COMMENT: It’s safe to say the high street has had its fair share of ups and downs over the past few months, mostly downs. This is a sentiment substantiated by the numbers, which show sales volumes fell by 0.2% in the last quarter of 2018 according to the Office for National Statistics, a period traditionally seen as the high street’s time to shine.
The convenience of online shopping, the strain on the public purse and even periods of adverse weather have all too often been to blame for the high street’s decline, but perhaps it’s less about shoppers’ reluctance to spend money and more about their desire to enjoy an enhanced experience when they do. Recent figures show that cinema ticket sales are riding high even in the face of on-demand streaming services.
Consumers are still willing to pay for experiences, if that experience is the right one for them. Lifestyle Outlets’ experience-led outlet shopping model is currently out-performing the wider retail market. During Christmas trading, we recorded an 8.10% increase in sales across our centres in Gloucester and Manchester. Interest from new retailers and operators has never been higher. As a result, capital values continue to increase steadily.
The hot new ticket in retail is outlets? There will rightly be some scepticism. Previously, a visit to a retail outlet for many consisted of a long drive to an out-of-town shopping park with the promise of affordable fashion. But the reality for some was that they often found themselves in a soulless, dated factory outlet.
Traditionally solving the problem of leftover fashion stock, outlet centres are now a crucial part of retailers’ three-pronged approach to their market offering – embracing full price stores, online and now outlet shopping. Some retailers are even producing outlet-specific products to differentiate from their high street and online counterparts.
What are the key drivers behind the growing numbers of successful higher-end retail outlet centres in the UK? Outlet leases 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 high street.
This flexible approach has found favour among retailers – we delivered more than 20,000 sq ft of new deals to the likes of Adidas and Hugo Boss across the portfolio last Christmas with vacancy rates at historically low levels for both our operational outlets.
Lifestyle Outlets is a new generation of outlet destinations with a mix of retail products consumers can’t buy online, a range of leisure attractions for families and a strong mix of food and beverage operators. The inclusion of leisure in our new approach is key to encouraging footfall to a development and is vital in defining a centre as a destination. In turn, this attracts consumers from a wider catchment area.
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. Our 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. This marks a striking difference to many of the UK’s shopping centres.
While the high street’s traditional settings provide physical obstacles to adapting to changing consumer demands, new retail outlet developments are quicker to react to the new beat. At Gloucester Quays and the Lowry Outlet, we are providing retailers with a platform to create dynamic leisure experiences to meet the needs of the modern-day shopper, such as themed markets, family friendly events and an improved leisure offering. The Christmas market at Gloucester increased footfall by 450,000, for example.
Outlet centres are now becoming an important part of investors’ development strategies as their appeal to retailers and consumers flourishes – and they look at new ways to diversify their retail portfolio.
Over the coming months, investor appetite for prime outlets is only set to grow as capital values continue to outperform the wider retail market. In the year to June 2018, outlet centres witnessed an 8.8% increase in capital values as opposed to a fall of 0.3% in traditional shopping centres, according to research from Cushman & Wakefield.
Gone are the days when outlet stores were an afterthought. Our Lifestyle Outlets at Gloucester, Manchester and soon to be Glasgow are creating a new type of elevated shopping experience, which is appealing to retailers, investors and, most importantly, consumers in the internet age.
