Resilience from Place, Product, and Partnership

How internet-proof outlet centres have adapted to the pandemic to support ever-changing retail habits.
By Angus Fyfe

Shopping habits were evolving long before lockdown restrictions were introduced at retail and leisure outlets. The doubling of online sales within six months has illustrated the dramatic growth in demand for speed, choice, and delivery. That said, there are three themes evident within the schemes managed by Realm that online just cannot replicate, and this gives us great confidence in our proposition.

Place: Realm-managed outlets in the UK saw a significant and rapid bounce-back when reopening between lockdowns last year, with a return of footfall levels to 85% on the previous year. This compared favorably to full-price shopping centres, some of which reached just 40 to 60% footfall in the same periods. With 60% of all UK shoppers ranking safety as the number one consideration on their agenda in 2020 (set to rise to 80% in 2021), this has proven a renaissance element of outlet shopping – the reassuring “secure feelings” that have consistently appeared in our centre research have been brought much more to the fore.

Product: The shift in consumer behavior extends to the products that are being bought – and, unsurprisingly, this has been influenced by the extended periods of time that people have been spending in their own homes. Baking, cooking, redecoration, and home makeovers have been prioritized over holidays and social events and, as a result, homeware sales in some of Realm’s schemes increased by 15% last year. Home has become a sanctuary and the introduction of more flexible working is likely to sustain further demand for homeware, cooking equipment, and tableware, which are all well represented at our schemes, so we expect positive sales growth this year.

Further categories to have experienced double-digit growth were sports, outdoor, beauty, and confectionary as our outlet retail destinations served the needs of consumers and their new-found fitness regimes and appetites to feel and look good – whether for a sense of normality, the next Zoom meeting, or social media feeds starved of content. Some stores saw growth as high as 40% in Q4 last year, and, with further interest from brands in these anchor categories, it seems the leisurely nature of outlets is striking a chord with leisure-orientated shoppers.

Partnership: With fewer periods to trade in last year, many retailers have questioned their purpose and commitment to the brick-and-mortar sales channel. The role that outlet schemes can play in supporting cashflow for retailers cannot be underestimated, and as the sector has matured, so too has the level of investment and commitment to physical retailing at our schemes. More and more brands have become receptive to having both a full-price and outlet presence and are grateful for the increased levels of support and data-driven decision making that is prolific throughout the Realm portfolio.

Outlets are not so much managed but nurtured, fueled by the collaborative nature of turnover driven leases and the “in this together mentality” that has prevailed throughout the pandemic. It is no surprise that this partnership approach, which has proven itself so successfully for over 20 years in the Realm portfolio, is being considered more commercially and is being requested by many full-price retailers.

So, collectively, the three Ps have combined to create a war chest against the appeal of online retail. Outlets are enjoyable and rewarding – two massive selling points in the current climate – and to be able to deliver this at a center in which operator and tenant work in harmony is a bonus. With the rise of wellbeing touching so much of our lives, there is something to be said for the state of mind of our shoppers and the outlet proposition, with resilience being central to both. Realm outlets weathered the last recession, and there is nothing to suggest that they will not continue to thrive.

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