Winter 2008 Issue - Value Retail News

Outlet enthusiasm strengthens
Outlet executives share research, tips, trends at conference
More than 150 people from 28 countries across three continents
attended the 2007 European Outlet Conference held at the Landmark
Hotel in London in October. The event was hosted by the
International Council of Shopping Centers and its publications, Value
Retail News and the International Outlet Journal. Sponsors of the
two-day conference were GVA Grimley Outlet Services, Henderson
Global Investors, ING Real Estate and Aareal Bank.
The continuing evolution of the outlet retail sector was apparent
as delegates expressed widely differing views on issues such as centre
State of the Global Outlet Industry
Brendon O’Reilly, GVA Grimley Outlet Services
David Ober, Partner, PA Outlet Management Services
OppOrtunities waiting
all arOund the glObe
Across Europe, with its population
of 459 million people in the Euro-
pean Union, there are 142 factory
outlet centres trading in 25 countries with
a further 34 FOCs proposed to open within
the next 12 to 18 months, according to
figures announced by Brendon O’Reilly of
GVA Grimley Outlet Services.
As borders across Europe open up, the
concept is quickly taking hold in more
countries as these New Europeans become
increasingly brand-aware.
“With Polish workers moving to the UK
and other Western European countries for
employment,” O’Reilly said, “the country
they leave behind has opened its borders
to workers from the Ukraine. Now they
are discovering for themselves the delights
of brand shopping in the new Polish factory
outlet centres.”
The Ukraine has huge potential for European
developers, he added, pointing out
that “with a population of over 58 million,
many of whom are hugely aspirational,
there are currently no factory outlet centres
open there, although two are proposed.”
However, some countries are reaching
outlet saturation. The UK has 48 factory
outlet centres with one more at Gloucester
Quays due to open in early 2009.
That’s no indication that the sector is
washed up in Western Europe, though. Retailers
are taking note of their competitors’
success in factory outlet centres and are
asking for their own piece of the action.
O’Reilly highlighted apparel retailers
Fat Face and Tula and UK department
store John Lewis, all of which are now
establishing outlet chains.
InternatIonal outlet Journal u Winter 2008
In Western Europe, he said, that nation
of brand-shoppers called Italy has
room for growth. “Currently in this
country there are 17 outlet centres with
three more proposed in a population of
58.5 million. In Ireland, too, with a
population of just 4 million, the number of
people with a significantly high disposable
income indicates expansion potential.”
The jewel in the crown of opportunities,
according to O’Reilly, is Germany.
Despite a challenging planning regimen,
the recent relaxations in the country’s
Sunday trading laws have heralded an upsurge
in development interest. Currently
Germany has just five outlet centres with
five proposed in a country which has a
population of over 82 million.
O’Reilly also highlighted a 25 percent
growth in the number of recent transactions
in European factory outlet centres
by predominantly institutional funding.
David Ober presented a vision of a
vibrant outlet centre industry in the
U.S., where every one of its top 30 outlet
centres is in expansion mode and where
brands are looking for more opportunities.
Ober is a partner in U.S.-based PA
Outlet Management and president of the
industry trade group Developers of Outlet
Centers & Retailers.
Speaking of outlet development outside
the U.S., Ober said the Asian outlet sector
includes nine centres in China, Japan and
Korea, totalling 5.3 million sf.
With six centres in Turkey, one in
Dubai and 16 in Australia, New Zealand
and South Africa, the factory outlet centre
is now a truly global phenomenon, he
branding and tenant-landlord partnerships during the conference’s
10 seminars and keynote presentation – often followed by lively
conversation and debate during the socializing/networking functions.
The programme was filled with trends, research, case studies and
ideas, all specifically related to this forward-thinking, global factory
outlet industry.
London-based writer Nicky Godding has provided IOJ with
an exclusive recap of the programme’s educational sessions, which
follows on the next few pages.
Brendon O’Reilly
David Ober
said. But the emerging outlet centre industry
elsewhere in the world should learn
from the U.S. experience where developers
and retailers took many years to trust each
other enough to work together. n

Balanced Scorecard:
Building Brands And Business
James Kirby, Fund Manager, Henderson Global Investors
Outlets perfOrm during
ecOnOmic dOwnturns
Henderson Global Investors’ Outlet
Mall Fund, currently working
with operator McArthurGlen and
worth e 850 million, is targeted to grow
to e1.5 billion over the next few years.
Henderson’s outlet mall strategy is to own
those centres that are the best in their class,
regionally strong, with suitable catchment
areas and GLA over 20,000 m².
The recent turbulence in the markets
– due to the credit squeeze, high oil prices
and increasing competition from High
Street – could slow Henderson’s ambitions,
according to fund manager James
Kirby. He suspects interest rates will drop
during the next few months.
“Outlet centres are counter cyclical,”
he said. “They tend to out perform
other retail sectors in an economic
downturn.”
Another factor contributing to this
not just the brands, it’s the experience,”
is how Ken Gunn, associate
“It’s
director of CACI, sums up the way
to succeed in the factory outlet sector.
With so many new outlet centres
opening (more are scheduled to open
this year in Europe than in any year since
the concept was first launched in Europe
in 1984), Gunn said that outlet centres
need to raise their game to successfully
compete with town centres and each
other for consumer spending.
