ICSC European Outlet Conference

Meeting the Needs of the Outlet

Customer

5th March 2014 Hilton Hotel - Wembley, London, United Kingdom

ICSC European Outlet Conference

European Market – 2014 Update

Kenneth Sinclair Gunn FSP Retail Business Consultants

European Outlet Centres Today • Current position • Recent Expansion • Historic Development Activity and Current Capacity

European Occupiers Today • Top 25 Occupiers • Expanding Occupiers • Evolving Markets

Looking Ahead • Planned 2014 & 2015 developments • Historic Trend • Capacity

Meeting the Needs of the Outlet Customer

Conclusions

Contents

Current Position

• 193 outlet centres1 >3k

m2

• Total GLA 3.3million m2

• Turnover of €10.8bn

• 184 are over 5,000m²

• 155 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

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

Source: FSP

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

Openings in 2013

Source: FSP

Country Location Name Year GLA (sqm) Format FSP Type

United Kingdom Croydon Croydon Village Outlet 2013 39,400 Department Store Large - Midscale

Ukraine Kiev Manufactura Kiev Outlet Village 2013 25,000 Outlet Village Large - Midscale

France Paris One Nation Paris 2013 20,000 Outlet Mall Medium - Upscale

Russia Moscow Fashion House Moscow 2013 15,724 Outlet Mall Large - Midscale

United Kingdom London London Designer Outlet 2013 16,000 Outlet Mall Medium - Midscale

Russia Moscow Vnukovo Outlet Village 2013 26,252 Outlet Village Large - Upscale

Poland Warsaw Factory Annopol 2013 19,700 Outlet Mall Large - Midscale

Slovakia Bratislava One Fashion Outlet 2013 15,000 Outlet Village Medium - Midscale

Historic Expansion

Source: FSP

0

50000

100000

150000

200000

250000

300000

350000

Flo

ors

pa

ce

Ad

de

d (

m²)

C. E. Europe Northern Europe Southern Europe Western Europe

Current Position – Development Capacity

Source: FSP

ICSC European Outlet Conference

The Occupier Market

Top Occupiers FISH Classification

Source: FSP

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

Top Occupiers Top 25 Occupiers

Source: FSP

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 and 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 and footwear AF Upper Middle 69 2 7 35 25

Desigual Spain Clothing and footwear YI Upper Middle 62 4 0 31 27

Lacoste France Clothing and footwear FS Upper Middle 60 12 12 15 21

Tommy Hilfiger USA Clothing and footwear AI Upper Middle 60 14 11 16 19

Home & Cook France Household Middle 56 7 8 18 23

Tom Tailor Germany Clothing and 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 and footwear AF Upper Middle 50 5 3 21 21

Calvin Klein Underwear USA Clothing and footwear AF Upper Middle 49 1 12 18 18

Gant USA Clothing and footwear AI Upper Middle 47 9 4 13 21

Hugo Boss Germany Clothing and footwear AI Luxury 46 1 10 13 22

Geox Italy Clothing and footwear AI Upper Middle 45 7 0 20 18

Clarks United Kingdom Clothing and footwear FS Middle 44 0 27 7 10

Reebok United Kingdom Leisure AS Middle 44 14 7 14 9

Timberland USA Clothing and footwear AI Upper Middle 44 4 10 19 11

Le Creuset France Household Upper Middle 43 3 16 3 21

Triumph Germany Clothing and footwear FS Middle 42 11 4 9 18

Mango Spain Clothing and footwear AI Middle 41 13 1 17 10

Benetton Italy Clothing and footwear AS Middle 41 11 1 22 7

Villeroy & Boch Germany Household Upper Middle 40 5 12 6 17

Top Occupiers Top 25 Expanding Occupiers

Source: FSP

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 and 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 and footwear AI Upper Middle 45 14 2 0 7 5

Puma Germany Leisure AS Middle 77 12 3 2 2 5

Lacoste France Clothing and 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 and 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 and 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 and footwear YI Upper Middle 62 10 1 0 5 4

The Body Shop United Kingdom Personal FS Middle 26 10 0 5 1 4

Lindt Switzerland Catering Upper Middle 52 10 1 4 1 4

Mustang Germany Clothing and footwear AI Middle 32 10 7 0 1 2

Samsonite USA Personal Upper Middle 52 10 4 1 2 3

Quiksilver USA Clothing and footwear YI Middle 35 9 5 0 1 3

Harmont & Blaine Italy Clothing and footwear CI Premium 17 9 0 0 9 0

Top Occupiers 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)

Source: FSP

Top Occupiers Evolving Fashion Markets

Source: FSP

50 70 90 110 130 150 170 190

Luxury / Premium

Upper Middle

Middle

Price Position 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

Young

Assured

Family

Classic

FISH Lifestage Index

C.E. Europe Northern Europe Southern Europe Western Europe

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

ICSC European Outlet Conference

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 Viladecans The Style Outlets 2015 25,000

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

Future Position – Development Capacity

Source: FSP

Opening 2014/15

Planned Expansion

Source: FSP

0

50000

100000

150000

200000

250000

300000

350000

Flo

ors

pa

ce

Ad

de

d (

m²)

C. E. Europe Northern Europe Southern Europe Western Europe

ICSC European Outlet Conference

Meeting the Needs of the Outlet

Customer

Satisfied Customers Reward Outlet Centres

FOC

%

Respondents

Annual

Visit

Frequency

Average

Spend Per

Visit €

Promoters 50% 15 68

A Detractors 11% 9 49

Potential Uplift 73% 40%

Promoters 15% 7 117

B Detractors 26% 6 93

Potential Uplift 16% 26%

Promoters 36% 8 70

C Detractors 27% 4 47

Potential Uplift 77% 49%

Promoters 21% 5 163

D Detractors 10% 3 120

Potential Uplift 43% 36%

• Survey research at 4 Outlet

Centres across Europe

• Promoters and Detractors

defined using response to

Net Promoter Score question

• Sites B and C under perform

• Site D has low proportions of

Detractors but converting

more visitors to Promoters

would bring huge benefits

• Across all 4 sites, changes

which convert visitors from

Detractors to Promoters

would increase visits by 50%

and average spend by 40%

Source: FSP

• Success is determined by how well we meet the needs of customers

• Promoters visit more often and spend more per visit than Detractors

• Opportunities exist to increase sales by 25% to 50% at most outlet

centres. This makes the sector attractive to new investors

• Growing outlet provision, on-line shopping and discount high streets

mean that in 2014/15 consumers have greater choice than ever

• It is important that outlet centres maintain their competitive advantage

by going beyond and not just simply meeting the needs of customers

• This is about integrating good design, marketing, leasing and

operational activity to focus on the complete customer experience

• The best performing outlet centres in the next 24 months will be those

which recognise this and deliver a ‘great day out’ visitor package

• Every outlet location is unique, so if you want to know how to create

the ideal visitor package, why not ask the customer?

Meeting the Needs of the Outlet Customer

ICSC European Outlet Conference

Conclusions

• 2013 was another strong year for European Outlet Centres

• Development activity continues to infill gaps in the 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 (Midlands/SE), France (Lyons,

Provence) and Spain (Catalonia)

• There is scope for further development of 50 and 75 new outlet

centres suggesting that the pace of growth will continue for years to

come

• As the map fills and competition strengthens, we need to go beyond

meeting the needs of customers and exceed their expectations

• An insight based, integrated approach is now essential for success

Conclusions