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Fashion House Group’s Insights into the Outlet Market

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Cornelia Nicolae, Retail Operations Director of FASHION HOUSE Group in Romania, gives us insights into how the outlet retail market has been affected by the pandemic.

For the introduction, please give us an overview of your company and projects, as well as a few words about your position within the company.

FASHION HOUSE Group is a leading player in the European outlet sector and one of the largest developers/operators in the CEE and Russian markets, with a proven track record in the design, development, finance, leasing, operation, and management of outlet centers.

The portfolio of projects delivered by FASHION HOUSE Group includes seven successful FASHION HOUSE Outlet Centres in Poland, Romania, and Russia.

Currently, FASHION HOUSE Group operates four outlet centers in Romania and Russia, with a total lettable area of over 70,000 sqm. The outlets offer more than 250 international brands to over 10 million customers every year.

FASHION HOUSE Group is present in the Romanian capital with two Outlet Centres. The first one, FASHION HOUSE Outlet Militari, opened 12 years ago and established a new standard on the local fashion retail market. Our second outlet, FASHION HOUSE Pallady, officially opened at the end of May 2021 in the eastern part of Bucharest and it proved that Romania is of strategic importance to FASHION HOUSE Group’s ambition. The project also represents a major investment in the local economy and demonstrates the growth potential of the outlet business in the region.

I have been part of the FASHION HOUSE Group team for almost a year now, and I am proud of what we have achieved together in this short time. As the Retail Operations Director in Bucharest, my main goal was to launch the Group’s new flagship development, while increasing footfall and sales in the first outlet center in the capital. I have almost 25 years of experience in fashion retail, and I can say that this broad experience has instilled in me a customer-centric mindset and the importance of product quality. I am confident that this experience will further enable me to inspire the local team and take the business to new heights.

How are your outlets tackling the challenges of the pandemic and what strategies are you now implementing to drive in visitors and to support tenants? Have you introduced any innovations within your projects?

The pandemic has brought unprecedented challenges to the entire business environment, including the retail sector. During this time of concern and confusion, we had to adapt quickly by ensuring our tenants were continually supported and our customers were kept safe and well at every visit.

We have implemented many initiatives and equipment in both our outlets in Bucharest, increased hygiene regime, and establish ample signage and assistance to help consumers to stay safe while they shopped. We continue to work in partnership with our tenants and closely with local authorities, to ensure a continued safe shopping experience in both our outlet centers.

Despite these challenging times generated by the pandemic, we continued with the construction of FASHION HOUSE Pallady – the newest outlet developed by the Group in Romania, and thus we were able to inaugurate the center at the end of May.

At the same time, the FASHION HOUSE Group recorded an excellent performance in Romania with its first outlet center. This performance demonstrates not only the strength but also the flexibility of our business model and proves that the outlet business continues to be on an upward trend even in times of economic instability, as customers tend to save more without changing their consumption habits.

Have you had any new store openings within your outlets and do you have any future openings planned?

We are proud to have officially opened our €25 million new outlet center in Bucharest, at the end of May. As the first new outlet center to open on mainland Europe this year, FASHION HOUSE Pallady spans over 12,000 sqm. The project is being developed over two phases and will house more than 60 stores, offering customers top-quality international brands with discounts of up to 70 percent, all year round. It also includes a children’s play area, restaurants, and over 300 free car parking spaces for visitors. The opening of the first phase has created more than 100 new jobs, and the second phase will be constructed next year.

It is encouraging to see that so many renowned brands have joined us in this new venture to deliver another successful retail experience. Leading sportswear brand Puma, along with other well-known names such as Killtec, Tom Tailor, Lee Cooper, Triumph, Otter, Sizeer, Ecco, Colin’s, US Polo Assn, and many others have opened new stores in our new outlet in Bucharest, offering attractive discounts all year round.

We are honored by the trust our tenants have placed in us, and we are committed to providing them with the best quality services in the future.

What retail categories are now performing the best in your outlets and why?

Sportswear continued to be at the top of the best-selling products, a sign that many Romanians are still looking to become more active, lose weight, or simply just to feel comfortable. But as restrictions become more relaxed and people start going to work or private events, we see an increase in sales for casual and formal outfits.

In your opinion, how has the pandemic affected the retail market, consumer behavior, and shopping centers? What changes do shopping centers now need to make in order to stay ahead?

Over the past few months, we’ve observed that people are placing much more emphasis on buying from brands they trust. While they remain loyal to their beloved brands, they are also paying more attention to value for money. In line with this trend, we’ve come up with even more tempting discounts on high-quality products from a wide range of well-known national and international brands.

We also find that people prefer to shop in out-of-town shopping destinations that have free parking and enough space for safe social distance. This trend has already translated into success for our first outlet and as consumers gradually resume their pre-pandemic activities, we are now seeing even more interest in the outlet model.

In addition, we expect to see a significant increase in consumer spending in the second half of 2021, and brand and value will be the key drivers for purchase. We are confident that this will bode well for our outlet centers.

We continue to welcome more and more tenants to partner with us, as they look to optimize their business by disposing of their surplus stock and generate cash to invest further in new seasonal stock while relying on our experienced team to deliver results for them.

Since the beginning of the pandemic, what forms of marketing do you use?

Brands need compelling and consistent communication to be visible, to be trustworthy, and to win consumers’ hearts. We have always focused on clearly communicating the benefits of the outlet model for both consumers and tenants using a communications mix of traditional media and digital.

One of the most recent marketing projects through which we have exceeded our previously set goals was the integrated communications campaign for the opening of FASHION HOUSE Pallady. Under the concept “Shopping magic continues”, the campaign aimed to position the new outlet as a smart shopping destination on the commercial map of Bucharest, but also in the surroundings. The communication mix included OOH, print, TV and radio, PR and BTL activities, online, and we are proud to say that the campaign achieved its main objectives.

What is next for your company?

Our top priority is to create a safe shopping environment for all our customers and employees by taking all necessary steps to ensure everyone is protected. At the same time, we will continue to expand our tenant mix, add value, and provide an exciting customer experience.

We are currently focused on driving the next phase of growth for FASHION HOUSE Group in Romania, and the €25 million investment reflects our mission to innovate the future of the shopping experience. We are confident that the strategic location, high service standard, quality of the brand mix, and the picturesque architecture with open-air galleries, which is a new concept in the country, are clear assets through which FASHION HOUSE Pallady will quickly establish itself as a smart shopping destination on the commercial map of Bucharest and beyond.

We believe that with our two outlets we can satisfy the needs of all Bucharest residents and visitors beyond.

How do you see the future of retail in general?

Many international experts indicate that the pandemic will continue to shape the retail industry for months and even years to come. We have already seen a sped-up shift towards a more digitized world, forcing retailers to find new ways to meet customer needs.

Due to social distancing restrictions in place, customers around the world have moved to online shopping, but have also discovered some pain points with e-commerce, such as clothes that do not fit or returns that take longer to process.

On the flip side, we’re already seeing that many consumers crave in-person experiences after more than a year spent indoors, but it is also true that they have become more selective about where they shop. So, retailers need to make their in-store experiences even more engaging to attract new customers and ensure they return.

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