“I’m concerned that the number of
schemes we have is threatening the unique
proposition that was behind the original
concept,” he said, adding that this concern
will come into greater focus over the coming
years as more centres open.
“As shoppers have moved to larger
centres offering more choice,” he said,
“the investment has been concentrated
in these centres and in new locations,
including retail parks. As a result there
InternatIonal outlet Journal u Winter 2008
optimistic view is migration, which raises
brand awareness. “There is 15 percent
migration in the European Union, higher
than the U.S.,” he said. “These immigrants
tend to be well-qualified and
aware of European brands.”
However, recent competition from
High Street and supermarket discounting
has focused the fund, and Kirby warns
that outlet centres must retain their point
of difference to maintain their success.
“Outlet centres need to be leading edge
to compete with the full price sector and
the Internet in the future,” he said. “That
means competing on leasing, marketing,
customer service, making outlet centres
a brand and improving innovation and
technology.”
According to figures released at the
conference by Henderson, Poland and
the UK have the highest outlet space
Feasibility and the Consumer Proposition
Ken Gunn, Associate Director, CACI
Henrik Maris, Factory Outlets Consultancy
Keep Outlets interesting
Or risK lOsing shOppers
has been a decline of smaller, less competitive
centres as they struggle to find
the investment to maintain their share
of the pot. This has brought about a fundamental
shift in shopping patterns from
small to big, reducing the opportunity for
smaller centres to attract the investment
to change their situation.”
Henrik Maris, president of Factory Outlets
Consultancy, cautions that the High
Street environment is moving into outlet
centres, and the presence of too many
department store clearance stores can be
detrimental. “Outlet centres need to work
closer with the true retail brands,” he said.
Whilst the UK has a status quo, the
continent is steaming ahead with new
innovations, he added. “We should link
centres to attractions not just catchment.
Think about traditions in each market,
because if people don’t know your brand,
they often won’t buy it.”
According to Gunn, maturing outlet
James Kirby
per capita, with over 10 million m² in
Poland and around 9.75 million m² in
the UK. Turkey has less than 2 million
m² of outlet space.
However, Kirby predicted that consumer
spending will grow the most in the
New European countries such as Estonia,
Romania and the Slovakian Republic,
with more modest growth in established
markets such as the United Kingdom,
Portugal and Switzerland. n
Henrik Maris
Ken Gunn
centres will need to keep refreshing their
offer. “People arrive at outlets centres in
a happy mood – the industry’s job is to
keep them that way.” n

Best Practices: Points for the Industry’s Future
Lisa Wagner, The Mega Company
Manuel Lagares, Managing Director, Neinver
Ivor Peters, Managing Director, Primal PR
Chris Warren, Partner, Cushman and Wakefield
factOry Outlet standards:
nuisance Or necessity?
The establishment of hard and
fast best practice standards could
inhibit the outlet centre sector’s
growth and jeopardise its future, according
to the panellists in this session.
“We see the free market approach as
being better,” said Manuel Lagares of
Neinver, “but it is clear that some industry
standards need to be followed in order to
please the customers.”
Chris Warren of Cushman and Wakefield
agreed. “The most important thing
to consider when developing a new outlet
centre is not to confuse the customer.”
Chris Warren
need to know your customer
before you put your spade
“You
in the soil,” said Peter Noble of
Value Retail, whose customers often travel
thousands of miles to visit one of its outlet
villages in the major cities in Europe.
Noble also believes that viewing an
outlet centre’s catchment by a 23 minute
drive-time (an industry average) is way off
the mark. Value Retail promotes its villages
as serious tourism destinations – think 23
hours rather than 23 minutes catchment.
“We promote our villages to aspirational
people, marketing ourselves as chic
outlet shopping in Europe,” he said. “To
InternatIonal outlet Journal u Winter 2008
The panel concurred that a significant
proportion of potential customers still
don’t understand what an outlet centre is,
and retailers could help this confusion by
conforming to the accepted outlet-centre
discount of 30 percent.
In 1996 in Spain and in 2002 in Poland,
Neinver set out to explain outlet retailing
to its consumer. However, Neinver still feels
that the concept isn’t fully understood.
As shoppers become more savvy, the
issue of made-for-outlet goods begins to
pose questions in consumers’ minds.
But Ivor Peters of Primal PR said
Manuel Lagares Ivor Peters
Closing the Gap in Branding and Positioning
Peter Noble, Group Senior Leasing and Commercialisation
Director, Value Retail
branding, pOsitiOning
have the same gOal
reach our target customer, we market our
centres as destinations using dedicated
tourism marketing experts within our
marketing and communications teams.”
To follow Value Retail’s example,
outlet centres could attract their target
audience by:
l Marketing to higher social group
women aged 25-60 who visit just once or
twice a year with friends
l Marketing to women who aren’t
afraid to spend
l Negotiating exclusive tie-ins with
upmarket publishers, such as Conde Nast
l Launching gift cards programmes
consumers are always going to have questions.
“In the future they will ask, ‘Is it
green, ethical or fairly made?’”
Lagares said, “Customers need to know
what they are buying. Brands are proud
of their name and they need to maintain
their image.”
Lisa Wagner of Bucharest-based Mega
Company said that a few years ago in the
U.S. there was an avalanche of negative
publicity about whether outlet goods
were inferior, so the industry launched a
campaign and created a stamp of outlet
authenticity. “It didn’t last long but the
message got out that the industry was
trying to police itself,” she said. “The time
may be coming for the EU outlet industry
to start policing itself.”
