Entertainment has become a cornerstone of the outlet centre business, according to Joey Kaempfer, chairman and founder of the McArthurglen Group.
'When people ask me what we do, I often say I'm in construction but we’re really in the entertainment business,' Kaempfer said during an interview at the annual INREV conference in Vienna on Thursday. 'People need things to do. If you entertain them and if the places are beautiful, they will come.'
McArthurglen saw visitor numbers grow by 12% last year, buoyed by strong tourism numbers, but Kaempfer conceded that the outlet centre business overall is becoming tighter. Our best clients are starting to slow down in terms of how many stores they want.'
Competition is also increasing, he added. 'There are more malls than they want to go to, but many choose us because we offer beautiful properties. There are a few good operators, but the rest will struggle.'
Bullish on own business
For the coming five years, Kaempfer said that he was bullish about prospects for his own business, however. 'A lot of people are competing in the space and there are fewer opportunities. But we're continuing and our people think it's an exciting business. We’re starting to look at things we can buy, to turn them around or turn them upside down.'
While the number of Russian tourists visiting McArthurglen's outlet centres in Europe has declined over the past couple of years, tourism numbers from Asia and the Middle East remain strong, he said. 'I think we will see organic growth over the next five years if we see tourism continue. If it continues, the business will continue to grow, although maybe not at the phenomenal rate of the past few years.'
Beautiful architecture pays off
Architecture also plays a key part in bringing upmarket retailers in, Kaempfer said. 'Many retailers are proud to display their products in these places… What makes this business tick is that it all started to get rid of excess goods. Some retailers prefer to destroy their products than do that, but most retailers find that if they give away goods at a discount, shoppers will come back and buy something for the full price.'
Commenting on the differences between operating in the US and Europe, Kaempfer said it was much easier to get permit approvals in the US. But the flip side is that competition is far more intense than in Europe. 'Outlet centres are more profitable in Europe.'
