Fashion House Group, the only professional outlet center developer and operator in Romania, closed 2022 with great results. We spoke with their Retail Operations Director, Cornelia Nicolae, to see how their outlets are achieving success in a retail market that is rapidly changing.
How has the Romanian market changed from your perspective in 2022?
In 2022 we have witnessed an overall improvement in the Romanian retail market, especially in fashion.
Fashion retail, as one of the fastest-growing markets in Romania, has not lost one inch of its glamour, despite the global economic turbulence that has been haunting us all for the past three years.
Even during the pandemic, the fashion market in Romania recorded a steady 3% year-on-year growth. The overall fashion retail market in 2022 was valued at approx. 3.77 billion EUR. This includes also the online fashion retail segment, which rose in popularity during the pandemic, and now reached a value of 894 million EUR.
Research shows that in Romania brick and mortar shopping is still in fashion and the love for shopping centers is still high. Based on the Google Smart Shopper Study 2022, 55 % of Romanians still prefer to shop at shopping centers and see them as their favorite fashion destinations.
The labor market also marked a strong recovery after the pandemic, fueled by new start-ups and businesses returning to normal levels of activity. However, the price increases in gas and energy had an impact on all sectors of the economy in the 2nd quarter of 2022.
How has consumer behavior in Romania changed and how has this impacted your projects?
The majority of consumers are now very conscious of their spending, as purchasing power has diminished due to inflation. Inflation has gone up to such levels that it has negatively impacted retail prices, interest rates, and all other living costs.
Because of this, outlet centers are becoming even more popular and attractive to consumers than ever before. As FASHION HOUSE is the only professional outlet center operator in Romania, this is our major advantage.
We have two outlet centers in Bucharest, on the East and West sides of the city. We offer consumers, all year round the most famous fashion brands at a 30 to 70% discount, which makes us unique and desirable in Romania.
How have your outlets performed in 2022?
We closed 2022 with great figures, which is due to our experienced management team, great tenant mix, excellent customer service, and the overall market potential of Romania.
In 2022, FASHION HOUSE Militari outlet center (Bucharest West) achieved:
- Tenant turnover increased by 34% compared to 2021, which is a 36% increase compared to 2019.
- Footfall increased by 12% compared to 2021, which is a 17% increase compared to 2019.
- Spend per head rose by 18% compared to 2021, which is a 45% increase compared to 2019,
- Sales density increased by 26% compared to 2021
Our second outlet FASHION HOUSE Pallady (Bucharest East), which opened in 2021, also reported an increase in all KPIs. Footfall increased by 6% in 2022 and sales went up by 18.7%.
What changes have you made to your outlets in 2022?
To improve the customer experience in our outlet in Militari we opened a new Food Court in mid-December 2022. We decided to change the layout of the restaurant units, and create a more unique and cozy experience by introducing a fresh new interior design. Our tenants and visitors are very happy with the results.
In December 2022, a Kaufland big box unit opened next to our outlet in Militari, which further increased the overall attractiveness of our location, while complementing our anchor tenants such as XXXLutz, Lidl, Jumo, Naturlich, Hornbach, and many others.
We are also proud that last year we signed 14 new leases covering a total area of over 2,700 sqm. New tenants include Samsonite, Hervis, The Cosmetics Company Store, Sport Vision, Chic Chic, Tommy Hilfiger, Calvin Klein, Nike, Liu Jo, Diesel, Guess, and other international and local retail players.
The demand for retail space in your outlets seems very high, is there any space left for new tenants?
Currently, our outlet in Militari is over 93% leased, but there is still room for some potential tenants that could prove to be a good fit. Shoe retailers are on top of our opportunity list, along with ladies’ formal wear and food & leisure. Sportswear is our top performing retail category and very well represented by big brands which constantly report sales growth year on year.
Due to the very high interest for retail space in our outlets, we will start this year to expand our second outlet center in Romania, FASHION HOUSE Pallady in Eastern Bucharest. Being a relatively new project with an open-air design and a different catchment area from Militari, the growth potential of this center is huge.
We will invest 45 million EUR in developing further FASHION HOUSE Pallady, which will add an additional 5,700 sqm of retail space in the 2nd phase. Construction works are expected to start in Q1 this year, and we plan to complete it by the end of 2023.
We started the leasing process last year and already have a good occupancy rate for the start. Retailers who are interested to join the project should act fast to reserve their spot.
Contact details for leasing: https://fashionhouse.ro/pallady/contact/