Ultimately, the industry’s success lies in
the partnership between tenants and landlords,
Lagares said. “Our retailers know their
business, and we don’t want to interfere,
but exchanging information is important.
By creating value for our brands, we are
creating value for our customers.” n
Lisa Wagner
Peter Noble
for the target customer
And perhaps a change in perspective
is necessary for a centre’s branding to
precisely reflect its target customer.
“At Value Retail we consider ourselves
retailers working for retailers,” he said. “In
the end, branding and positioning are the
same thing.” n

John Drummond Mark Clark Neil Thompson Clive Woodger
Centre Branding: What’s in a Name?
John Drummond, Managing Director The Guinea Group
Mark Clark, Business Development, GVA Grimley Outlet Services
Neil Thompson, Chief Executive Officer, The Outlet Company
Clive Woodger, Managing Director, SCG
fOc branding reflects
reputatiOn, emOtiOn
Centre branding should begin
long before the marketers are
appointed; it must start right at
the beginning of a project, embedded in
the architect’s plan.
“If the architects don’t know the proposition,
what hope has the centre got?” said
Clive Woodger, architect and managing
director of SCG.
Panellists hotly debated what branding
means, with opinions differing on whether
branding an outlet centre detracts from
the retailers within it or whether people
visit a centre because they know that its
brand represents their own aspirations.
Mark Clark of GVA Grimley felt that
consumers didn’t need to be educated
about a shopping centre. They just need
to know how they will benefit from visiting
one, and that’s what an outlet centre
brand should convey, he said.
Panellists agreed that a consumer’s reaction
to a brand isn’t completely rational.
“Branding is a product plus the emotional
values invested in it by the consumer,” Clark
said. “When we debate the factory outlet
centre business, we hear much rational
analysis of the likelihood of potential success
Outlets’ Impact on Traditional Retail
Dr Joachim Will, Chief Executive Officer, Ecostra
surprise! signs say
Outlets increase sales
Do outlet centres harm High
Street?
Outlet centres might be a
niche market, but in Germany the sector
is growing, despite its bumpy beginning
there. In the late 1990s prevailing opinion
was ardently against factory outlet
centres, as they were seen as a threat to
local retailing.
The accusation rarely comes up anymore,
largely due to positive results that
changed the minds of the outlet-wary,
said Dr. Joachim Will of Ecostra.
In 2001, despite enormous opposition
in the locality, Outlet Centres International
opened Designer Outlets Zweibrücken
(DOZ) in southwest Germany,
“in the middle of nowhere,” Will said.
Since opening, the Zweibrücken centre
has attracted millions of visitors, has shown
steady sales increases, is constantly refreshing
its tenancy, and thanks to the recently
relaxed German Sunday trading laws, it
can now open 16 Sundays per year.
So what happened to the local retailers
who were supposed to be killed off by the
outlet centre?
According to Will, up to now there have
been no town-planning consequences, no
trading-down effects. The main streets
have a high stability with persistent inquiry
for stores, even while there are almost
no empty retail units in Zweibrücken.
The predicted drop of 20-30 percent
of a new centre based on drive-time and
demographics, but this research takes little
account of a consumer’s mood swings.”
Good branding cannot make up for
deficiencies elsewhere in a centre, he said.
Branding works well as long as everything
else works equally well.
“We are not a brand in the true, retailer,
sense of the word,” Clark said. “But
we behave like one.”
Woodger warned panellists not to confuse
branding and marketing.
“Branding is about image and reputation
– it’s what people say about you when
you’ve left the room,” he said. “Right
from the beginning, consumers will start
to have a view about your centre, its
developers, its managers as well as the
retailers and the brands they sell.”
He urged developers to look at their
brands from every angle – how it looks on
a text, on a Google search, on the website,
in advertising – even on You Tube, and to
involve the outlet centre’s stakeholders in
its development. n
Dr. Joachim Will
in sales didn’t happen and there were
no recognisable job losses. Whilst some
retailers reported a small drop in sales,
the overall effects were minor. Instead,
it has boosted the city’s retailers’ determination
to up their game and in
(See Suprise!, page 10)
Winter 2008 u InternatIonal outlet Journal

Surprise!
(Continued from page 9)
September 2007, a former city-centre
Kaufhalle department store was converted
to City Outlet, featuring 2,700
m² of retail space over three floors selling
toys, electrical goods and sportswear.
Success of this new store has yet to be
measured, but retailers are optimistic.
However, other synergies envisaged by
the outlet centre development company
didn’t happen, and visitors didn’t flood
from the outlet centre into the city.
Now Zweibrücken has decided that
having a successful outlet centre in the
region isn’t such a bad thing after all and
The Power of Footfall
Karen Isman, Marketing Director, Chameleon Retail Consultancy
Mike Davidson, Retail Operations Director, Land Securities
Chris Green, Head of Marketing Communications, McArthurGlen
Didier Harm, Managing Director-Leasing, MDG Europe
universally agreed
that fOOtfall is all
Footfall is the single most important
element of a shopping centre, along
with the retailers themselves, according
to Karen Isman of Chameleon
Retail Consultancy.
Continuing the debate begun in the
previous session on branding, the panellists
discussed whether the brand or the
marketing campaign attracts the most
visitors to a centre.
