Retail Intelligence - Retail General -

Date: 14 Nov 2000

Throughout much of Europe, purpose built factory outlet villages have emerged as a new retail format only during the last decade. A new report from Retail Intelligence, “Factory Outlet centres in Europe”, states that the factory outlet centre market in the UK is nearly twice that of all Continental Europe. Now attention is focusing on opportunities across the channel.

Market Size
According to data provided by Healey & Baker, there are 57 purpose built factory outlet centre (FOC) schemes operational in Europe, offering a total floorspace of 746,409 sq m.
Source: Healey & Baker and Retail Intelligence 2000

The UK is by far the most important market, having:
 54% of the total in terms of number of schemes (31)
 49% in terms of floorspace (369,369 sq m).
France ranks as the second most developed market in Europe for modern factory outlet centre schemes, accounting for 19% of the total number (11) in Europe and 28% of total floorspace (208,440 sq m).

Future Factory Outlet Centre Developments
There is great potential for the development of FOCs elsewhere in Europe.
Europe: Estimated Factory Outlet Centre Floorspace in the Pipeline, 2000-2003 (sq m)
Source: Healey & Baker; Retail Intelligence ,2000.

Despite strong opposition, there are at the present time, pipeline proposals for:
 a further 49 factory outlet schemes across Europe
 offering a total of 794,032 sq m of floorspace.

And by 2003:
 the UK and France will remain the two leading markets in Europe for factory outlet centres, with 40 and 13 schemes respectively.
 Germany, Italy and Spain will vie for third place, all with nine schemes in operation.
Retail Intelligence analysis predicts France, Germany, Italy, The Netherlands, Portugal and Spain are all set to outperform Europe as a whole in terms of FOC development.


The Developers
Europe: Market Shares of Leading Outlet Centre Developers by Area, September 2000
(as % of total area of all outlet centres)

Developer Market share (%)
BAA McArthurGlen 26.0
Concepts & Distribution 18.7
Freeport 12.0
MEPC 6.6
Silvio Tarchini 4.5

Value Retail 4.0
Morrison Outlets 2.9
Outlet Centres Intl 2.6
Others 22.7
Source: Healey & Baker; Retail Intelligence, 2000.

The market is characterised by a small number of specialist developers: nine operators account for just over three-quarters of all factory outlet centre floorspace in Europe.

European Factory Outlet Centre Market:
Growth Prospects
Austria **
Belgium **
Czech Republic **
Denmark *
Finland *
France ****
Germany ****
Greece *
Hungary **
Ireland **
Italy ****
Netherlands ***
Norway *
Poland **
Portugal ****
Spain ****
Sweden **
Switzerland **
UK **
NB: Growth ratings refer to the relative prospects for factory outlet centre development compared to the other countries shown and not against other retail markets within each country. One star indicates underperformance, three stars an average rating and five stars outperformance.
Source: Retail Intelligence, 2000.

Future Trends in the European FOC Market
As the sector develops we will see:
 further consolidation
 the importance of the relationship between landlord and tenants
 use of FOCs as regeneration projects
 the attraction of FOCs as investment vehicles
 differentiation of the offer through increased segmentation
 operators looking for a closer targeting of their customer base through the appropriate mix of tenants, facilities and design,with the aim long term of building brands in their own right.

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