| {{Facilitator}} |
| {{Jörg Nowicki}} {TextilWirtschaft} |
| {{Speaker}} | |
| {{Ulrich Nordhorn}} President {Retail Development Group} |
|
{{Jörg NOWICKI}}
_ I am the Senior Editor for Textilwirtschaft, Europe’s leading weekly trade magazine for the retail and fashion industry.
{{Ulrich NORDHORN}}
_ Previously Director of Gap, I also worked for Mc Donald’s, did some work for Habitat and founded my own business for the German market: Retail Development Group. His objective is to help wholesalers to become retailers. Our focus is to provide consultancy and to develop factory outlets in Germany.
{{Jörg NOWICKI}}
_ Germany is often quoted as the land of ‘too much retail space’. Since the reunification of Germany, space rose from 70 to 150 million square metres. Part of the retail spending went down from 35 % in 1995 to 29 % in 2006. For over 10 years, Germany did not have a good turnover except in 2002. This year, in 2007, the German Retail Association calls for another year of stagnation or slight decline due to the high value of added taxes (now 19%). Germany hosts 400 shopping centres with 24 new shopping centres next year.
{{Ulrich NORDHORN}}
_ With 82 million inhabitants and 7 major centres, Germany’s development of factory outlets is slow in comparison to other countries such as the UK, where there are already 27 centres for 60 million inhabitants. Yet, performance in the German outlet centres is deemed fairly good (for instance Metzingen).
{{Jörg NOWICKI}}
_ Will there be any changes for new developments?
{{Ulrich NORDHORN}}
_ In Germany, there is a strong lobbying from department store companies against further development of factory outlet centres. In the Northern part of Germany, Bremen, the 9 years old outlet centre, has experienced phenomenal sales with all the big brands (Nike, Adidas, recently Esprit…) and a stock room of over 1000 sq. metres. This project is almost completed. In Otwurp, a 5000 square metre of selling area hopes to expand but the permit has not been granted by the state yet. The strong lobby from department stores is a massive obstacle. In Otwurp, there is a new legislation which forbids factory outlet centres to establish in a city comprising less than 1000 inhabitants and requires both local and regional consent.
{{De la salle}}
_ What about other states?
{{Ulrich NORDHORN}}
_ The overall permit process is a difficult and complicated process. Other states face the same difficulty as in Otwurp (Hessen). In lower Saxony, the State Minister has yet to grant one permit to the winning bidder.
{{From the floor}}
_ Is it through legal consent or through local communities that the permit is granted?
{{Ulrich NORDHORN}}
_ It used to be a local community issue but it is now the state law that decides on granting the permit. All state governments are proceeding to prevent out of town developments.
{{From the floor}}
_ As a marketing specialist, and from a consumer point of view, we want the factory outlet to open even if it will be more difficult to establish them in Germany than in other countries. Germany’s centres will be best taking into account its past experience in factory outlet.
{{Ulrich NORDHORN}}
_ German customers do appreciate outlets but it will take some years to develop. It is all about the legal situation and its consents. Italy has 17 outlet centres, Spain has 12, France has 15…
{{Jörg NOWICKI}}
_ Germany has 7 outlet centres. Why is Germany in the middle?
{{Ulrich NORDHORN}}
_ It is very difficult to get the legal consent like in France. When you waste 700,000 € in legal costs, you understand that financial means and power are crucial to get to the final stages of getting a permit.
{{Jörg NOWICKI}}
_ Is it also different because of the structure, of the retail industry? Is it different in the UK than in Germany?
{{Ulrich NORDHORN}}
_ Retail industry is changing in favour of the outlet industry since concession shops are less and less surviving to recession.
{{From the floor}}
_ The German mentality has also changed, it is today less shameful to go to an outlet.
{{Ulrich NORDHORN}}
_ It is still a bit shameful.
{{Robert VAN DEN HEUVEL}} (BVS Outlet villages)
_ Times have changed, the market is less hypersensitive about outlet factories. There are still political forces against factory outlets but this will change in time.
{{Henrik C.MARIS}}, Factory outlet consultancy
_ Factories are going to breakthrough and brands will need to hide under a name (such as Mac Arthur Glenn). Question is, how will the rules be bent? Will there be more of multi brand shops in one outlet centre or will there be more stand alone shops?