According to McArthurGlen’s Chris
Green, successful branding and marketing
will increase quality footfall, not
footfall overall. “We want visitors to find
and buy the products they want, rather
than attracting the tyre-kickers,” he said.
McArthurGlen has reportedly decided
not to heavily brand its centres, instead
allowing the brands within the centre to
speak for themselves.
“It’s about quality of retailers and the
10 InternatIonal outlet Journal u Winter 2008
it now plans to position itself as “the
outlet shopping region” with main attractions
such as DOZ, City Outlet and
traditional factory shopping in the village
of Hauenstein, well known for its shoes.
A similar energy boost to the city centre
happened in Ingolstadt, where Value
Retail opened an outlet village in 2005.
After the opening, a full-price shopping
centre, City Arcaden, opened with 8,000
m² of retail floor space and 38 stores. Up
to now, there have been no store closings.
However, unlike Zweibrücken, Ingolstadt
retailers have reported more visits to their
stores by those who have travelled long
distances to shop at the outlet centre. A
report on the effects of Ingolstadt Village
experience of consumers within the centre,”
he said. “People want to come back
because they enjoy themselves.”
Mike Davidson of Land Securities
urged adoption of a loyalty scheme similar
to one introduced at his UK outlet centre,
Gunwharf Quays.
“We now have more than 40,000
people on our database, thanks to our
loyalty card,” he said, explaining that
the card was introduced when the centre
opened, with the blessing of the retailers.
The programme is now so successful that
other partners outside the centre want to
get involved.
Didier Harm of MDG Europe agreed.
“The best boosts to footfall are loyalty or
outlet credit cards, and the tenant line-up
within the centre.”
Whether footfall can be increased
by one-off events was open to debate,
on the city centre concluded there was
only a limited influence on local shopping.
Instead, visitors to the outlet centre
came from much further afield and those
living in and around Ingolstadt continue
to do their everyday shopping in the
West Park shopping centre or in the city
centre itself.
If outlet centres have been perceived
as a threat to city centres, they have galvanised
local retailers into improvements
they should have been making anyway. In
Germany, city centres have seized the opportunity
to market themselves to a much
wider national and possibly international
audience, promoting their own cultural
offerings. n
Mike Davidson Karen Isman Didier Harm
Chris Green
according to panellists, but they must
benefit the retailer – a difficult thing to
achieve.
Davidson said that major events build
awareness “but smaller events that happen
regularly involving the local community
are important because they attract
the locals, who are your most frequent
customers.”
All agreed that different marketing
methods were needed for different audiences,
with one of the most effective
being Web-based with selective emailing
and downloadable vouchers. Advocacy
marketing was also highlighted, where
those on the database pass on offers to
their friends.
Research is absolutely vital, with the
most successful centres conducting ongoing
research to finesse their product
and consumer offer.
The relationship with retailers again
came under the spotlight, with panellists
bemoaning that there are always retailers
who don’t get involved because they are
concerned about the effect marketing will
have on their full-price stores.
“When we reassure them that they are
targeting a new customer, not encouraging
a full-price customer to an outlet
centre, they are more inclined to get
involved,” Green said. n

Retail Runway
Moderator: Neil Chapman, Chief Executive Officer,
Chameleon Retail Consultancy
retail runway:
4 brands share their visiOns
Outlet retailers want amenities – air
conditioning, plenty of stock-room
space, large windows and a good
location within the centre. In return, they
say, they’ll deliver a great shopping experience
for customers. Four brands shared their
company’s strategies for creating good values
for landlords and consumers, as well as their
plans for expanding their chains.
Puma
Kristofer Jürgensen, International
Expansion Manager, PUMA AG
The Puma brand
is based on
three pillars: sport
performance, sport
lifestyle and sport
fashion. Although
Puma’s core is the
sport performance
line, the most in-
Kristofer Jürgensen
come comes from the sport lifestyle line.
In the past, Puma was seen as the
underdog against competitors such as
Adidas and Nike, but it has recently developed
a more aggressive development
strategy and is determined to be one of
the main footfall generators in a centre.
Its retail mission for its full-price stores
is to promote the Puma brand with no
franchised stores. Its retail mission for its
12 InternatIonal outlet Journal u Winter 2008
factory outlet stores is to allow Puma to
follow its full price strategy in its concept
stores and secure effective distribution of
excess inventory.
The company plans to grow its business
in Europe over the next few years and currently
has franchised stores in countries
such as Russia and Poland. It is keen to
open in areas which it feels have the most
potential, such as the Czech Republic,
Hungary, Romania and Germany.
Jürgensen says that the company is
happy to sign up at the early development
stage of an outlet centre and is looking for
500-sf to 600-sf spaces in locations with
good footfall.
“We don’t see Puma outlets boosting
our brand,” Jürgensen said, “but they
don’t do us any harm. We have a profitability
target, not a sell-through target.”
Group SEB
Franck Larzilliere, Vice President
Home and Cook
Group SEB is the world leader in small
domestic equipment, according to
Larzilliere, with sales around e 2.7 billion.
It sells more irons, food processors, kettles
and toasters than any other retailer in the
world, and is a leading player in countries
such as France, Spain, Portugal, Canada,
Mexico, Russia and Turkey, as well as in
Central Europe and the UK.
