Outlet vs. full-price retailers 2023 case study by Sensormatic Solutions

Inflation landed like a thud in the retail sector in 2022, with tightening constraints on consumer spending. While the year 2023 has seen progress in this regard, truth is that consumers have increasingly become more sophisticated in their purchasing behaviour. The best value for money together with a unique brand-mix and the welcoming atmosphere of Designer Outlets make them the perfect day-out destination and a win-win model in comparison to the full-price sector.

Sensormatic Solutions’ Market Intelligence data shows that throughout 2023, outlet retailers (retailers based in an outlet centre) have in general, outperformed full-price retailers for traffic. While both outlets and full-price stores have followed similar traffic patterns, there are some key differences.

Overall, for the first couple of months of the year, Germany and Italy both experienced higher year-over-year traffic growth which then eventually tapered off to more stable levels. Spain’s traffic on the other hand, has remained more consistent throughout 2023. This could be attributed to Germany and Italy still having some stricter COVID-19 restrictions in place at the beginning of 2022, which has then impacted YOY trends.

Looking at 2023 so far, German outlet stores had the best performance against full-price stores out of the three countries. For over 70% of the year, outlets have had a higher YOY traffic change than that of full price. Outlets also experienced significant spikes and dips in traffic depending on whether a public holiday (such as Easter or Ascension Day) took place either in 2023 or 2022. The same spikes were not experienced at full-price stores.

2023 data in Germany. Source: Sensormatic Solutions

Italian outlets had the second-best performance out of the three countries, with outlet stores outperforming full price for almost 70% of the year so far.  Italian outlets did see a more erratic start to the year with there being some significant spikes and dips, but after June, outlets and full price stores have followed a very similar traffic pattern.

2023 data in Italy. Source: Sensormatic Solutions

Spanish traffic has been largely consistent throughout 2023 so far at both full-price and outlet stores. Outlets saw a better YOY improvement than full-price just over half of the time this year, with the only significant spike in traffic being at the beginning of April during the week of Good Friday.

2023 data in Spain. Source: Sensormatic solutions

With outlets being heavily weighted towards luxury and premium brands, it is also worth evaluating the performance of these types of retailers. For the purposes of this analysis, “luxury” brands are defined as designer fashion houses (for example: Chanel, Prada, Hermes, Louis Vuitton) and “premium” as the more accessible luxury brands (i.e. Calvin Klein, Barbour, Timberland). “Everyday” brands would be defined as affordable fashion brands – think Zara, Marks & Spencer, Vero Moda. This analysis covers stores at both outlet and full price locations.

In Germany, Everyday, Premium, and Luxury retailers’ traffic trends followed a very similar pattern for much of the year. However, Premium retailers came out on top, seeing a higher YOY traffic change than the other two categories 60% of the time. Luxury and Everyday saw a very similar traffic performance, although Luxury still had a better overall performance against the prior year.

Moving onto Spain, Premium retailers saw their traffic performance exceed that of Everyday and Luxury 75% of the time, with YOY performance only dropping into the negative on two occasions. Luxury on the other hand has not been so positive, with this category seeing negative growth for much of the year. This gradual decline has continued throughout 2023, with Luxury experiencing its lowest performance at the beginning of September.

Looking at Italy, Premium and Everyday retailers have come out on top, with Premium performing especially well during the spring months. Luxury on the other hand has tailed off since the summer, although performed very well against the prior year until this point.

Overall, despite differences in performance across Europe, outlet retailers are generating more interest than their full-price counterparts and traffic has generally seen a markedly better YOY performance.

Looking at retail as a whole and not just at outlet centres, the Premium category has performed especially well this year. Amid inflation and higher prices, consumers who can afford to purchase from more high-end brands may be feeling the squeeze when it comes to very upmarket luxury, but can still afford to splurge on more premium brands. With that being said, the festive season is fast approaching, and trends can be quick to change. It is also worth noting that this analysis is focusing on footfall data – not sales. While traffic patterns may be normalising within the Luxury segment, this is not to say to that sales are following the same pattern. It is entirely plausible that luxury consumers are shopping more purposefully and with intent.