Outlet Centre Research | 2014 | Retail Consultancy

FSP RETAIL BUSINESS CONSULTANTS

Occupiers: Selling the Future Kenneth S. Gunn, FSP Retail Business Consultants

Occupiers: Selling the Future European Outlet Centres – Current Position

Recent developments

European Occupiers Today

Looking Ahead

Planned 2014 & 2015 developments

Improving Location Decision Making

Conclusions

April 7, 2014 FSP RETAIL BUSINESS CONSULTANTS 2

Current Position

FSP RETAIL BUSINESS CONSULTANTS April 7, 2014 3

1 Turkey is considered to be separate from the core European market, and is not included in this review

http://www.fspretail.com/en/demo/interactive-outlet-centre-map/

194 Outlet Centres1 >3,000m² Total GLA 3.3million m² Turnover of €10.8bn 185 are over 5,000m² 156 are over 10,000m² 66 are over 20,000m² Excluding Russia, 70% of the European population (controlling 73% of total purchasing power) lives within 90 minutes’ drive of an outlet centre

Source: FSP









Openings in 2013


Country Location Name Year GLA (sqm) Format

United Kingdom Croydon Croydon Village Outlet 2013 39,400 Department Store

Ukraine Kiev Manufactura Kiev 2013 25,000 Outlet Village

France Paris One Nation Paris 2013 20,000 Outlet Mall

Russia Moscow Fashion House Moscow 2013 15,724 Outlet Mall

United Kingdom London London Designer Outlet 2013 16,000 Outlet Mall

Russia Moscow Vnukovo Outlet Village 2013 26,252 Outlet Village

Poland Warsaw Factory Annopol 2013 19,700 Outlet Mall

Slovakia Bratislava One Fashion Outlet 2013 15,000 Outlet Village

Spain La Jonquera Gran Jonquera Outlet & Shopping 2013 12,000 Outlet Mall

Source: FSP

Historic Expansion


0

50000

100000

150000

200000

250000

300000

350000

Floo

rspa

ce A

dded

(m²)

C. E. Europe Northern Europe Southern Europe Western Europe

Source: FSP

Current Position – Development Capacity


Source: FSP


The Occupier Market

FISH: FSP’s Classification of Fashion Brands


Fashionable – Demonstrates fashionability

Individual – demonstrates taste beyond transitory fashion

Safe – ‘value for money’ merchandise with good enough performance

Homely – Items are bought purely for replacement. Price is important for goods whose main attribute is utility

Young – peer pressure to conform is strong and fashion is a powerful identifying statement

Assured– able to make up own mind and sophisticated in choice

Family – dominated by the financial considerations of running the home and caring for the family

Classic – typically Post-Family. Many similarities with Assured but less self confidence about the ‘rightness’ of purchase decisions

Old – ‘given up’. Not seeking to make a statement about themselves through their purchases

8% 6% 3%

9% 26% 12%

1% 21%

6% 6%

1%

8% Source: FSP Indicates the percentage split of all European Outlet Centre fashion brands in each FISH Segment

Top 25 Occupiers by Portfolio


Retailer Country of Origin

Merchandise Category FISH Price Position # Outlet

Stores CE.

Europe Northern Europe

Southern Europe

Western Europe

Nike USA Leisure YI Upper Middle 114 19 31 39 25 Levi Strauss & Co USA Clothing & Footwear AS Middle 105 16 17 34 38 Puma Germany Leisure AS Middle 77 19 7 29 22 Adidas Germany Leisure AS Middle 74 21 16 21 16 Calvin Klein USA Clothing & Footwear AF Upper Middle 69 2 7 35 25 Desigual Spain Clothing & Footwear YI Upper Middle 62 4 0 31 27 Lacoste France Clothing & Footwear FS Upper Middle 60 12 12 15 21 Tommy Hilfiger USA Clothing & Footwear AI Upper Middle 60 14 11 16 19 Home & Cook France Household Middle 56 7 8 18 23 Tom Tailor Germany Clothing & Footwear FS Upper Middle 54 15 1 4 34 Lindt Switzerland Catering Upper Middle 52 4 6 23 19 Samsonite USA Personal Upper Middle 52 7 10 17 18 Guess USA Clothing & Footwear AF Upper Middle 50 5 3 21 21 Calvin Klein Underwear USA Clothing & Footwear AF Upper Middle 49 1 12 18 18 Gant USA Clothing & Footwear AI Upper Middle 47 9 4 13 21 Hugo Boss Germany Clothing & Footwear AI Luxury 46 1 10 13 22 Geox Italy Clothing & Footwear AI Upper Middle 45 7 0 20 18