Formed in 1957 in Burgundy, France,
over the last three decades SEB has
bought up a number of highly regarded
brand names such as Moulinex, Rowenta
and Krups and now has a roster of many
international and local brands, including
All-Clad. As a manufacturer – not as a
retailer – the name SEB is only known in
France and Belgium, but it employs nearly
14,000 people in 51 countries
SEB entered factory outlet retailing two
years ago because it wanted direct access
to consumers and to sell out-of-date products.
Now the company has launched
an ambitious expansion programme and
expects to open 40 new stores in the next
three years throughout the world.
“Home and Cook is the name of our
shop but our brands are more important,”
said Franck Larzilliere. “We offer products
which are not well represented in factory
outlet centres.”
The company also operates some factory
outlet stores under the Lagostina and Tefal
banners, but SEB is currently rebranding
them as Home and Cook stores.
Le Creuset
Petra Schuler, Development
Manager-Business & European
Retail, Le Creuset
Whilst Petra Schuler admits that
L e C r e u -
set isn’t perhaps
the footfall driver
that other retailers
claim to be, she
says that this upmarket
cookware
c o m p a n y a d d s
value to a factory
outlet centre.
Petra Schuler
Le Creuset is a private company founded
in 1925 in Fresnov Le Grand, France,
where the first cocotte, or casserole dish,
was produced.
Now it is a leading company in enamelled
cast iron kitchenware, as well as wine
and bar accessories, with 90 percent of its
sales coming from exports to more than 60
countries.
Le Creuset has over 1,000 employees
throughout the world in 17 commercial/
marketing/distribution subsidiaries.
In Europe the company currently operates
21 outlet and two full-priced stores,
and in the U.S., 50 outlet and three fullprice
stores. Le Creuset also operates
stores in South Africa, Japan and Korea.
Le Creuset admits that new markets are
(See Le Creuset, page 14)

Le Creuset
(Continued from page 12)
difficult for their business because people
like to spend their money on clothes: “You
can’t wear a Le Creuset around your neck,”
Schuler said. So rather than blazing a trail
into a new country, the company waits until
the market is established and then looks
at the factory outlet centres available. The
company has a three-to-five year window
to show a profit on its outlet stores.
“We want to be in outlet centres that
don’t impact our wholesale business but will
improve our brand recognition,” she said.
Outlet Retailing, Past, Present and Future
Brendon O’Reilly, Partner, GVA Grimley Outlet Services
David Ober, Partner, PA Outlet Management Services
Henrik Maris, President, Factory Outlet Consultancy
Phil Cottingham, Portfolio Director, Land Securities
Nicky Lovell, Head of Client Management, McArthurGlen
harsh lessOns prOve
Only the strOng survive
After the summer’s credit crunch,
factory outlet centre investors
will only be looking for the ‘best
in class.’ As a result there is bound
to be consolidation within the sector,
especially in the saturated UK market,
although there is still room for growth
Keynote Presentation:
Improving Customer Care at Outlet Centres
Ros Gardner, Customer Care Excellence
plumbing the depths
Of custOmer lOyalty
People change their marriage partners
more often than they change
their banks, according to customer
care expert Ros Gardner, who spent 27
years with retailer Marks and Spencer in
Human Resources and then as head of
customer care.
Her experience in handling returned
goods and managing customer
expectations, especially
regarding Marks and
Spencer’s most ubiquitous
items – underpants and
ladies’ knickers – means
there isn’t much that a
dissatisfied customer can say
that will surprise her.
What is beyond discussion
is that there is little
Ros Gardner
1 InternatIonal outlet Journal u Winter 2008
Sunglass Time
Rags Davenport, Sales and
Operations Manager, Sunglass Time
Sunglass Time was founded by Michael
Cooney in 1998 to help distribute
surplus designer sunglass stocks at discounted
prices in outlet malls and villages
throughout Europe.
The retailer opened its first shop in
1999 in the McArthurGlen outlet centre
in York, UK where it traded from a 150-sf
kiosk. Selling a wide range of designer
sunglasses, it now has 10 stores in UK
outlet centres, three in Italy and one each
in continental Europe.
The better projects will survive, but
tougher questions are likely to be asked
about the validity of a project before
money is invested, according to David
Ober from the U.S.
With the benefit of his U.S. experience,
loyalty anymore, and as the internet has
made people more informed, outlet centre
retailers are going to have to work a great
deal harder to engage successfully with
their customers.
The potential for improved customer
care to positively impact business is not in
doubt, but it requires knowledge, experience,
drive and total commitment
to make it happen
successfully, Gardner says.
Focussing on the challenge
of internet shopping,
still seen as a threat by
many outlet centre retailers,
Gardner urged them to
embrace the new medium
as a huge opportunity.
“Any retailer not engag-
in Holland, Belgium, Germany, Austria,
Ireland and the Czech Republic.
Now, Sunglass Time is the biggest
sunglass outlet operator in Europe, consistently
introducing new lines. It has also
strengthened its winter offer with a wider
range of goggles and sports glasses.
Sunglass Time sees outlet shopping
as a major growth area and is looking
for areas of 350 sf to 500 sf in highfootfall,
upmarket outlet centres.
Southern Europe is a particular focus
for the retailer, where it has recently
experienced a 50 percent increase in
comp-store sales. n
Ober stated that some outlet centres
fail, but “a centre won’t fail if its retailers
support it.”
