Expert analysis - outlet centers

The tradition of the outlet center market has existed in Poland for several years. Factory, which was the first such center in Poland, was opened by Neinver in 2002 in the Warsaw district of Ursus.

Today the outlet center sector comprises a total of some 70,000 sqm of operating retail space in six commercial locations, with another 20,000 sqm being constructed. For its part, Neinver is planning further projects in Warsaw and Kraków comprising a combined total space of 34,000 sqm.

A growing trend

The outlet industry has noted a number of years of an uninterrupted growth, ensured by the fact that it fills an important market niche. It is an excellent supplement to existing retail channels, as it responds to the needs and expectations of both its tenants and consumers.

The development of the outlet center sector is being driven by two factors: on the one hand, the dynamic growth of the traditional sales channel, which serves as their supply source; on the other, increasingly difficult economic conditions will encourage consumers with premium brand preferences to switch to these kinds of shopping centers.

As new outlet centers open, growing interest in this type of sales model can also be seen among prospective tenants. Retail chains are increasingly appreciative of this means of selling off surplus products, samples and old collections left in stock from previous seasons. An outlet center ensures they are distributed in a controlled manner and are properly marketed, which in turn allows products' lifespans to be prolonged beyond the after-season sales in the mainstream sales channels.

Each year, more premium Polish and international brands enter outlet centers, including Tommy Hilfiger, Nine West, Olsen and Royal Collection. This broadens the product range offered and makes it more attractive to consumers.

The case in Poland

The Polish outlet center market continues to be the most mature in Central and Eastern Europe. Nevertheless, it still remains far behind the UK, French, Spanish and Italian markets.

Neinver's experience concerning the management of Factory outlet centers shows that these centers' biggest strengths are their product range and the special business model. Such centers offer brand products at reduced prices all year, with discounts reaching 30-70 percent. There are also seasonal sales, held twice each year - in January and February, and in July and August. All outlet shops are stocked on a regular weekly basis.

In Poland, as anywhere else in the world, outlet centers are established within large commercial sites at well-exposed locations, on key regional transport routes, away from traditional shopping malls. This gives them a broader regional reach, making them a lot more than just a local attraction.

Such commercial complexes are also unique in terms of architecture. In the beginning, these objects were rather like factory centers. At present, however, their atmosphere, design of common space and individual shops resemble that of traditional shopping and entertainment malls. The Wrocław-based Factory is one example of this, as it was awarded first prize in the category of public utility buildings in the 17th annual "Beautiful Wroclaw" competition.

Unique assets

The operation of outlet centers relies on the foundation of long-term relationships with their tenants, high standard of facility management, unification of terms of operation for all tenants and close cooperation with them in terms of developing sales and customer management tools.

When it comes to Factory outlet centers, there is a system of customer counters installed in all shops. The system for tenant reporting is an important tool as well, one which gives an overview of the number of visitors to the entire center and in each individual shop. It also allows them to track their sales numbers. The data also allows comparing the operation of centers across the chain as well as between the individual shops and product types, enabling more effective management.

Outlet centers emphasize the importance of the look and feel of the tenant's shopping windows and shop interiors. Another key factor is proper management of marketing and promotional processes, aimed mostly at educating the consumers on an ongoing basis. Each new location in an outlet center is a new consumer market which requires intensive preparatory marketing actions and bolstering of consumers' awareness of the benefits of this type of commercial venue.

The future of the Polish market is expected to bring further sustainable development of the outlet center sector, driven by the inflow and growth of new retail chains, including those marketing luxury brands. One of the most recent trends in that market is combining outlet centers with retail parks and Futura Park, opened by Neinver in Wroclaw, was the first such project.

Barbara Topolska is the general director of Neinver Polska