Clarks UK Clothing & Footwear FS Middle 44 0 27 7 10

Reebok UK Leisure AS Middle 44 14 7 14 9 Timberland USA Clothing & Footwear AI Upper Middle 44 4 10 19 11 Le Creuset France Household Upper Middle 43 3 16 3 21 Triumph Germany Clothing & Footwear FS Middle 42 11 4 9 18 Mango Spain Clothing & Footwear AI Middle 41 13 1 17 10 Benetton Italy Clothing & Footwear AS Middle 41 11 1 22 7 Villeroy & Boch Germany Household Upper Middle 40 5 12 6 17

Source: FSP

Top 25 Expanding Occupiers


Retailer Country of Origin

Merchandise Category FISH Price

Position # Outlet Stores

# New Outlet Stores

CE. Europe

Northern Europe

Southern Europe

Western Europe

Levi's USA Clothing & Footwear AS Middle 105 20 4 1 7 8 Sunglass Hut Italy Personal AI Premium 18 17 0 7 9 1 Asics Japan Leisure AI Middle 39 16 1 6 4 5 Geox Italy Clothing & Footwear AI Upper Middle 45 14 2 0 7 5 Puma Germany Leisure AS Middle 77 12 3 2 2 5 Lacoste France Clothing & Footwear FS Upper Middle 60 12 6 3 2 1 Villeroy & Boch Germany Household CI Upper Middle 40 12 1 7 1 3 Crocs USA Clothing & Footwear FS Middle 23 12 1 4 5 2 Fossil USA Personal AI Middle 28 12 0 6 2 4 Adidas Germany Leisure AS Middle 74 11 5 3 2 1 Guess USA Clothing & Footwear AF Upper Middle 50 11 3 1 2 5 Swarovski Austria Personal AS Upper Middle 19 11 0 3 3 5 Desigual Spain Clothing & Footwear YI Upper Middle 62 10 1 0 5 4 The Body Shop UK Personal FS Middle 26 10 0 5 1 4 Lindt Switzerland Catering Upper Middle 52 10 1 4 1 4 Mustang Germany Clothing & Footwear AI Middle 32 10 7 0 1 2 Samsonite USA Personal AS Upper Middle 52 10 4 1 2 3 Quiksilver USA Clothing & Footwear YI Middle 35 9 5 0 1 3 Harmont & Blaine Italy Clothing & Footwear CI Premium 17 9 0 0 9 0 Salomon France Leisure FS Upper Middle 22 9 5 0 0 4 Tommy Hilfiger USA Clothing & Footwear AI Upper Middle 60 9 6 1 1 1 Superdry UK Clothing & Footwear YF Middle 24 9 0 4 1 4 Nike USA Leisure YI Upper Middle 114 8 4 0 3 1 Tom Tailor Germany Clothing & Footwear FS Upper Middle 54 8 5 0 0 3 Triumph Germany Clothing & Footwear FS Middle 42 8 3 0 1 4