Ober reminded the audience that in
the U.S. 2001 recession, a number of
outlet chains closed their doors. He
urged factory outlet developers to think
globally and invite retailers to the table at
the planning stage in order to understand
their expansion ambitions.
E-commerce is still perceived as a
threat to bricks and mortar retailers, but
outlet retailing can be the beneficiary:
When E-tailers over-order and undersell,
the excess stock often ends up in
outlet channels. The panel agreed that
E-commerce won’t triumph over those
outlet centres offering a destination
experience. n
ing with customers through the internet is
putting themselves at a big disadvantage,”
she said. “Your customer relates closely to
shopping and when they can do that in
the comfort of their own home, you have
to make it worth their while to visit your
centre when they have the choice of going
elsewhere – or not going anywhere at all
and having it delivered to them. Customer
expectations are rising – tomorrow they
will want something more, so using every
means of communication is essential.”
Ros described the four typical customer
groups:
l The loyal and satisfied are your
advocates
l The loyal but not satisfied feel like
hostages and must be rescued
l The not loyal and satisfied are mercenaries
who will shop anywhere
l The not loyal and not satisfied are
terrorists who won’t be happy no matter
what
Ros urged outlet centres not to waste
time trying to please the last group. “You
can sack customers if they’re never going
to benefit your business,” she said. “You’ll
never convert them to advocates.” n

Cannes crowd shows outlets flourishing
By Linda Humphers, Editor in Chief
In the last four years of attending
Mapic, ReedMidem’s
annual retail convention in
Cannes, I’ve seen evidence everywhere
that factory outlet retailing
is flourishing and growing in
Europe.
Though many outlet development
companies have fallen away
from exhibiting at the mid-November
deal making event – Freeport,
McArthurGlen and Promos
among the exceptions – business
was bustling with meetings held in
cafés and yachts surrounding the
Festival Centre.
Colin Brooks, managing director
of UK-based Realm Ltd.,
organized an outlet-industry
forum during Mapic to discuss
issues affecting the sector’s ongoing
success. On everyone’s mind is whether the outlet
sector in Europe will follow the same
growth patterns seen in the UK and
in the U.S.
Brooks theorizes that planning approvals
will stave off over-saturation,
but he was intrigued by the possible
emergence of a tiered-tenant system
similar to that seen in the U.S. He was
Brooks
referring to the evolution in the U.S.
of three types of centres tenanted by
outlet retailers: pure outlet centres, value-oriented centres
(a significant number of outlet tenants complemented by
off-price/discount/local retailers) and lifestyle centres (an
upscale combination of outlet tenants and traditional retailers).
“This delineation is interesting,” Brooks said. “Retailers
choose which of their concepts to put in a centre and the
landlord’s job is to help them choose
which concept is right for that centre.”
As the conversation turned to the
trend toward institutional ownership,
Neil Varnham said that Henderson
Global Investors’ initial, almost accidental
acquisition of McArthurGlen
projects has progressed into such a de-
liberate strategy that the asset management
firm has created a fund specifically
for outlet centres.
“We’re not in the business of taking risks,” said Varnham, who
is the director of retail property for Henderson.
“We protect our clients’ money.
The outlets are a retail business, which is
completely different from the retail real
estate business.”
Recognizing the paramount importance
of brands, the group turned to Pieter Van
Voorst Vader of Nike to explain how his
company views its retail mission.
Van Voorst Vader
“Nike is very liquidation-driven, very
1 InternatIonal outlet Journal u Winter 2008
In November, Colin Brooks, far left, managing director of asset management firm
Realm, organized a forum in Cannes to discuss issues pertinent to outlet retailing.
Varnham
disposal-driven,” said Vader, who is Nike’s real estate manager.
“Nike Outlets isn’t yet a retail business. We produce maybe 10
to 15 percent for the outlets in Europe, usually a white t-shirt
with a swoosh. Retail is a silo, with opportunities filtering down
at every level. Sensitivity is very important to us, but we judge
it by each and every location.”
Varnham said that sensitivity was a huge worry when McArthurGlen
was opening Roermond Designer
Outlet in The Netherlands. “The impact
turned out to be that retailing in the city
of Roermond actually improved after the
centre opened,” he said.
Like their ownership and tenanting,
outlet centres are ushering in new designs.
According to Mike Nagelsztajn, director of
Nagelsztajn
S&P Architects, early outlet centres were
cost-driven and often poorly designed.
“They were initially designed to look cheap,” he said, “but
that’s changing, and other elements, such as the food offer,
are really improving.”
The group thought that Value Retail’s Bicester Village was a
major influence on outlet-centre design in the UK and Europe,
with its emphasis on reflecting the local market and creating an
intimate, town-centre environment.
Nigel Robson, director of Londonbased
Resolution Property plc, said that
developers in Sweden, Spain and elsewhere
were doing a number of things to
add integrity to their projects. “To gain
credibility with the tenants,” he said,
“we’re seeing more partnering with estab-
lished factory outlet developers.”
Varnham concurred and said that con-
Robson
tinued consolidation was a sure thing, with more acquisitions
likely by the big three outlet investors – Morley Fund, Hermes
and Henderson.
“How will consolidation benefit retailers?” Vader asked.
