Entering the European Realm

Dan Mason, managing director at Realm, discusses the company’s recent acquisition of the Ringsted Outlet in Denmark – a joint venture with Patrizia – and what Realm can take to mainland Europe and what we can learn from the European market. Interview reproduced from issue 77 of Retail Destination.

WHAT MADE YOU FIRST DECIDE TO EXPAND INTO THE CONTINENTAL EUROPEAN OUTLET MARKET?

Standing at just over 30 schemes, the UK outlet market is mature and, with space for just a few new destinations, it was a natural step for us to look for opportunities further afield.

Schemes across Europe have echoed the strong recession-proof trading conditions we’ve seen here in the UK and there is considerable synergy with the brands and occupier market. European outlet schemes are often still in their post-development phase where there are natural opportunities for further phases and expansion. Their catchments are now settled into the proposition and it’s a good time to look at developing the tenant mix and broadening the offer and destination experience.

WAS THERE ANYTHING SPECIFIC THAT DREW YOU TO THE DANISH MARKET, OR WAS IT A CASE OF THE RIGHT ASSET AT THE RIGHT TIME?

In many ways, the consumer culture and attitudes to off-price retailing in Denmark and the Nordics are very similar to that of the UK. While this is a bonus, we’re also aware that across Europe, turnover leases are the default leasing structure in outlets wherever they are located. With this established and proven operating platform and a good relationship with international brands, we believe that with the right capital partners there are good returns to be made.

Outlets respond well to remodelling and repositioning which keeps them fresh and helps to maintain their growth. Ringsted Outlet already presents well with a great brand line up and it is part of a wider development on a busy motorway junction, with leisure and other retail park elements. We see an opportunity to create further differentiation and keep the outlet experience as distinct as possible – whether this comes from improving the guest journey and brand line-up so that the outlet offering delivers a broader experience beyond just great prices.

WHAT ARE SOME OF THE KEY THINGS YOU THINK YOU CAN OFFER THE EUROPEAN MARKET?

The European market currently generates €19bn in sales from 15,000 outlet stores and this is expected to grow by a further €1.5bn in the next few years. We feel confident that from the scenarios we have seen in the UK, where schemes are faced with challenges and barriers to growth, we can identify and seize opportunities for enhanced performance. We are a strong operator so some of our data and asset management systems and relationships will hopefully be well received to unlock turnover growth in the right schemes.

The big opportunity for all outlets in Europe is to increase visits from new customers and increase frequency of visits from existing ones. In some European countries we are seeing opinions and attitudes to outlet centres change in response to the rising cost of living, with up to 80% of all consumers now prepared to shop at physical outlets. This is a big increase from an historic benchmark of 40-50% participation. This new interest is being harnessed by the use of clear value messaging and younger shoppers are being attracted by influencers, use of digital channels and a focus on conscious consumerism. Lifestyle and cultural events are also being used to increase dwell time and we are seeing more schemes embracing events and festivals which are rich in photo opportunities.

IS THERE ANYTHING OUTLET OPERATORS HERE IN THE UK CAN LEARN FROM THE EUROPEAN MARKET?

It really important to appreciate the individual characteristics and customer requirements of each trading location within Europe and not to just think of the continent as a whole. The Danish customer is not the same as that within Spain, for instance. Yes, there a lots of international brands which have appeal throughout both Europe and the UK, but the customers’ expectations in terms of more regional and independent retail and food and beverage occupiers will be very different from location to location. Therefore, it is critical to know your customer in each location in which you are operating, and this is where the importance of having really strong local centre management teams comes to the fore.

In Ringsted we are really fortunate to have a very capable centre management team who have an innate knowledge of the target customer and what they want to see at the scheme. Interestingly, cultural attractions are also starting to be used to promote outlets in Europe. With a diverse offer becoming increasingly important there’s no reason why operators in the UK can’t take inspiration from Europe and look to incorporate elements such as touring exhibits of art and sculpture. However, while it is important for all outlets to embrace other complementary uses to widen the customer appeal, we must not forget that international, desirable brands are the cornerstone of our sector.