Source: FSP

Top Expanding Occupiers in Key Markets


Rank France Germany Italy Poland Spain United Kingdom

1 Nydel (+5) Watch Station (+5) Harmont & Blaine (+9) Brugi (+7) Sunglass Hut (+8) Gift Company, The (+8)

2 Geox (+4) Esprit (+3) Geox (+6) Hi-tec (+6) Flamenco (+4) Sunglass Hut (+7)

3 Izac (+4) Guess (+3) Yamamay (+6) Scotfree (+6) Asics (+3) Villeroy & Boch (+7)

4 Acanthe (+3) Cecil (+3) Michael Kors (+5) Tom Tailor (+4) Crocs (+3) Blue inc (+7)

5 Desigual (+3) Levi's (+2) Alcott (+5) Albione (+4) Burger King (+3) Asics (+6)

6 Devianne (+3) Fossil (+2) Brums (+5) Mustang (+3) Simone Perele (+3) Fossil (+6)

7 Levi's (+3) Napapijri (+2) Primigi (+5) Quiksilver (+3) Belros (+3) Radley (+6)

8 Little Marcel (+3) Asics (+2) Levi's (+4) Tommy Hilfiger (+3) Forecast (+3) Viners (+6)

9 Mariner (+3) Puma (+2) Bottega del Sarto (+4) Filippo (+3) Xti (+3) Body Shop (The) (+5)

10 Aigle (+2) Seidensticker (+2) Camomilla (+4) Regatta (+3) Levi's (+2) Bellissimo (+5)

(+) Indicates the number of new stores Source: FSP

Evolving Fashion Markets


40 60 80 100 120 140 160

Young

Assured

Family

Classic

FISH Lifestage Index

C.E. Europe Northern Europe Southern Europe Western Europe

(100 = Existing Regional Provision) (100 = Existing Regional Provision)

40 60 80 100 120 140 160 180

Fashionable

Individual

Safe

FISH Attitudinal Index


(100 = Existing Regional Provision)

Source: FSP


Looking Ahead

Planned 2014 / 2015 Openings


Source: FSP

Country Location Name Year GLA (sqm)

Denmark Copenhagen Copenhagen Designer Outlets 2014 17,500

Germany Bad Munstereifel Eifel City Outlet 2014 12,000

Italy Brugnato Shoppinn Brugnato 2014 22,000

Poland Lublin City Outlet Lublin 2014 11,500

Czech Republic Stříbro Bohemia Village 2015 16,000

Denmark Billund Billund Quality Outlets 2015 20,000

France La Cavalerie Viaduc Village 2015 5,988

Germany Leipzig Fashion Outlet Leipzig 2015 17,500

Germany Koblenz Montabaur Fashion Outlet 2015 14,500

Poland Bialystok City Outlet Bialystok 2015 14,500

Russia St Petersburg Outlet Village Pulkovo 2015 25,000

Russia St Petersburg Fashion House St Petersburg 2015 20,260

Russia Yekaterinburg Fashion House Yekaterinburg 2015 18,000

Spain Barcelona Barcelona The Style Outlets 2015 25,000

United Kingdom Solihull Resorts World at the NEC 2015 14,362

Planned Expansion


0

50000

100000

150000

200000

250000

300000

350000

Floo

rspa

ce A

dded

(m²)


Source: FSP

Future Position – Development Capacity


Source: FSP


Improving Location Decision Making

Improving Location Decision Making Success is determined by how well we as an industry meet the needs of our customers

Growing Outlet provision, on-line shopping and discount high streets mean that in 2014 consumers have greater choice than ever

Outlet increasingly has to perform profitably against other retail channels

Occupiers also have more choice than ever. Not only are more schemes opening and existing schemes expanding but there is also vacant space at existing Outlet Centres

For some brands, the high cost of occupancy at the best sites is becoming a constraint

With so much choice, it is increasingly difficult for occupiers to identify the best Outlet Centres, particularly amongst the 85% of European Outlet Centres not managed by the top two operators


