How Healthy is the Outlet Centre Industry? Kenneth Sinclair Gunn
Director, FSP Retail Business Consultants June 11, 2015
FSP RETAIL BUSINESS CONSULTANTS
Contents European Outlet Centres Today Current Position Recent Expansion Planned 2015 & 2016 developments Development Cycle and Current Capacity European Occupiers Today Top 25 Occupiers Expanding Occupiers Evolving Markets Consumer Feedback International Brands Communication Conclusions
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June 12, 2015
FSP RETAIL BUSINESS CONSULTANTS
Current Position 201 outlet centres1 >3k m2 Total GLA 3.4million m2 2014 Turnover of €11.7bn 191 are over 5,000m² 161 are over 10,000m² 63 are over 20,000m² Excluding Russia, 72% of the European population lives within 90 minutes’ drive of an outlet centre
http://www.fspretail.com/en/demo/interactive-outlet-centre-map/
1
3
Turkey is considered to be separate from the core European market, and is not included in this review June 12, 2015
Source: FSP FSP RETAIL BUSINESS CONSULTANTS
Operators & Investors Share of Total Turnover Value Retail & Ptnrs: 14%
Value Retail: 15% McArthurGlen: 23%
IRUS: 7% TH Real Estate: 18%
Neinver: 8%
McArthurGlen & Ptnrs: 4%
VIA Outlets: 3%
Realm: 4%
Others: 37%
Blackstone: 3%
Marques Ave.: 4%
Hermes: 3%
Promos: 3%
Resolution: 3%
Freeport: 2% Fashion Hse.: 2% Fashion Dist.: 1% Advantail: 2%
AEW: 3% Unibail Rodamco: 2% Others: 40%
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Outlet Centre Openings in 2014 Country
Location
Name
Format
Location
Format
GLA (m2)
Italy
Brugnato
Shopinn Brugnato
Outlet Village
Edge of Suburbs
Medium - Upscale
22,000
Denmark
Copenhagen
Copenhagen DO
Outlet Mall
Suburban Location
Medium - Midscale
17,500
Poland
Lublin
City Outlet Lublin
Outlet Mall
Edge of Suburbs
Medium - Midscale
12,500
Germany
Bad Munstereifel
Eifel City Outlet
Outlet Village
Town Centre
Medium - Midscale
12,000
United Kingdom
London - Hackney
Hackney Fashion Hub High Street
Edge of Town Centre
Small - Upscale
7,000
Netherlands
Amsterdam
UFO Akerpoort
Minor - Midscale
5,000
Department Store Suburban Location
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Planned Openings in 2015 & 2016 Country
Location
Name
Year
GLA (sqm)
Poland
Bialystok
City Outlet Bialystok
2015
13,000
Denmark
Billund
Billund Quality Outlets
2015
12,000
Germany
Brehna
Fashion Outlet Leipzig
2015
11,500
Germany
Koblenz
Montabaur Fashion Outlet
2015
14,500
France
La Cavalerie
Viaduc Village
2015
5,988
France
Paris (Aubergenville)
Marques Avenue A13
2015
12,900
Czech Republic
Prague
The Prague Outlet
2015
12,000
United Kingdom
Solihull
Resorts World at the NEC
2015
14,362
Russia
St Petersburg
Outlet Village Pulkovo
2015
13,024
Italy
Torino
Torino Outlet Village
2015
19,500
Spain
Barcelona (Viladecans)
Viladecans The Style Outlets
2016
19,800
Italy
Bergamo
San Pellegrino Outlet Village
2016
13,000
France
Marseille (Miramas)
McArthurGlen Provence
2016
16,000
Russia
St Petersburg
Fashion House St Petersburg
2016
13,000
Estonia
Tallinn
Gate Tallinn Outlet
2016
12,500
Finland
Vaalimaa
Zsar Outlet Village
2016
12,000
Russia
Yekaterinburg
Fashion House Yekaterinburg
2016
18,000
Czech Republic
Zdice
Bohemia Outlet Village
2016
16,000 Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Outlet Industry Expansion 350000
Floorspace Added (m²)
300000
250000
200000
150000
100000
50000
0
Central Europe
Northern Europe
Southern Europe
Western Europe Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Capacity for New Outlet Development
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
The Occupier Market
FSP RETAIL BUSINESS CONSULTANTS
The Occupier Market 1,000
40%
Count of Ocupiers
800
30%
