Broadening of outlet centres’ role is the key to continued consumer spend

25 Oct 2022

An article that featured in React News

As the cost of living challenges really start to bite, it’s time to show outlets are about more than just a good deal.

In the summer, it was widely reported that the future of Scottish retail was bleak following the shift to working from home and concerns over consumer confidence.

Footfall drops as high as 15.8% between 2021 and 2022 were reported by the Scottish Retail Consortium, who suggested that across the country retail was struggling with high streets becoming increasingly ‘hollowed out’. Whilst we are very supportive of all forms of retail in these ever-evolving times, we do not believe this is an accurate picture across the piece. Indeed, there are positive stories to tell where the offer is right.

Apparel sales driving growth in Scotland

At Livingston Designer Outlet, the largest outlet centre in Scotland, fashion sales picked up over the course of 2022 with footwear, sports, menswear, and womenswear the big winners. Menswear saw an increase of 29% in sales and womenswear also saw double digit growth in July with an increase of 15% on last year. A mix of formal suiting (occasions) and casual summer essentials were the drivers with heatwaves and holidays triggering a seasonal spike in clothing demand. Whilst sports brands always do well at ‘back-to-school’ time, apparel has driven growth.

So why success here, where others are struggling? We believe this is where the strength of the outlet offer comes in. It’s safe to say that consumers are looking for a deal, particularly as the cost-of-living crisis begins to take hold. In outlets, a combination of keen pricing plus additional seasonal discounts is driving sales, we still have clearances but most brands are now very active with layering on extra incentives to convert spend. We are also seeing dwell time increase, evidence of how consumers are looking for a more sociable shopping experience post-pandemic. At Livingston, F&B sales were up 10.6% between May and September when compared with 2021 and 13.2% when compared with 2019.

Average spend on the up as experience edges ahead

We have also seen price inflation with average spend increasing 25% between 2019 to 2022. As traditional luxuries such as holidays and high value purchases become less affordable a day out to a ‘retail destination’ devoted to value becomes a more appealing option. While the trend we saw coming out the pandemic of the ‘purposeful shopper’ is still in play, increasingly people are looking for an experience. People still want to spend on enjoying themselves and days out; they just want to do it prudently, weighing up whether it is better to buy fewer items of high quality rather than fast throwaway fashion.

Outlets are embracing localism more than ever and they are increasingly mindful that they can’t just be all about discount and brands. There must be some level of community engagement and responsibility taken – a broadening of the mission so to speak.

The most successful centres and schemes will be looking to capitalise on this new trend as much as possible. We are now offering everything from yoga classes and style blogger workshops to charitable initiatives with Cancer Research. Coming out of the pandemic a new sense of localism has emerged – tapping into this is key. People are more likely to shop in places that have standing within local communities through a sense of loyalty and a desire to support local businesses, their community and its economy.

To help combat the difficult economic climate, centres and schemes are also going to have to look at ways of attracting new customers. Over recent years outlets have started to attract a younger, broader demographic. We are always looking at ways to proactively retain and grow this new base. For example, we have brought in sustainability initiatives that chime with the ethics of the socially conscious younger generation such as the procurement of green energy and a zero waste to landfill target.

Marketing is also increasingly geared towards showing people there is more to outlets than just a good deal. By promoting the whole offer, we hope to rid centres of their ‘once in a while’ visitation pattern. People might see a workshop, class or green initiative and be encouraged to come back far sooner than they otherwise would have.

The lesson here is that if you do more than just get the price right you can do well. Anyone can put more percentage off signs on their posters but it’s important to realise that consumers today aren’t as easily fooled. The key is to ensure that you flesh your centre brand to be in line with the motivations, beliefs and wishes of your local community– this is a switch from a push to a pull strategy – invite people in rather than bombarding them with broadcast lobbying.