A new report published this week by retail analysts Verdict Research, part of the Datamonitor Group, in association with the leading global real estate service provider Savills, finds that despite the credit crunch, there are still significant opportunities for retailers and developers in the European out-of-town (OOT) arena, with the Mediterranean countries showing strong potential for further rapid development.
However – going forward – these opportunities will become harder to find. In the South the prime OOT locations get snapped up, while in northern Europe retailers and developers will increasingly need to focus on redeveloping older sites and make existing space work harder.
For many years OOT development appeared a relatively easy route to riches for both retailers and developers, however over the last five years profitability at many OOT retailers has been adversely impacted by the boom in OOT superstores especially in the DIY and furniture sectors.
As the operating costs of these stores have risen in tandem with slowing top line sales, going forward profitability growth will be a lot harder to come by.
The research also shows that the European out-of-town market is still characterised by huge differences, despite convergence being a major theme across business activities in the EU.
Daniel Lucht, Senior Analyst at Verdict Research and author of the report, comments: “OOT growth will be fastest for Italy and Spain. Both markets are currently in a catch up phase and especially attractive to retailers and developers.”
For Italy and Spain Verdict Research predicts buoyant sales and space growth in OOT retailing, as the relatively new concept is introduced by international investors and retailers eager to gain a share of these markets.
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