700 600
20%
500 400
10%
300 200
% Change 2015 vs. 2014
900
0%
100 0
-10%
2015
Change 2015 vs. 2014 Source: FSP
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June 12, 2015
FSP RETAIL BUSINESS CONSULTANTS
Top 25 Occupiers Retailer
Nike Levi Strauss & Co Puma Adidas Tommy Hilfiger Desigual Guess Tom Tailor Lacoste Calvin Klein Lindt Asics Home & Cook Samsonite Clarks Gant Geox Calvin Klein Underwear Hugo Boss Le Creuset Triumph Villeroy & Boch Timberland Mango Quiksilver
Country of Origin
USA USA Germany Germany USA Spain USA Germany France USA Switzerland Japan France USA UK USA Italy USA Germany France Germany Germany USA Spain USA
Merchandise Category
FISH
Price Position
# Outlet Stores
CE. Europe
Northern Europe
Southern Europe
Western Europe
Leisure Clothing & Footwear Leisure Leisure Clothing & Footwear Clothing & Footwear Clothing & footwear Clothing & Footwear Clothing & Footwear Clothing & Footwear Catering Leisure Household Personal Clothing & Footwear Clothing & Footwear Clothing & Footwear Clothing & Footwear Clothing & Footwear Household Clothing & Footwear Household Clothing & Footwear Clothing & Footwear Clothing & Footwear
YI AS AS AS AI YI AF FS FS AF
Upper Middle Middle Middle Middle Upper Middle Upper Middle Upper Middle Upper Middle Upper Middle Upper Middle Upper Middle Middle Middle Upper Middle Middle Upper Middle Upper Middle Upper Middle Premium Upper Middle Middle Upper Middle Upper Middle Middle Middle
120 112 75 74 71 68 62 62 61 58 57 56 54 53 50 49 48 45 45 44 43 43 42 42 42
20 16 20 21 16 4 11 19 8 3 4 8 12 9 1 9 8 2 2 3 14 5 6 11 10
29 18 3 14 13 1 4 1 12 8 8 11 9 10 29 6 1 11 10 17 5 9 10 1 1
43 37 28 21 22 32 26 4 18 31 25 19 21 17 7 12 22 15 15 4 6 10 20 20 12
28 41 24 18 20 31 21 38 23 19 20 18 24 17 13 22 17 17 20 23 18 19 12 10 19
AI FS AS FS AI FS AF AI AI FS CI AI AI YI
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Top Expanding Occupiers FISH
Price Position
Outlet Centre Portfolio Extent
# New Outlet Stores
CE. Europe
Northern Europe
Southern Europe
Western Europe
Leisure
AI
Middle
Global Brand
19
6
2
8
3
France
Household
FS
Middle
Global Brand
16
5
2
4
5
Guess
USA
Clothing & Footwear
AF
Upper Middle
Global Brand
15
7
1
5
2
Levi Strauss & Co
USA
Clothing & Footwear
AS
Middle
Global Brand
15
3
0
5
7
The Body Shop
UK
Personal
FS
Middle
Super Regional
14
0
5
3
6
Tommy Hilfiger
USA
Clothing & Footwear
AI
Upper Middle
Global Brand
14
4
2
8
0
Fragrance shop, The
UK
Personal
FS
Middle
Local
11
0
11
0
0
The North Face
USA
Leisure
FS
Upper Middle
Global Brand
11
0
4
2
5
Quiksilver
USA
Clothing & Footwear
YI
Middle
Global Brand
11
2
0
4
5
Utd. Colors of Benetton Italy
Clothing & Footwear
AS
Middle
Global Brand
11
1
1
4
5
Desigual
Spain
Clothing & Footwear
YI
Upper Middle Super Regional
10
0
1
3
6
Pepe Jeans
UK
Clothing & Footwear
YI
Upper Middle Super Regional
10
3
0
3
4
Puma
Germany Leisure
AS
Middle
Global Brand
10
2
0
4
4
Superdry
UK
Clothing & Footwear
YF
Middle
Global Brand
10
0
2
1
7
Vans
USA
Clothing & Footwear
YI
Upper Middle
Global Brand
10
1
2
5
2
Villeroy & Boch
Germany Household
CI
Upper Middle
Global Brand
10
0
1
5
4
Watch Station
USA
Personal
AS
Middle
Regional
10
0
5
1
4
Ecco
Denmark Clothing & Footwear
AS
Middle
Global Brand
9
4
2
0
3
Michael Kors
USA
AF
Premium
Global Brand
9
1
1
2
5
Retailer
Country of Origin
Merchandise Category
Asics
Japan
Home & Cook
Clothing & Footwear
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Expanding Occupiers in Key Markets Rank
France
Germany
Italy
Poland
Russia
Spain
United Kingdom
1
The Body Shop (+5)
Michael Kors (+4)
Liu Jo Man (+8)
Bestseller (+6)
Albione (+3)
Charanga (+4)
Fragrance Shop (+11)
2
Levi Strauss & Co (+4)