{{Ulrich NORDHORN}}
_ It is a temporary problem due to a lot of new laws. 5000 square metres is still possible but you need a significant size. The mono label is the market of the future.
{{From the floor}}
_ And what about the development of outlet centres on city borders?
{{Ulrich NORDHORN}}
_ There are possibilities in Germany like one city centre in Ettlingen next to Karlsruhe. Catchment is there with a beautiful historic city centre but there is no space (less than 2000 square metres).
{{From the floor}}
_ But then, retailers won’t want out-of-town outlets?
{{Ulrich NORDHORN}}
_ That is what politicians aim at. They want a factory outlet in an underdeveloped city but it also means a centre without any attractiveness.
{{From the floor}}
_ It goes against the concept of factory outlet, against the idea of leisure activity. What do you think of East Germany?
{{Ulrich NORDHORN}}
_ We have studied the markets and we do not believe in investing in areas like Dresden because spending power is very low and inner-city development is going up. There is too much retail space in the East and there is a different kind of consumption, consumers are not driven by brands like in the West.
{{Jörg NOWICKI}}
_ As a result of restrictions, Germany is neighbouring more outlet centres in France and Belgium. Is this trend going to get more serious in the next years?
{{Ulrich NORDHORN}}
_ Belgium outlets centres attract many German customers: they are opened seven days a week, they are located only 30 minutes away from Düsseldorf. Soon in Salzburg, there will be a new outlet centre.
{{From the floor}}
_ The example of Salzburg is a huge undertaking that will turn a shopping centre into an outlet mall.
{{Ulrich NORDHORN}}
_ If this Austrian outlet is established, it will attract the German customers away from German outlets.
{{Jörg NOWICKI}}
_ Is Germany competitive enough in terms of its opening hours?
{{Ulrich NORDHORN}}
_ Germany is competitive in comparison to The Netherlands where outlets close at 18pm but will need Sunday openings to be more competitive.
{{Jörg NOWICKI}}
_ The Internet is open 24 hours, 7 days a week. Does that represent a threat for outlet factory centre business?
{{Ulrich NORDHORN}}
_ Internet is a real competitor for the retail market and within 6 months you can judge the efficiency of an internet platform by the sales of a top store.
{{Jörg NOWICKI}}
_ What kind of brands does a factory outlet centre in Germany need?
{{Ulrich NORDHORN}}
_ A premium factory outlet centre focuses more on international luxurious brands (Gucci, Prada), and on mainstream brands to keep the frequency in the centre and its young customers. It also focuses on sports brands (Polo) and middle market brands (Tommy Hilfiger, Ralph Lauren) for which people will drive 1 hour to 1h30.
{{Jörg NOWICKI}}
_ There are no real designer brands in these outlet centres, so why is it called a ‘designer’ outlet centre?
{{From the floor}}
_ The aim is to define an outlet that is not a factory, but also offers good value retail brands. You need the mass and the class: the name ‘designer outlet’ attracts all of those.
{{Jörg NOWICKI}}
_ Do customers only come for the number of stores?
{{Ulrich NORDHORN}}
_ Diversification of brands and proximity to transportation are crucial. The main focus is to make money on the main high street not in the outlet industry (Puma, Esprit) although it is a good business for retailers.
{{Jörg NOWICKI}}
_ Architecture is a sensitive issue, what kind of architecture represents the future for an outlet centre?
{{Ulrich NORDHORN}}
_ Outlet centres need a combination of big box outlets (Bremen), a cosy city atmosphere and big surfaces but you do not need a Disneylike atmosphere.
{{From the floor}}
_ There is not one design. The Bremen concept works for certain retailers. Each outlet centre has to consider the league of the brands and then define its design.
{{Jörg NOWICKI}}
_ There are 7 factory outlet centres in Germany. How many new centres will be added?
{{Ulrich NORDHORN}}
_ Over the next 3 years, there may be 3 to 4 new permits for new outlet centres in Germany, in lower Saxony, in Otwurp, in Berlin, maybe in Neumünster.