“Consolidation leads to efficiencies in the operations and
marketing spend,” Varnham said, “and it drives down costs
while driving up quality and standards.” n

News from Cannes
McArthurGlen
rebrands itself
Now that McArthurGlen has come out
of the outlet closet to help brands open fullprice
stores, the developer has decided to
launch a new image campaign for itself. According
to marketing director Chris Green,
McArthurGlen’s mantra is to solve problems
for brands, whether that means helping
them disposing of last season’s products or
finding new channels of distribution.
“We’re not just the outlet guys anymore,”
Green said. “We really want to
broaden the way brands think of us.”
After thoroughly reviewing its own marketing
process, McArthurGlen saw that it
needed a completely integrated marketing
picture that blended 40 different opportunities
into a cohesive message.
“This is all being developed with the
retailers in mind,” said Green, who was an
executive with Getty Images before joining
the retail sector. “We work with over
700 brands, so our business isn’t about the
properties, it’s about the brands.”
McArthurGlen has hired Vogue magazine
photographer Christian Schuller to
do the business-to-business and businessto-consumer
art.
Keeping up with OCI
Although the opening of its second centre
in Germany was just weeks away, Outlet
Centres International’s Hans Dobke,
Stefan Schafer and Regina Leitner were in
Cannes, keeping their business ball rolling.
Invitations to the 15 December opening
of OCI’s Designer Outlets Wolfsburg had
been posted, and Dobke, who is the director
of OCI, was already talking about the
centre’s planned 10,000-m² phase 2.
“We’ll open phase 2 in summer/fall
2009,” he said, adding that the expansion
was already 20 percent preleased. The
11,500-m² phase 1 opened 80 percent occupied
and is expected to be 100 percent
leased by this summer.
OCI, with its eye on a third German
outlet project, is in a bidding war for a
site 50 to 75 miles south of Hamburg.
The winning bid is scheduled to be
announced mid-year. After revealing
this news, Dobke casually mentioned a
planned fourth site in Germany, but he
wasn’t giving out any details.
2008 busy for Promos
Filippo Maffioli, sales director of
Brescia, Italy-based Promos, said that
Palmanova Outlet Village in Udine, Italy,
which was scheduled to open in February,
will have an unusual phase 2 – the expan-
McArthurGlen’s marketing director Chris Green stands in front of the developer’s
new creative, unveiled at Mapic, shot by Vogue photographer Christian Schuller.
sion will feature a hotel, resort, fitness
centre and restaurants. “Phase 2 will
open at the end of the year,” he said.
Additionally, Promos’ Lake Malaren
Outlets will open in Shanghai in March,
and Pescara Outlet Village on the Adriatic
Coast will open in the autumn.
“And I’m getting married in 2008,”
Maffioli said. “It’s going to be a pretty
busy year for me.”
Floating outlet
centre proposed
Ubaldo De Vincentiis, president of
Europ Invest, based in Italy and Belgium,
was in Greece when he got the idea for
the Luxury Outlet Ship.
“In Greece, there are lots of islands
and not much good shopping,” he said.
“There are beautiful ports, but big ships
can’t get into them. So I thought of a
ship with 60 to 100 duty-free outlets that
would not only be important because of
tourism, but could offer special events,
leisure and entertainment.”
The ship is being built in Italy by a
Greek company and is expected to launch
Ubaldo De Vincentiis
in 2009, he said. De Vincentiis hasn’t
nailed down a lot of the venture’s details,
but he isn’t worried. His affiliations with
outlet projects in Serravalle, Valdicchiana,
Pescara and Zagreb are always on the
front end: “I start the process and then
the developer takes over the leasing, marketing
and management,” he said. “Once
I sell the property, I’m out of it.”
De Vincentiis has some sketchy ideas
on where the ship will sail (from Russia to
the Mediterranean) and definite ideas on
who the tenants should be. “Of course,
we need some recognized brands,” he
said, “but I would like to bring together
about 100 small manufacturers and have
them create exclusive, made-for-outlet
goods. This idea brings the possibility of
growth to the hundreds of small manufacturers
all over the world.
“I don’t agree that an outlet centre has to
copy McArthurGlen and Value Retail.”
A new day dawns
for Freeport Limited
Now that the long process of obtaining
new ownership has been completed,
Iestyn Roberts and Chris Milliken of
Freeport have been working on improving
Freeport Limited’s projects in Sweden,
Portugal and the Czech Republic,
as well as gaining approvals for a new
scheme in France.
At Freeport Lisbon Designer Outlet, the
cinema has reopened and a relaunch programme
of the entire scheme is in place,
as is a new centre manager. “For the first
time we now have a local person managing
the centre and we feel that he’ll build a lot
of bridges with the tenants,” said Roberts,
who is CEO of Freeport.
Leisure activities at the Lisbon centre,
(See Freeport, page 18)
Winter 2008 u InternatIonal outlet Journal 17

News from Cannes Continued
Freeport
(Continued from page 17)
including paintball, skateboarding and
five-sided football, are doing well alongside
traveling exhibitions and museum displays,
he said. “I’m thinking of putting in a wax
museum,” he said. “We have one in Excalibur
(in the Czech Republic) that’s quite
popular, especially the figures of Saddam
Hussein and Arnold Schwarzenegger.”