Superdry (+4)
Tommy Hilfiger (+7)
Asics (+5)
Paper Shop, The (+3)
Skechers (+3)
The Gift Company (+8)
3
L'Oreal (+4)
Wellensteyn (+4)
VB Store (+7)
Italian Fashion (+5)
Charuel (+2)
Asics (+3)
Ernest Jones (+7)
4
Home & Cook (+4)
Coach (+3)
Flavio Castellani (+6)
Mountain Warehouse (+5) Cream della Cream (+2)
Forecast (+3)
Grape Tree (+6)
5
Le Coq Sportif (+4)
Campus (+3)
Kennet Street (+6)
Symbiosis (+5)
Econika (+2)
Benetton (+3)
Watch Station (+5)
6
Little Marcel (+4)
Kneipp (+3)
Asics (+5)
Home & Cook (+4)
Elena Shipilova (+2)
The Body Shop (+2)
Beauty Outlet (+5)
7
Jeff De Bruges (+4)
Lambert (+3)
Vans (+5)
Bialcon (+4)
Just Couture (+2)
Home & Cook (+2)
Musto (+5)
8
Karl Marc John (+4)
Sanetta (+3)
Bottega del Sarto (+5) Prochnik (+4)
Kanz (+2)
Rockport (+2)
Suit Direct (+5)
9
Benetton (+3)
Sterntaler (+3)
Puma (+4)
So! Coffee (+4)
Marc Cain (+2)
Zwilling (+2)
Skechers (+4)
Levi Strauss & Co (+2)
Alberta Ferreti (+4)
Reserved (+3)
Milana (+2)
Adolfo Dominguez (+2) The Body Shop (+4)
10 Puma (+3)
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Evolving Fashion Markets FISH Lifestage Index
Price Position Index
(100 = Existing Regional Provision) 50
70
90
110
130
150
170
(100 = Existing Regional Provision) 190
50
70
90
110
130
150
Young
Luxury / Premium
Assured
Upper Middle
Family
Middle Classic
C.E. Europe
Northern Europe
Southern Europe
Western Europe
C.E. Europe
Northern Europe
Southern Europe
Western Europe Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Consumer Feedback
FSP RETAIL BUSINESS CONSULTANTS
Mixed Customer Reviews “A lot of the shops are shut and what is open are all the same, very little variety” “I went with a friend last week. I found lots of brands that I love: the Kooples, Zadig, American Vintage, Agnes B, Etro, Diesel (super store)“ “This is beyond the ordinary shopping” “It’s a bit like a bazaar for some brands there”
“There are some brands there that just don’t look or feel the right style or quality. It makes me wonder just what their stock is” “The trouble here is that it is always the same. Static and unchanging. You never feel there will be anything new or exciting. It lacks any excitement or thrill of discovery.” “Burberry is awesome at Parndorf. Just bought an insanely beautiful coat discounted from 1300Euro to 237Euro! Super sale - late night - AWESOME! Even without the sale if you are a Burberry fan you should see the store”
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“I used to come for the Reebok, but it closed and the only option was Adidas, but if they closed that then I wouldn’t bother coming at all any more.” “The stores in this outlet offered mostly ugly old stocks nothing interesting with almost no discount. On the previous day we went shopping in an outlet in Germany the same stores offered much better prices and goods” “You will not find Gucci, Prada or Burberry here, but typical Italian brands that are more friendly for your wallet, Guess, Marina Militare and lots of other brands. But you will also find popular brands such as GAP, Calvin Klein and Tommy Hilfiger. I personally love this outlet. It is big, the selection of shops is very diverse” “I went there fairly recently and frankly I was disappointed. I can get the same items at the same price in the sales here and I don’t have to travel that distance. So there really is no incentive for me to go any more” “I often end up cutting my visit short here because I just get too hungry, or tired or thirsty and I go the adjacent mall for lunch and then just stay there.”
FSP RETAIL BUSINESS CONSULTANTS
International Brands
FSP RETAIL BUSINESS CONSULTANTS
Just How International is the European Industry?
