According to Mike Ashley, the UK high street is “already dead”. By contrast outlet shopping continues to grow as the go-to shopping destination for modern consumers, so what the wider retail sector can learn from outlet shopping centres in 2019?
In days gone by, a visit to a retail outlet for many consisted of a long drive to an out-of-town shopping park which promised high fashion trends at affordable prices. But the reality for some was that they often found themselves in a soulless, dated factory outlet selling items that they had already seen in shops before.
Historically, outlet stores solved the problem of leftover stock in a world of fast fashion, but today, Outlet Centres are becoming an important part of both investors’ and retailers’ development strategies, with retailers taking a three-pronged approach to their market offering, embracing full price stores, online and now outlet.
Outlet leasing terms are particularly relevant in the current retail climate as they allow more flexible terms and shorter lease lengths to retailers and, by design, enable landlords and retailers to share sales success through a turnover lease structure which facilitates a significantly reduced starting rent for retailers. This structure enables Outlet Shopping to offer an alternative to landlord inflexibility and respite from the over-renting situation prevalent on the UK High Street, which Mike Ashley was commenting on at the select committee.
Find out more - Ashley attacks “prehistoric rents” and calls for online tax
Our Lifestyle Outlets at Gloucester, Manchester and soon to be Glasgow are creating a new type of elevated shopping experience. They contain an exciting hybrid of retail products consumers can’t buy online, a range of leisure attractions for families and are underpinned by a strong mix of food and beverage operators. Gone are the days when outlet stores are an afterthought. Now, some retailers are even producing outlet-specific products to differentiate from their high street and online counterparts.
Today, the UK retail market is made up of an ever-growing proportion of higher-end outlets. So, what are the key drivers behind the growing success of retail outlet centres in the UK?
Lifestyle Outlets offer consumers a perfectly-balanced combination of exciting leisure and entertainment with a strong retail pull. The inclusion of leisure in the make-up of a retail outlet is key to encouraging footfall to a development and is vital in defining a centre as a destination.
Online shopping has gone a long way in increasing the expectations of consumers, who, with the click of a button, can shop all year round at discounted prices rather than wait until the traditional sales periods to find what they want. Experience-led outlets are offering this in a tangible form that isn’t possible online, combining the ease and value of the internet with the engagement and inspiration of physical stores.
They are a relatively new approach and are distinctly different from the shopping centres found across the country, offering similar stores and services no matter which one you choose to visit. Unlike larger shopping centres which are often found in the outskirts of major cities, retail outlets are taking space in the city’s core and on redeveloped urban sites that may previously have laid vacant for years.
They may tend to be based in urban or city centre locations, but high-end outlets are also a different experience from the high street, which has had its own challenges as consumers turn to online shopping and rents continue to rise.
The high street’s traditional settings can’t always adapt to the changing needs of consumers, but new retail outlet developments, such as Gloucester Quays Lifestyle Outlet, are providing retailers with a blank canvas enabling them to create dynamic leisure experiences to meet the needs of the modern-day shopper.
Despite their central location, high streets aren’t always as well-connected as retail outlets, which are easily accessible to a large number of consumers with strong transport links and parking.
Over the coming months, investor appetite for outlets is only set to grow as capital values continue to outperform the wider market. In the year to June 2018, outlet malls witnessed an 8.8% increase in capital values as opposed to a fall of 0.3% in traditional shopping centres. Similarly, outlet mall rental income grew by 8.1%, compared to a fall of 0.2% in traditional centres, according to research from Cushman & Wakefield.
Shopping is no longer an act of necessity, but rather, it has evolved to become a major, multichannel leisure activity for which retail outlets are and will continue to provide the perfect destination.
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