nike
In Gunn’s 2023 EOIR analysis, Levi’s remains the leading outlet brand by presence with around 135 outlet stores.
Guess is in second place with 129 outlet stores and Adidas in third place with 131 stores but in slightly weaker locations than Guess.
Nike has dropped from 3rd to 4th place following closure of some six outlet stores in Moscow, while Sketchers has added 11 new outlet stores, taking it to 97 European locations and rising 2 places.
Furthermore, Jack & Jones, Puma and Marc O’Polo have been Europe’s most active retail brands in terms of portfolio growth, while Hugo by Hugo Boss has doubled its count of outlet stores.
When it comes to Food & Beverage, Bollicine & Co has expanded its upscale champagne bar operation in the luxury outlet tier across Europe.
Starbucks remains the leading F&B brand in outlets across Europe with 53 locations.
But there remains substantial opportunities to better align F&B propositions to suit the highly refined luxury and designer brand experiences across Europe.
Gunn also sees potential for some sector consolidation. ‘There are only 27 operators in Europe who manage more than one outlet centre. While some of those own a cluster of outlet holdings, many assets are under-managed by “one-trick ponies”, with narrow skill sets and limited negotiating power.’
‘It’s logical to think that investors will attempt to consolidate individually-owned centres and smaller porfolios into larger, strategically managed, value added portfolios in the next few years.’
The report states that top tier sites are highly prized by investors such as La Salle IM, DWS, Nuveen, Aviva and Hammerson, and command substantial values and rarely come to market.
‘So the best opportunities are either through indirect investments in leading sites, acquisition of sites lower down the hierarchy or development of new locations. Given the operational nature of outlet assets, picking those investments with the greatest prospects for success is a challenge for inexperienced investors.’
Despite high interest rates forcing a pause in the development pipeline, Gunn said there was scope for floorspace to rise to 5 million m2 in the future. Parts of Northern and Western Europe lack appropriate upper tier sites; and outlet shopping has still to reach growing economies such as Slovenia or Albania, while Germany and the Nordic region are well below European provision benchmarks.