Count of Outlet Stores
2500
2000
1500
1000
500
0
International Occupiers
Domestic Occupiers Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Opportunities For International Expansion Actual Count of International Occupiers
400
350
300
IT DE
250 FR AT
200
UK
ES CH
NL
150 PL
PT
100
RU
GR IE
SE
BG
50
RO
DK
UA
NO
LT
0
-
50
100
150
200
250
300
350
400
Predicted Count of International Occupiers Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Which Countries Offer the Right Potential? Key Countries - Occupier Mix by FISH Young
Assured
Family
Classic
Old
France
14%
51%
28%
7%
0%
Germany
13%
51%
21%
15%
0%
Italy
14%
52%
17%
18%
0%
Poland
24%
38%
22%
16%
0%
Russia
9%
60%
16%
15%
0%
Spain
17%
56%
24%
3%
0%
United Kingdom
12%
37%
25%
22%
4%
Europe
16%
48%
22%
13%
1%
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Which Sites Offer the Right Potential? €450
€350 €300
Millions
2014 Turnover (ex VAT)
€400
€250 €200 €150 €100 €50 €0
-
20
40
60
80
100
120
140
Count of International Occupiers Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Which Sites Offer the Right Potential? McArthurGlen Roubaix Old 4% Classic 4%
Family 29%
Old 4% Classic 21%
Family 29% Assured 23%
Classic 20%
Family 27%
Young 15%
Assured 23%
Assured 25% Family 28%
One Nation Paris Old 4%
Young 30%
Old 7% Classic 27%
Family 29%
Marques Ave. A6 (Paris Sud)
Quai des Marques Bordeaux
Young 21%
Young 47%
Assured 16%
Old Classic 4% 14%
Roppenheim The Style Outlets
Young 22%
Assured 27%
L'Usine Channel Outlet
Classic 16%
Family 31%
Old 5%
Young 27%
Assured 21%
Source: FSP
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FSP RETAIL BUSINESS CONSULTANTS
Communication
FSP RETAIL BUSINESS CONSULTANTS
The Prague Outlet Centre The Opportunity for Tommy Hilfiger The Prague Outlet
‘Prague is one of the most beautiful and most visited Capital Cities in Europe. The Prague Outlet offers an outstanding opportunity for Tommy Hilfiger to serve affluent, brand conscious residents and cultural tourists from a highly accessible, well appointed and purpose built outlet centre, located close to the city’s airport’
The Prague Outlet is a 26,000m2, purpose built development, located in the North West suburbs of Prague Highly accessible location – close to Prague Airport and just 2 mins from the city’s orbital highway, convenient access for residents and tourists alike just 25 mins from the city centre Footfall is expected to exceed 2.5m visitors a year Ideal customer base – Residents are typically affluent professionals and tourists with a high spending power Large population within 30 minutes – Prague is the 14th largest city in Europe. 1.1m residents within 30 mins. ranks The Prague Outlet in the top third of Tommy Hilfiger’s outlet portfolio
Catchment area 4.6m residents within 90 minutes The Principal catchment (shown right) contains over 4.1m residents, largely from relatively high income suburbs Shopper spend on FOC goods is estimated at €307m Similar lifestyles to Berlin, Metzingen and Zweibrucken 5.9m tourists in 2013, spending €1bn on retail goods Prague is underserved in terms of quality outlet floor space. While Luxury brands such as Burberry, Dior, Hugo Boss, Hermès, Louis Vuitton Tiffany and Tods operate company stores on Pařížská Street, the fashion offer for affluent shoppers and tourists is relatively weak Source: FSP
24
Prague – Tourism 1200 1000 800 €m
Central Prague is a UNESCO World heritage site Attractions include Prague Castle, Charles Bridge, Old Town Square, Jewish Quarter and Lennon Wall According to MasterCard’s Global Destination Cities Index 2014, Prague is the 9th most visited city in Europe, ahead of Berlin, Madrid and Warsaw In 2013, Prague received 5.9m million visitors a 9% increase on 2012. c5.0m (85%) of these were high spending international tourists 13% of international visitors are German and 11% Russian. Chinese tourists grew 16% year on year In 2013, an estimated €1bn was spent in Prague by tourists on retail goods, with a further €608m on F&B
594
600 400 200
446
0 Tourist Retail Spend Same Day Visitors
Overnight Tourists Source: FSP / Czech Statistic Office
5
1.0
4
0.9
3 0.8
2 1
0.7
0
0.6
Correlation Coefficient
60 Minute Resident Population (M)
Tommy Hilfiger Portfolio – Similar Locations
Source: FSP / MB Research / Gfk
25
The chart shows those outlet centres with Tommy Hilfiger stores which have similar resident lifestyle profiles to The Prague Outlet Prague’s Capital City status means that residents are significantly better off than other parts of the Czech Republic There are strong concentrations of mid scale and wealthy families plus young professionals – ideal customers for Tommy Hilfiger Residents are similar to Berlin, Metzingen and Zweibrucken suggesting that Tommy Hilfiger will be very attractive to shoppers
