Issued 5th March 2020
Forget the challenging 6-week Christmas trading period for retailers. It has been over three years since the Brexit vote, and, in that time, it is fair to say that the retail sector has been significantly impacted by increasingly cautious shopper sentiment. Now, the impending threat of changing trade deals is set to raise prices as the majority of purchases will have to cross a soft, hard, or middling border to get to our shelves. That said, outside of the UK, the retail situation does not seem to be much brighter, and investment in UK retail from international investors has slowed down. Has the unpredictability of outward investment become the new normal?
However, while there is a growing list of casualties, other retail players are still enjoying positive sales figures, particularly in the vital 6-week festive period–which has now grown to encompass Black Friday deals and New Year sales–with JD Sports, Next, and Mountain Warehouse all proudly announcing increased trading figures. The retail sector is waiting with baited breath for more brands to announce positive trading figures from this period. Brexit uncertainty has dominated headlines and decision making across real estate and retail, but since 2017, outlet retail has remained unscathed. Perhaps this is not surprising for a branch of the retail sector whose raison d'être is built on boosting customer spending power, offering a leisurely experience and an array of products that cannot be found on the internet.
Outlet schemes offer a comfort blanket to consumers– soothing a lack of confidence with the knowledge that they are a prudent choice. Specialist asset manager Realm has seen this first-hand across four of its larger UK assets–London Designer Outlet, Livingston Designer Outlet, Dalton Park, and Lakeside Village– with 2019 Christmas footfall increasing by 2% across the assets, supporting a growth in sales of 6%, reaching a total of £43.8 million. This buoyant performance is not exclusive to the promotional push that closes out each calendar year, but a more enduring tale of success, which has commanded recognition from UK and international brands to see the value of having a brick-and-mortar presence in this outlet format.
A physical outlet store offers a window for new customers to experience a leading brand and access its products. In fact, brands such as Under Armour, Guess, and Hugo Boss have all opened new stores at Realm-operated schemes in the years since the Brexit decision, notably, in some instances, converting from temporary pop-ups to permanent stores. Individual categories are also reaping the benefits of an outlet presence during this uncertain trading period, with beauty and health seeing a positively glowing like-for-like sales increase of 19.1% for Christmas 2019. Broadening the offer with more indulgent but indispensable products has seen a seismic growth in appeal of outlets with younger and older customers alike. Throw in the investment that has gone into outlets to increase aesthetic appeal and, perhaps, it is not a surprise that visitors want to spend time in these environments, spend their cash, and do it more frequently.
Elsewhere across the Realm schemes at Christmas, sales of menswear rose by 13.3%, while sports and outdoor wear grew by a similar 13.9%, mirroring the increased consciousness around well-being and staying fit. With their more leisurely brand of shopping, outlets and athleisure are set to be a long-lasting and happy marriage. So, are running shoes and yoga tops the battle uniform of the post- Brexit shopper? Uncertainty since the vote has prevailed across many of the decisions that retailers, landlords, and shoppers have made and continue to make. What we can be certain of is that the internet-proof format of outlets has proven not only to be resilient to Brexit uncertainty but has, in fact, succeeded where others have struggled.