Factory Outlet Centres (FOC) are flourishing in Europe as “many consumers cut back on their purchases of discretionary goods and instead spend more on ‘one-off’ items typically found in outlet stores,” according to a new report from Savills, a global real estate consulting firm.
Germany is the #1 target nation, according to the report, for retailers and brands looking to diversify their outlet offerings.
Brands were asked which nations in Europe have the most potential for FOCs for a poll (conducted by ecostra). Furthermore, 46 per cent of them expressed interest in growing in Germany during the following three years. France came in second with 35 per cent, Spain third with 29 per cent, the UK fourth with 19 per cent, and Italy fifth with 19 per cent.
According to Savills, a FOC includes both conventional outlet malls, that sell unsold merchandise from brands to customers at a discount and designer malls, made up of high-end or luxury labels that also sell products at a price.
Savills has also said that outlet stores are able to provide good discounts on high-quality products because of the excess stock that retailers were unable to sell as a result of the epidemic. Additionally, because they are typically outside and away from the city, they have lower operating costs and less sensitivity to energy costs.
According to Georgia Ferris, European Research Analyst at Savills, outlet centres’ popularity is partly a result of their strong performance during economic downturns due to their customary discounts of 30 per cent to 70 per cent on merchandise, which they use to “offer value for money to an increasingly cost-conscious consumer.”
Ferris added that outlet centres have also been “relatively shielded from the rise of e-commerce as, generally, discounts are only available in-store”.