The chart ranks estimated visitor spend (taking account of competition and tourism) at sites within Tommy Hilfiger’s outlet portfolio Out of 211 trading outlet centres in Europe, The Prague Outlet will rank in the top quartile by potential The Prague Outlet would have similar potential to established Tommy Hilfiger locations including Athens, Metzingen, Neumunster and Wolfsburg
Estimated Market Potential (all visitors) - €m
Tommy Hilfiger Locations – Market Potential 400 350 300 250 200 150 100 50 -
Source: FSP
200 180 160 140 120 100 80 60 40 20 0
1.6 1.2
0.8 0.4 0
Pop per SqM
Purchasing Power Per Sqm (€M)
Population per SqM
Prague – Outlet Capacity
PP per SqM (€) Source: FSP
26
The chart combines outlet centre floor space provision with population and purchasing power (disposable income) within 90 mins of major European Capital Cities to create a simple capacity benchmark for Prague After Prague Outlet (phase 3) opens, the city will still have less outlet floorspace than Rome, Lisbon and Warsaw If Tommy Hilfiger locates at The Prague Outlet it would be the second store in the city – increasing exposure to the market Tommy Hilfiger currently trades in duel locations within Sofia, Warsaw and Moscow, indicating 2 stores in Prague will be sustainable
Conclusions
FSP RETAIL BUSINESS CONSULTANTS
Conclusions 2014 was another good year for European Outlet Centres There are now over 200 trading outlet centres in Europe which encompass a variety of formats, price positions and locations . Sales have grown to â‚Ź11.7bn While there were fewer new developments, the occupier market saw substantial growth The occupier average portfolio remains at 2.8 outlets however, key markets remain highly distinct in terms of occupiers Italy has overtaken the UK as the largest single European occupier market Development activity is focused in Germany and Central/Eastern Europe. There are opportunities to infill under-developed regions including the UK (Midlands/SE), France (Lyon, Provence) and Spain (Catalonia) There is theoretical scope for further development of 50 to 75 new outlet centres across Europe. However, these are increasingly marginal opportunities which require careful study and continuing expansions at established outlet centres will reduce this potential
Opportunities for added value management are challenging however, there are still opportunities to increase sales by 20% at under performing sites. The success of this will be determined by choosing the right sites and recognising consumer opportunities using tools such as FISH
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FSP RETAIL BUSINESS CONSULTANTS
Conclusions It is important not to manage or develop outlet centres to a standardised formula or to assume that market share can easily be won from established sites. Competition is more effective and investors expect stronger performance, delivered over shorter time scales
The most successful centres are increasingly those with strong provision of international brands. These generate ‘recognition’ and differentiate sites from discount high streets Insight is now the essential key to successful development, operational management and increasingly leasing Occupiers have never had more choice. It is essential to use tools such as FISH to ensure a strong match between brands and consumers. Operators must go beyond simple drive times to provide occupiers with ‘more informed’ intelligence on site potential So if health is measured in terms of diversity, scale and growth, the European Outlet Industry is looking well. However, with increasing on-line competition, high street regeneration and new outlet developments, competition is increasing and the point of difference for consumers is less clear. The outlet industry must therefore keep evolving
The key to maintaining competitive advantage is to grow the presence and widen the distribution of international brands. Achieving this will require a combination of multinational operational skills, supportive investment and of course, FSP’s global insight
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FSP RETAIL BUSINESS CONSULTANTS
Merci pour l'écoute
FSP RETAIL BUSINESS CONSULTANTS
Ken Gunn Director
FSP RETAIL BUSINESS CONSULTANTS
T+44(0)1494 474740 M+44(0)7773 779919 F+44(0)1494 474262
19 Manor Courtyard Hughenden Avenue High Wycombe UK, HP13 5RE
Ken@fspretail.com
T +44(0)1494 474740 F +44(0)1494 474262 fspretail@fspretail.com www.fspretail.com www.snap-shop.co.uk