Editor in Chief at "La Tribune Grande Conso"
2007 will be a significant year. There are currently two million mÂ˛ of dedicated sales area in brand villages and factory outlets in Europe. In 2003, the sales area was 50% lower. The rate of growth is high, but can it be maintained? Projects for over one million mÂ˛ have been announced. But are these in fact real projects, intentions or secured projects? Brand villages are attracting operators and investors, but will they attract the brands and the customers?
A â€śtypicalâ€ť European consumer
Director of "L’Observateur Cetelem"
â€śL’Observateur Cetelemâ€ť has been studying consumer behaviour in France and more generally in Europe since 1989. We have, as of 2000, demonstrated that there is a â€śEuropean consumerâ€ť. How do we explain the existence of a â€śEuropean consumerâ€ť? Many European countries share a common currency, as well as economic indicators, distribution concepts, and product supply. The appetite for consumption in Central and Eastern European countries is remarkable, with a shared desire to consume as they do in Western Europe. These various factors have as such formed a so-called â€śEuropeanâ€ť consumer. As a result, thanks to this concept of a European consumer, there is a harmonisation in the life styles in the various European countries.
The European consumer is a serious buyer. In all countries, the intention to consume is greater than the intention to save. This becomes more intense every year. It is however possible to detect a feeling of frustration among consumers, because purchasing power, whilst increasing, is not keeping up with the significantly increasing desire to buy.
- What is the link between the European consumer and brands?
The growth of â€śhard-discountâ€ť in Europe might well have been thought of as presaging a decline in the brand concept. However, according to consumers, if there are no brands they feel lost and a sense of loss. Consumers need brands, because they represent confidence over time and a reference for consumption.
The brand can also be an inspirational support. Consumers appropriate the codes and the values carried by the brand. When one drinks Coca Cola, one appropriates the American way of life.
Henrik C. Maris is a brand villages consultant and has been involved in the sector for many years. What is the link between the consumers and the brand? Do you think this link is as strong as that described by Pascal Roussarie?
Henrik C. MARIS
Factory outlet consultancy / Danemark
I think this link is even stronger. We see the brands all around the world. The consumersâ€™ environment is full of brands. When you go shopping, you want first a branded product. You want to be branded for the right price too. Factory outletsâ€™ clients are exclusively brand consumers. In textile in general, it is going more and more identifications to Mc Donaldâ€™s, Burger King, Coca-Cola, and Pepsi-Cola. People want to show what kind of person they are through their clothes as if they were choosing between Coca Cola or Pepsi.
Does this apply to brands in general or just to a few specific brands? Are we not over-generalising the brand concept, forgetting that we have to stratify it? It is obvious that not all brands are valuable. Some are not worth anything.
Henrik C. MARIS
You are right. But to be a brand you have to be branded right. And big playing businesses gain brands. You can find textile brands which produce sunglasses, perfumes, a whole pallet of products. About 200 strong brands produce things which are not profitable at all, but it allows them to strengthen their profile. Consumers are aware if a brand is a brand or if itâ€™s just something with a name. Donâ€™t forget that consumers are clever. It is not only a question of commercial identity.
How do the brands see retail? How do they assess the changes in retail sales in general, and in brand villages in particular? Are brand villages just one channel among others or a highly specific channel for them?
Alessandro Bedeschi, as the General Secretary of the European association of fashion retailers, how do the chains that you represent see the development of brand villages, from the birth of the concept some fifteen years ago to the brand villages being constructed today?
General Secretary, European Association of Fashion Retailers / Belgium
The situation of the factory outlets in Europe differs significantly from country to country. In some member states, design factory centers are proceeding as a threat to the traditional retailing system. While others just consider them as an alternative to traditional distribution. There are social reasons, historical reasons, or legal reasons behind these differences. The standpoint of each AEDT national member association on Designer Outlet Centres, depend on the specific situation in that country.
Changes in the brand villages in question
Do you see the development of brand villages as something positive? Or is it an area of concern for your members?
Again it really depends on the country. For instance there are many differences between northern and southern European countries. You have to determine level plain field in matter of agreements. In some countries, there is a lack of legal clarity on factory outlet centres and designer outlet centres. Factory outlet centres sell over-stocks and merchandise pre-season products. In legitimate FOCs producers sell directly to consumers. Generally they are far away from city centres. In many cases, things are different. The original concept of factory outlet centres has evolved in shopping villages, design outlet centres or outlet villages.