Even Top Brands have Under Performing Outlets


Source: FSP

0%

5%

10%

15%

20%

25%

30%

35%

40%

Quartile 1: <=€1,850/sqm



Quartile 4: >€3,500/sqm

% O

utle

t Por

tfolio

Spl

it

European Outlet Centre Performance Quartiles

All Occupiers Top 60 Occupiers Top 30 Occupiers


Source: FSP

€0 €50

€100 €150 €200 €250 €300 €350 €400 €450 €500

0 5 10 15 20 25

Estim

ated

201

3 Tu

rnov

er

Mill

ions

Population within 90 minutes

Millions

Drive Times are not Reliable Indicators of Potential


Source: FSP

€0 €50

€100 €150 €200 €250 €300 €350 €400 €450 €500

0 10,000 20,000 30,000 40,000

Estim

ated

201

3 Tu

rnov

er

Mill

ions

Gross Area (m2)

C.E Europe Northern Europe Southern Europe Western Europe Trendline

Performance Varies Within Regions


Source: FSP

€0 €50

€100 €150 €200 €250 €300 €350 €400 €450 €500

0 10,000 20,000 30,000 40,000

Estim

ated

201

3 Tu

rnov

er

Mill

ions

Gross Area (m2)

Outlet Village Outlet Mall Factory Outlet Other Trendline

Good Design is Increasingly Important


Source: FSP

€0

€50

€100

€150

€200

€250

€300

€350

€400

€450

€500

0 10 20 30 40

Estim

ated

201

3 Tu

rnov

er

Mill

ions

Count of Top 60 Occupiers (by Portfolio)

A Strong Brand Line Up Is Important


Source: FSP

€0 €50

€100 €150 €200 €250 €300 €350 €400 €450 €500

0 10,000 20,000 30,000 40,000

Estim

ated

201

3 Tu

rnov

er

Mill

ions

Gross Area (m2)

McArthurGlen / Value Retail Major Operators Others Trendline

It Is About More Than Just the Operator


Conclusions

Conclusions 2013 was another strong year for European Outlet Centres

Development activity continues to infill gaps in the European outlet map and to challenge conventions on what is a sustainable level of provision

There are over 200 trading Outlet Centres in Europe which encompass a variety of formats, price positions and locations

Current development activity is focused in Germany, Central and Eastern Europe. Elsewhere, there are opportunities to infill under developed regions including the UK, France and Spain

There is scope for further development of 50 to 75 new Outlet Centres suggesting that the pace of growth will continue for a number of years to come

2014 looks like a slightly slower year however, 2015 will see a return to trend


Conclusions As the outlet map of Europe fills and competition strengthens, the outlet industry must continue to exceed the expectations of customers, however;

Many Outlet Centres are underperforming

Without stronger management, a number of schemes will eventually fail

For some brands, the ‘high’ cost of occupancy at the best sites is a constraint

For many occupiers, it is increasingly challenging to identify the best schemes

FSP believes the key to achieving a sustainable future is better location decision making;

Operators, investors and developers need to be much clearer about the trading opportunity, strategic objectives and their future vision for growth, when promoting Outlet Centres

Occupiers should demand more than drive time statistics when selecting new sites

With improved decision making, many Outlet Centres would substantially increase sales and the entire industry would be more profitable and more resilient to future challenges


Conclusions With new schemes, extensions and vacant space, occupiers currently have greater choice of locations than ever

To determine the most suitable sites, occupiers need to incorporate greater insight. It is important to ask the right questions, request more detailed information and if necessary, seek independent advice

Looking forward, the most successful operators will be those who can use information effectively to prioritise trading opportunities and lease units to the most appropriate occupiers

The most successful occupiers will be those who recognise how to use the insight and expertise that is available today to reject inferior locations and prioritise the most appropriate, profitable trading opportunities for their brand



Merci pour l'écoute

FSP RETAIL BUSINESS CONSULTANTS 19 Manor Courtyard Hughenden Avenue High Wycombe UK, HP13 5RE

T +44(0)1494 474740 F +44(0)1494 474262 [email protected]

www.fspretail.co.uk www.snap-shop.co.uk

Ken Gunn Director T+44(0)1494 474740 M+44(0)7773 779919 F+44(0)1494 474262

[email protected]

Outlet Centre Research | 2014 | Retail Consultancy

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