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What is an Outlet Centre?: How do outlet centres fit into the retail dynamic? Presented by: Lisa Quier Wagner Presiden

What is an Outlet Centre?: How do outlet centres fit into the retail dynamic? Presented by: Lisa Quier Wagner President, Quier Target Marketing. Lisa Wagner – Quier Target Marketing Started in the outlet centre industry in l988 with McArthur Glen in US – 22 centers opened in 6 years!

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What is an Outlet Centre?: How do outlet centres fit into the retail dynamic? Presented by: Lisa Quier Wagner Presiden

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  1. What is an Outlet Centre?: How do outlet centres fit into the retail dynamic?Presented by:Lisa Quier WagnerPresident, Quier Target Marketing

  2. Lisa Wagner – Quier Target Marketing • Started in the outlet centre industry in l988 with McArthur Glen in US – 22 centers opened in 6 years! • Opened Cheshire Oaks in 1995 with McArthur Glen Europe • Further openings in France, Sweden, Scotland and Germany with McArthur Glen and Outlet Centres International • Over 40 outlet centres in 20 years – and now Bucharest, Romania with Mega Designer Outlets

  3. What is an outlet centre? • A collection of manufacturers’ owned, operated, or licensed stores selling overstocks, excess goods and overruns direct to the public

  4. History of the Outlet Centre Industry • In 1800’s, US apparel and shoe mills began offering excess goods for sale to employees and then public • In 1936, Anderson Litter (menswear) pioneered “Factory to You” disposition centers for overstocks • In l974, the first Multi-Tenant Outlet Mall opened in Reading, Pa in a former apparel mill building • During late l970’s and ‘80’s, outlet centers opened due to: • Consumer desire for status symbol brands • Impact of economy and energy crisis on discretionary income • Pressure on wholesale business resulting in underutilized factory output • Increased overseas manufacturing and long order lead times • Demise of exclusivity arrangements for brands in department stores • Increased financial failures of department and specialty stores

  5. History Continued • During ‘boom’ of 1980’s and ‘90s, outlet centers opened based on: • Non-metropolitan markets/’edge of town’ locations • Sensitivity to retail accounts • High tourist trade • Around 2000, industry compressed through mergers and acquisitions; the industry repositioned more competitively • Recent trends driving US outlet center development: • Consumer demand for quality, value and selection • Recognition that outlet stores could be profit centers rather than simply disposition • Technological advances allowing manufacturers to increase productivity and intentionally overproduce • Growing strength of brands over department stores

  6. Who is the outlet customer? Extensive studies show consistent patterns: • Demographic profile: • Predominantly Women • Average age of 40 • Typically employed; education level of some College+ • Household Incomes $50,000 USD per annum+ (Middle class and above) • Typically living in households with children  • Psychographic profile – Heavy shoppers; early adopters; inquisitive; brand-seekers

  7. Current State of the US Outlet Industry – Very Healthy! • Centers getting closer to city centers   • Village concept gets customers away from cars and into pedestrianized plazas – increases impulse shopping, allows all stores access to customers, greatly enhances dwell time, sales results dramatically increased (98% of new projects are villages)

  8. Current State of the US Outlet Industry – Very Healthy! • Upgraded store ambiance and amenities enhances brand image and loyalty • Few irregulars and overruns; more current season stock • Strong sales patterns with less seasonality • Tourism continues to be strong driver

  9. Industry Snapshot:(As of April 2008, source: ICSC) • Number of US outlet centers: 217  • Total outlet center Gross Leasable Area (GLA): 57 million square feet = approx 17.8 million square meters • Average outlet center GLA: 260,422 sf = approx 81,400 square meters  • Average size of the 20 largest centers in the US: 606,000 sq ft (approx 190,000 sqm) • 74 developers own 217 outlet centers: with the Big Three: Chelsea, Prime and Tanger owning 93 • 44 new centers being planned currently

  10. The Stores are What Make the Centre:(As of Dec, 2007; Source: ICSC) • Total number of outlet chains in US Outlet centres: 305 • Total number of stores: 11,544 • Average outlet chain size: 38 stores • 2008 expansion plans: 348 new stores (66 chains reporting) • 2009 expansion plans: 302 new stores (48 chains reporting) • Number of parent companies operating outlet chains: 261 parent companies • Number of parent companies operating multiple concepts: 51 chains operate 140 concepts totaling 6,337 stores 

  11. The Stores are What Make the Centre:(As of Dec, 2007; Source: ICSC) • TOTAL OUTLET SALES OF OVER $17 Billion USD per annum representing approx 2% of total retail sales in the US economy

  12. Global Expansion • Back-of-factory shops existed throughout Europe for centuries • Proliferation of ‘gray market’ goods and resulting brand damage, combined with success of outlet industry in US prompted European expansion • McArthur Glen Europe opened first ‘American-style’ outlet centre, Cheshire Oaks, in UK in 1995

  13. Global Expansion • Now 117 outlet centers in 22 countries of Europe and UK; total of 24.3 million square feet or 7.5 million sqm • Asian sector accounts for 5.3 million sqf; Turkey has 6 centers, Dubai has a 1 million sqf Dubai Outlet Mall; Australia and New Zealand have 16 total and one in South Africa; South America is developing and BRIC (Brazil/Russia/India/China) is next focus of interest

  14. Global Expansion • Of European centers, 59 companies own 117 of the centers, creating diversity • 20 largest centres total more than 8 million sf; 17% of the centres account for 33% of the GLA  • Developers are planning 28 Phase One outlet schemes totaling nearly 6 million sf (1.8 million square meters) of GLA; 14 expansions to existing projects are planned in the next 2 years

  15. Global Expansion •  In Eastern Europe: • Poland: 6 outlet centres open (pop of 38.5 mil) • Czech Republic: 2 outlet centres open (pop of 10 mil) • Hungary: 2 outlet centres open (pop of 9.9 mil) • Romania: 1 village concept outlet center opening; 1 mall concept (pop of 22 mil) • How many outlet centres could Romania hold? 

  16. Global Expansion

  17. Global Expansion

  18. Global Expansion

  19. Global Expansion

  20. Predictions for outlet centre development in Romania: • The same rules will hold true as in the rest of the world: • Centers will prosper in edge of town locations primarily • If they can see it, they will get to it – visibility to the highway trumps access every time • It takes a village – get customers away from the cars and into an open-air plaza • Critical mass is critical – centres are getting bigger as a result of consumer demand for depth and breadth of offer

  21. Predictions for outlet centre development in Romania: • Tourism will be a driver • A ‘known’ destination is much easier to market • Traditional retail sensitivity is not a threat • Leisure is a complementary aspect – not an essential element • The brand/value equation has to deliver • Romanians are going to love outlet centres – and the outlet industry is going to embrace Romania!

  22. Contact Us:Lisa Quier WagnerPresident, Quier Target Marketing

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