Outlet Centre International's Designer Outlets Wolfsburg

COVER STORY
economic downturn?
Outlets optimistic
By Linda Humphers
Editor in Chief
With so much attention being
paid to the global economy,
it’s little wonder that one
weary retailer threw up his hands and
told a reporter, “It’s the media that’s
talking us into a problem.”
Sometimes blaming the messenger
is appropriate, but when the topic
concerns profitability, most people
are more than willing to chime in with
their disparate opinions on what’s
causing the supposed recession and
what needs to be done to conquer it.
Some have said that online retailing
is the true Big Threat, while
others have said e-tailing will save
their business. Almost everyone said
online retailing’s rise will be meteoric
and needs to be considered, recession
or not.
Some have said that in an economic
downturn brands have to be more
creative and that those with the fastest
supply chains will be the most
competitive. Others have pointed
to the importance of the “natural,”
“renewable,” “sustainable” message
to reach the growing number of ecoconscious
consumers.
As one retailer went on record saying
shoppers are sick of discounts
while others countered that today’s
consumers, “the choice generation,”
are looking for premium value. In
fact, the most commonly heard comment
is that consumers demand a
rewarding shopping experience with
the best deal on the best brands and
the best quality.
While European shoppers visiting
the U.S. are certainly enjoying
the dollar being at an all-time low,
they might have a tough time in a
InternatIOnal Outlet JOurnal SPRING 2008
The success of outlet centres in Poland, such as Fashion House Warsaw (above), gives
industry execs cautious optimism regarding the sector’s ability to withstand a recession.
few months finding European labels
in specialty stores. U.S. specialty
retailers are saying they can’t afford
European goods right
now, but could that
economising translate
into more outlet
stores with more
goods in Europe?
And how much
would a cutback in
American sales hurt
European brands?
Not much, say many of them, who
have been expanding their businesses
in Asia and the Middle East.
To put the fears of a sinking economy
into perspective, consider that
in the U.S. the 2007 holiday selling
season was flat, leading to a prediction
by the International Council
of Shopping Centers, IOJ’s parent,
that some 5,700 U.S. stores will
be shuttered this year. However,
that number isn’t out of line with
store closings in the past, when,
for instance, 5,769 stores closed in
e-tailing
could be
more important
to outlets than
the economy
2004, and 6,890 stores shut in 2001.
So whether the European or global
or U.S. economies head into downturns
or don’t, the
smart money is always
on planning ahead.
As Pascal said, luck
shines on the wellprepared.
Luxury goods analyst
Pam Danziger says
retailers can weather
economic storms with
two factors:
l Increase the amount of time customers
are in the store
l Increase customer interaction
with the merchandise and the staff
Since shoppers already spend much
more time in outlet centres than they
do in traditional shopping venues,
2008 shouldn’t hold too many surprises
for the sector.
IOJ talked to seven European outlet
industry executives about the economy.
Their comments follow on pages
6 and 8. (Continued on page 6)