Outlet stores: What do retailers need to know?

Why are we talking about this now?

Sportswear giant Nike plans a raft of outlet store openings over the next few years. Nike’s expansion comes as London is poised for its first discount outlet centre when the London Designer Outlet opens in Wembley at the end of the year.

What are outlets and who are the main tenants?

There are 41 factory outlet centres in the UK, which typically offer end-of-line goods at discount prices. To secure a site on an outlet the retailer is usually expected to cut its prices by at least 20%, according to Trevor Wood, director of property consultancy Trevor Wood Associates.

Gap, Next and Marks & Spencer are established outlet retailers.

In addition, John Lewis at Home at Swindon’s Mannington Retail Park sells end-of-line products and imperfect furniture. According to Wood, the attraction of outlet centres for retailers is that they do not have to discount in the rest of their shops throughout the year.

Which other retailers are moving into the market?

French retailer The Kooples opened a debut outlet store at McArthurGlen’s York Designer Outlet in December last year.

In the past three years the UK’s designer outlet sector has been encouraging retailers with a younger demographic to open outlets, which has resulted in Superdry building a presence in the market.

Upmarket brands such as Aquascutum, Jaeger and Kurt Geiger have also been expanding their outlet portfolios. Burberry, Aquascutum and Pringle have opened outlet stores at Chatham Place in Hackney, London, which is slowly becoming an outlet hub.

What is the future of outlets?

Despite two new designer villages opening this year - London Designer Outlet and Resorts World Birmingham - the market is not necessarily easy and there have been exits of late. Freeport Scotland has closed and K Village in Kendal fell into administration in January.

Whiteley shopping centre near Southampton, which opened in May, was formerly planned as an outlet centre but redeveloped as a retail park because the demand for outlet space was insufficient.

However, prime outlet locations continue to thrive. Rob Asbury, partner at property adviser Montagu Evans, says: “You have the designer outlets like Bicester Village and McArthurGlen that have the right ranging [of retailers] to work but it’s the tertiary locations where there isn’t demand where we might see a few disappear.”