Freeport’s Excalibur is doing “hugely
well,” Roberts adds, with footfall up 35
percent and trading up 28 percent from last
year. Roberts attributes much of the success
to, again, a local centre manager who’s
adept at reading the market and working
with tenants. That centre is 90 percent
leased and should be full soon, he says.
At Freeport Kungsbacka in Sweden,
trading is up 15 percent and the centre’s
occupancy has grown to almost 90 percent.
“An ICA supermarket is opening
next door in March, and that will be good
for us,” he said.
Now that the outlet portfolio is owned by
Carlysle Group – the deal closed on 3 September,
2007 – Freeport is once again on the
development track, according to Roberts.
“We’ve pledged to rebuild the portfolio,
mostly from ground-up development,” he
said. “We have a strong base and we’re
well-capitalized now. And after five years
we’ve gotten our approvals for our Roppenheim-Alsace
centre [in France]. We
hope to start construction around Easter
and open the centre in autumn 2009.”
Roberts said Freeport was also looking
at a couple of acquisitions, but “the prices
are still too optimistic.”
Land Securities set
to de-merge itself
Peppered with questions about Land Securities
radical split plan, which came into
public view in November during Mapic,
portfolio director Phil Cottingham explained
that the new structure would simply
“formalize the way it already works.”
Land Securities, the UK’s largest real
estate investment trust, will take about
a year to separate itself into three main
iOJ calendar
1 InternatIonal outlet Journal u Winter 2008
divisions: a property
outsourcing
REIT, a retail
REIT, and a London
REIT focusing
chiefly on the
office market.
“The de-merger
should make
each division
more nimble,” Phil Cottingham
Cottingham said. Land Securities is
involved in three factory outlet centres:
Gunwharf Quays in Portsmouth, The
Galleria Outlet Centre in Hatfield, both
in England, and The Outlet at Bridgewater
Park in Banbridge, Northern
Ireland.
Working closely with tenants is crucial
in the outlet arena, he said. “We operate
on the premise that customers aren’t loyal,
that they have to be wooed all the time,”
he said. “So we train shop staff and provide
big incentives for well-run stores.”
The Outlet Company
seeks new frontiers
Neil Thompson, CEO of Warsaw-based
The Outlet Company, said he’s looking to
the Ukraine and Russia as the next frontier
for Fashion House Outlet Centres.
“We’ve got some sites under discussion,”
he said.
Pioneering the outlet concept in Eastern
Europe has already turned profitable
for Thompson and company, as evidenced
by the sale of phases 1 and 2 of Fashion
House Warsaw in August to AIB’s Polonia
II Fund for e45 million. The sale of
the centre’s phase 3 – which opened 23
November with such tenants as Tchibo,
Park Avenue, Villeroy and Boch, Gardeur
and Vision Express – is expected to take
place in the first half of this year.
“We are currently in negotiations with
a party for FH Gdansk and FH Sosnowiec,”
Thompson said, declining to be
more specific. “Work began last week
on Sosnowiec’s second phase (opening in
September) and we expect to start work
in the spring on the phase 2 at Gdansk,
2008
15 February Spring IOJ deadline
21-22 February VRN Spring Outlet Deal Making (Orlando)
16-18 April ICSC European Conference (Amsterdam)
21 April Summer IOJ -deadline
18-21 May ICSC Spring Convention (Las Vegas)
15-16 September VRN Fall Outlet Deal Making (New Jersey)
13-14 October 2008 European Outlet Conference (London)
with the opening in spring 2009.”
The Outlet Company and GVA
Grimley Outlet Services will continue
to lease, manage and operate the centers
for the new owners.
BVS Villages to be
the next generation?
Alain Van Hulle, Barbara Horatz and
Robert Van Den Heuvel, all of BVS
Company Store Villages, were making
the rounds letting everyone know that
groundwork has begun on Alpenrhein
Outlet Village in Landquart, Switzerland,
and that the groundbreaking will be in
March. The opening is scheduled for the
end of this year or early 2009.
“We’re about 25 percent leased with
major international, German, Swiss and
Italian designer brands,” said BVS managing
director Van Hulle. “It’s a nice mix
and we have a well-balanced merchandising
plan for both sides of the center.”
Van Hulle said BVS’ villages will
be the next generation in European
outlet centres: “There have been four
generations,” he said. “We started with
regenerations, then went to strip centers
and U-shapes, then to village styles,
where most are now. Our centres will be
leisure/outlet centres, designed to draw
more people for longer periods.” n
JOHN L BuCKSBAuM, SCSM
Chairman
MICHAEL P. KERCHEVAL
President and CEO
RuDOLPH E. MILIAN, SCSM, SCMD
ICSC Senior VP
JAy STARR
ICSC Senior VP
Florida oFFice +1 727 781-7557
FaX +1 727 781-9717
29399 U.S. Hwy. 19 N., Suite 370
Clearwater, FL 33761
LINDA HuMPHERS
Editor in Chief, ext. 472
lhumphers@icsc.org
RANDy GDOVIN
Art Director, ext. 451
rgdovin@icsc.org
KAREN KNOBELOCH
Advertising Prod. Mgr., ext. 441
kknobeloch@icsc.org
SALLy STEPHENSON
Senior Advertising Executive
+1 847 835-1617
Fax: +1 847 835-5196
sstephenson@icsc.org
International Outlet Journal is a quarterly publication for
the non-U.S. factory outlet industry. Copyright © 2007