The development of a US retail format in Europe: the case of factory outlet centres

Abstract

It is not uncommon for the USA to be the origin of innovative retail formats. In recent years in the UK, the most recent retail out‐of‐town developments have their roots in the USA, most notably warehouse clubs and factory outlet centres. Charts the growth of one of these formats, factory outlet centres, in the UK and discusses the prospects for development potential in other European markets. Semi‐structured interviews were carried out with major developers and development consultancies to ascertain the type of strategies pursued, the locational criteria for site selection, the role of tenants in this process and the degree of customization or standardization of the format in market entry strategies. Although the UK appeared to offer US developers the best opportunity for market penetration, planning policy has progressively worked against the development of this retail format. It is unlikely that any more than seven to eight US‐style factory outlet centres will be built out of a total of 26 developments by 2001. There has been a considerable downsizing of initial proposals, with the creation of smaller, more downmarket centres than in the USA. US developers have been forced to seek sites in the rest of Europe much earlier than originally intended. Their strategies have differed from the standardized, upmarket brand character of one operator compared with a more customized approach adopted by the market leader.