COVER STORY (Continued from page 4) not quite a recession, but almost Ken Gunn, Director, Fripp Sandeman Partners, retail analysts “THe recession is already here in terms of the European property Gunn industry. We’re seeing high street occupiers getting shy and some developments being mothballed. This must be having an impact on the financing of schemes, especially those in Central and Eastern Europe. “What is interesting is that we have had such a long period of economic growth. There aren’t many survivors left from the last major recession in 1991. In fact, most European outlet centres have not traded through a very severe recession. Do we have the skills in the industry to see our way through? “On the consumer side, the UK is like the U.S. – suffering from the sudden removal of credit. We’ve had Northern Rock bank go under, the Internet’s Egg Banking cancelling 161,000 credit cards [7 percent of its customers] and housing prices stalling, so we are not feeling too buoyant right now. I’d not quite describe the situation as a recession – yet – although Elvi, Dolcis, The Works, ePlay, Ronit Zilkha, ChoicesUK and Stead & Simpson have recently gone into administration. “I’m not sure exactly what’s happening elsewhere in Europe but I would expect European Union funding of new member states to keep Central and Eastern European economies growing for a while. Also, consumers in Poland and Romania are not as dependent on credit as Western Europeans, so that may help, although if we all stop buying Skodas in the West, the credit crunch is likely to spread. “When times get hard, the Western European consumer tends to look for good value, so we can expect the high-street discounters and mid-priced groups like Arcadia to do well. Discounting on the high street tends to benefit outlets as can be seen during January sales, but these days, as U.K. outlet centres look increas- InternatIOnal <strong>Outlet</strong> JOurnal SPRING 2008 ingly like high streets (and each other), I don’t think we can be complacent. “The big concern for me is what happens if the slowdown lasts a couple of years? We are in the middle of one of the most active periods of city-centre retail development since the war, and with schemes like Westfield London, Liverpool One and Cabot Place, Bristol all trying to attract the same premium customers, outlet centres may find it much harder to attract shoppers, particularly if their premium brand/ value for money advantage is eroded. “I guess we are going to hear a lot more talk about point of difference, value of experience and shoppertainment from the marketing guys. I’d add delight your customer (old, but still key), rekindle old flames, take control of key battlegrounds, convert floating voters and prune back the dead wood before it rots the tree.” Been there, done that Julia Calabrese, CEO, McArthur- Glen Europe, developer of 15 designer outlet villages in the most lucrative markets in Europe. “convenTionaL wisdom says outlets calabrese are counter-cyclical, performing better in a slow economy when consumers have to tighten their belts. We do think they turn to us, but we don’t take for granted that they will. We are constantly improvising, constantly monitoring any blip in footfall. We haven’t seen any major decreases, but we’re always watching and at the first inkling of a falloff in traffic, we’re right on it, fixing it. “We’re also constantly expanding our centres and our portfolio to meet the appetite for outlets. Because of our expansion schedule, we study the economy all the time. “We’ve been here for 12 years, and in that time, we’ve experienced regional – not global yet – economic downturns. We stay confident and keep on doing what we do best, which is getting the brands into centres, helping them grow their business, and surprising and delighting the customer.” “Stay sharp all the time” John Drummond, Managing Director, The Guinea Group, developer of Junction One and K Village: “noWadays you have to stay sharp all the time, drummond not just during a downturn or during the holidays, but all the time. Northern Ireland has a small population and to get revenues from a small market you have to work it. “I do a lot of things, most of it nothing new, but it’s continual. We do a lot of outdoor advertising and television ads, plus on-site marketing. We’re spending more on fashion photography and getting more coverage because of it. I’ve got quite a few promotions with brands to get their names out. “And we’re expanding the centre all the time, too. I just stick chunks of new space on when I get the tenants. Five or six at a time, that’s the most successful way for us. That way we won’t have a load of empty units. “The important thing is to not stop, to keep working, all the time.” “<strong>Outlet</strong>s are perfect” Brendon O’Reilly, Partner, GVA Grimley <strong>Outlet</strong> Services, Europe’s only independent outlet-centre manager, with properties primarily in Eastern Europe. o’reilly “From my perspective as a property consultant based in the UK, I can say that in the UK there certainly is a loss of confidence in the economy. But I mostly work in Central and Eastern Europe and there is no economic uncertainty there. “<strong>Outlet</strong>s are counter cyclical – when (Continued on page 8)
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