Shoppers buy into bliss at Bicester

James Thompson on the venture in which Hammerson this week invested £100m
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The Independent Online

There is nothing out of the ordinary about Bicester, a historic market town in Oxfordshire, with its square, cake shops, a church and cottages. But a few minutes' drive away, there is a modern retail cathedral that is likely to surprise even hardened shopaholics.

The designer outlet centre Bicester Village is home to 130 brands, including Burberry, Hugo Boss and Prada, and at the weekend its car parks are often so rammed it can take up to 20 minutes to find a space.

The success of the site has not been lost on the property company Hammerson, which yesterday said it was investing a further £100m in Value Retail, the operator of Bicester Village. This takes Hammerson's investment in the company, which was founded by American Scott Malkin and has eight other centres in Europe, from a 12 per cent stake to 22 per cent.

Designer outlets appear to have hit the sweet spot of enticing consumers cutting back and seeking value, as well as those trading up to buy quality designer brands in austerity Britain.

Neil Saunders, the managing director at Conlumino, says: "Most designer outlets seem to be getting very good growth – certainly better than the high street."

For consumers, part of the attraction is that retailers offer designer goods at a discount of up to 60 per cent off in these centres.

CBRE, the property firm, says there are about 48 designer outlet centres in the UK, including Gunwharf Quays at Portsmouth Harbour and Cheshire Oaks in Chester.

Most schemes were built in the 1980s and 1990s and were initially called factory outlets, as they were often sited on, or next to, a retailer's manufacturing site.

The market is also highly heterogeneous, ranging from Bicester's luxury offer to centres, such as Braintree in Essex that sell high street brands, including Mountain Warehouse and Marks & Spencer, at lower prices.

In terms of the luxury end, it is Bicester that arguably provides the blueprint, both in terms of its look and feel, but also in how it has gone after the overseas tourist market.

Mr Malkin wanted to introduce the American concept of discount shopping, and this is reflected Bicester's New England-style clapboard houses, which are painted in subtle greys and whites.

David Atkins, the chief executive of Hammerson, says: "Bicester trades off the London tourist market," attracting high-spending visitors from Russia, Brazil, the Middle East and China. The site is marketed globally with a number of tour operators, and information is available in London's upmarket hotels. This is particularly true for four-fifths of Chinese visitors to London, who also fit in a trip to Bicester.

Jonathan De Mello, a senior director at CBRE, says: "What Bicester is tapping into is that inflow of Chinese tourists coming to the UK."

For overseas tourists, the shopping outlet also offers peace of mind that the products are not counterfeit.

Mr Atkins says: "If you come to Bicester, you are getting the real thing. That credibility and reliability of the offer is very important to overseas buyers."

Food and leisure facilities are also key to successful centres. For instance, the property firm Land Securities' Gunwharf scheme has more than 90 designer outlets, 30 restaurants and bars, and a 14-screen Vue Cinema.

Ashley Blake, the head of retail portfolio management at Land Securities, says: "I think this is the future of outlets. People come in, have a good time, go back with a bargain and feel they have been prudent."

From a commercial perspective, designer outlets can offer both retailers and landlords a more flexible way to conduct business.

Mr Atkins says: "It is a great way to deal with last season's stock, or discounts, and generate very strong retail volumes – and yet in a controlled manner that matches their own brand's aspirations."

For landlords, designer outlets typically give them more leeway in how they run centres.

As opposed to 10 to 15-year contracts under commercial lease law, retailers typically sign up to shorter leases and turnover-based rents. This gives landlords greater flexibility in moving out weaker retailers in favour of stronger ones.

Mr Blake says: "We can take people out quite easily. If a retailer's sales fall below a certain level, the landlord can evict them.

"At Gunwharf, we have seen a high level of lettings and relettings over the last three years – far more than a normal shopping centre."

He adds: "In a way, you are running a designer outlet like a department store because you want to bring in new brands, which keeps the offer fresh and exciting for consumers."

Retailers are also keen to join the designer outlet revolution. Graeme Ellisdon, the founder of Osprey London, the retailer of vintage leather handbags and purses, says: "As a retail tenant with eight Osprey London outlet stores, it is clear to me that the outlet sector continues to provide an attractive alternative to the high street – both for brands and customers."

Despite their attraction, Mr De Mello says that the building of designer outlet centres has "tailed off" over recent years. This appears to be changing, however.

For instance, Quintain last month signed up its first high-end fashion brand, Max Studio, at its London Designer Outlet at Wembley, which opens next year. And Henderson Global Investors last month submitted a planning application to extend its Swindon Designer Outlet Centre by 50,000 square feet of new retail and catering space.

Indeed, Mr De Mello sees room for more designer outlets in the UK, particularly in areas such as East Anglia and London.

He said: "They are definitely a hot commodity at the moment. The market has not reached saturation in the UK."

The crowded car park at Bicester on a weekend certainly points to a big future for designer outlets in the UK.