Is the development you describe positive or negative?
It is not the question to know if itâ€™s good or bad. Itâ€™s a matter of legal level plain field. In some southern countries, it can be a problem, because what we call factory outlet centres, are more shopping centres. They should be compared to equivalent services on prices, promotion, opening hours, and administration process rules.
A specific assessment of brands for each country
Emmanuel DE LABARRE
Managing Director, Eurelia
A â€śbrand-signâ€ť is different to a â€śsign-brandâ€ť. Although there may be a European consumer, every country has its own appreciation of brands, or even signs, that can sometimes be completely different even for the same type of product.
The signs have a specific â€śnet square meterâ€ť approach (Are square meters necessary in selling off products? Can we make a profit?). Not all brands take the same position with regard to the concept of the sales square meter. Some in fact even refuse to sell their products in certain types of super-production. It also depends on the image the sign gives of itself (and therefore the need to distinguish between a brand centre and a commercial centre), as its role is also to analyse the commercial operation.
The way brands see things has changed, in the same way as has the nature of the brand village or factory outlet projects themselves. Sometimes too many net square meters are made available in these centres. This is however an opportunity for certain brands or signs wishing to achieve a European reconnaissance. In addition, rents in some countries are lower than in ours, and the concept of commercial property is sometimes understood differently.
Online brand villages?
CEO "Brand Alley"
â€śBrand Alleyâ€ť is an online factory outlet center setup in 2005 and which has 1.5 million hits and ships 60,000 products every month. Annual growth in this market in France is 60%. The sales model applied by the Brand Alley services company is different to the so-called â€śflash saleâ€ť (â€śvente flashâ€ť) model. The company offers the brands by means of a technological platform, similar to department stores, in order to manage an â€śexternalisedâ€ť stock.
This market is a new way of consumption for Internet users. In France it has a 4% share of the total clothing market and a total turnover of 900 million euros in 2007. The best selling products are womenâ€™s, childrenâ€™s and textiles. Brand Alley includes in its sales products from destocking as well as so-called full price products.
An â€śextranetâ€ť is available for brands to control over their own corners. They also have access to sales statistics, and can carry out â€śproduct elasticity testâ€ť, exclusively on the Internet. It is a real externalised shop on the Internet. Brand Alley works with over a hundred major brands and the market exists in many countries in Europe.
How do you convince a brand to join this market?
It is difficult for a brand to take the first step and launch itself on this market. When one is not familiar with the Internet, it is difficult to exhibit oneâ€™s products. However, once it becomes a matter of figures, the brands very quickly make their decisions. The quality all has to be maintained because the site is visible 24/24 to millions of people. The customers of â€śBrand Alleyâ€ť are 80% provincial. On the Internet, one buyer in two (in the textile, computing or even clothing fields) lives in a village with fewer than 2,000 inhabitants. These are people who do not have access to brands or departments stores, and who therefore have to buy on the Internet.
The Internet, a launch pad for brandsâ€™ â€śfull priceâ€ť business?
â€śBrand Alleyâ€ť offers brands the possibility to test the destocking business on the Internet, so that they can familiarise themselves with the ideas of e-commerce. On the Internet, the brand is assisted by â€śBrand Alleyâ€ť which will eventually enable it to create its own so-called full price business. French consumers are however not yet ready to accept this sort of market. The concept is nevertheless already visible on US sites, which sell only full price and luxury products.
â€śUnsoldâ€ť and â€śUnsellableâ€ť, what is the difference?
We need to distinguish between â€śunsoldâ€ť and â€śunsellableâ€ť. A skirt, for instance, that is left in the shop at the end of the season is unsellable, whilst real â€śunsoldâ€ť products can have a second life. Unsold products account for between 2 and 3% of products at, a maximum, or approximately 50%. The margin is therefore large.
Sunday shop opening
Emmanuel de LABARRE
The issue with Sunday trading is not economic, it is above all social. Until we can be certain about what society expects of the links that connect it with the commercial world, there is no point in carrying out surveys or studies to prove whether opening stores on Sundays would have a positive or negative effect from an economic point of view.
How do the brands see the Internet?
The Internet combines a number of benefits. It is a means for communicating quickly, and it is possible to send alerts by the million in the form of emails. But we do however need to be aware of the ransom extracted in return for these benefits. One is that the visibility may be too great in terms of the fire sale of brands. As a result, brands are often reticent, because the Internet makes their destocking operations too visible.