McArthurGlen: Pioneering Designer Outlets

BoF: Outlets have become an incredibly important part of the fashion industry. But in some quarters of the business, they are still frowned upon. Why do you think fashion and luxury brands should consider designer outlets as a channel?

JC: When you walk into a McArthurGlen designer outlet, you are walking into a luxury retail environment. It is a distribution channel where brands can do what they do best while managing surplus stock, in an environment where their brand is presented to the same high standard as in their own full-price stores. When you walk into the Prada store in our Venice centre, you will see the store design is almost identical to their city centre stores. We often describe what we do as a full- price retail experience at outlet prices. The only thing ‘outlet’ about your day out is when you pay at the till.

BoF: How important can the outlet channel be for a luxury fashion business?

JC: I think it plays an enormous role for them. They are able to reach a different customer who may be accessing their brand for the first time. When that customer walks into Bottega Veneta, Gucci or Burberry, they have a genuinely authentic experience of that brand. They may only buy a great pair of sunglasses but they leave the centre thoroughly excited by the fact that they have bought into the brand. The next time those customers visit they buy more. It is an incredible gateway for the aspirational shopper.

A great number of our customers are, of course, those who are already great lovers of the brands we have available and shop those very brands in full price stores as well as at the outlet, everyone loves to save money when they can.

Growing up in the United States, outlets were basically a way of life. I grew up in Pennsylvania and my girlfriends and I would drive two hours to find a Coach bag or an Armani coat. It was all about the thrill of the experience, it's exciting. I believe that kind of excitement still happens day in and day out in our centres. What distinguishes McArthurGlen is that our customers are getting the full experience: they discover beautiful architecture, year round entertainment, great places to eat and drink, excellent customer service, and the brands they love from A-Z.

BoF: How important is the concept of ‘discounted pricing’ in your business?

JC: Customers demand value more than ever – don’t get me wrong, everyone loves to save money but they want to feel great too. Whether you are spending €100 or €1,000, if that’s a sizeable portion of your disposable income, you will put the same amount of thought and consideration into how you spend it.

We provide every customer with a five-star experience, whether they have driven for an hour or hopped on a plane from China for a holiday. They understand fashion and they know that a €13,000 beautiful handbag down to €2,000, is a steal.

BoF: McArthurGlen has American roots and pioneered this concept of outlet shopping in Europe. How has your approach in Europe developed since you opened Cheshire Oaks in 1995?

JC: The outlet experience has been completely transformed. When our Chairman, Joey Kaempfer, brought the concept over to Europe, he built upon an existing model and tailored it to the needs of an ever more sophisticated consumer.

For example, American style ‘food courts’ were replaced with a range of cafes and restaurants dotted around the centre. Another thing we did was commission works of art and sculpture to bring a sense of theatre to the experience. The collection of brands has also evolved. Luxury names are sitting alongside premium high street brands. When the outlet business first started in the United States, it was more of the mainstream brands as opposed to the luxury brands that McArthurGlen offers now. All of this has contributed to the rapid growth of our business; we now have 20 centres across Europe and more retail space than anyone else in our field.

BoF: Is McArthurGlen a real estate business or a retail business?

JC: It’s a brand-led business. Of course, part of it is real estate, but barring a few, everybody that works in our business is a retailer and passionate about it.

We build partnerships with the brands. Many have entrusted us with their first or only outlet.

We make it easy for our brand partners to expand with us across many different countries. We do our homework when we are going into a new market. We make sure we have an in-depth understanding of the consumer dynamics. We maximise any opportunity for tourism. We carefully curate the brand mix. We work collaboratively on store-fit design, visual merchandising, stock levels and pricing to create a seamless and successful operation for our brand partners.

When we sit down and talk to a new brand, we have our marketing, retail and leasing team talk to them about what we do. For those who don’t already have an outlet business, we walk them through the process and explain to them how it works, from helping them get he necessary permits in order to open in that particular location to helping them set out their logistics channels.

It’s a kind of ‘soup to nuts’ thing. We help them recruit staff, we talk to them about their stock and the various KPIs that they should use. We also set a standard of how much sales they should be able to generate, comparing them to other ‘like’ brands throughout our portfolio.

BoF: How much of your business is driven by luxury tourists versus local customers?

JC: Tourism is certainly a big growth area for us, and we are making major investments to drive this. We have agents in Russia, China, Korea and Brazil, and work with tour operators in all of those countries to make sure that if you live in Russia and you are going to Venice, even before you leave home, our Noventa di Piave Designer Outlet is on your itinerary.

This investment builds upon the established success our centres have within their local catchment. We have always planned carefully to ensure that our centres excite and engage those customers who live nearby as well as those who are travelling from further afield.

BoF: What are your plans as you think about expanding the McArthurGlen business?

JC: Our 21st centre is opening in Vancouver, Canada, in early 2015. We are planning to open Ghent in Belgium, Provence in France, Remscheid in Germany. We have expansions either in progress or planned for our outlets in Venice, Neumunster (outside Hamburg), Parndorf near Vienna, and in Ashford and Swindon in the United Kingdom. We are also looking to expand in Turkey. However, our main concentration for now is Western Europe.

BoF: What kind of person does it take to be successful at McArthurGlen?

JC: It is a young and vibrant culture. McArthurGlen employees are very agile, they are very dynamic, able to turn on a dime. You can go from talking to an investor, to a partner, to a brand, to speaking directly to a consumer. We are now part of every fashion-conscious shopper’s repertoire. For me, what is completely captivating about McArthurGlen’s culture is the entrepreneurial spirit of our people.

BoF: What skills are particularly in demand right now, as McArthurGlen continues to grow? What kind of people are you looking to hire?

JC: We are looking for exceptional talent across the board. Our people have their roots in some of the world’s leading fashion brands and retailers. We always need people who speak the language of fashion: we need retail specialists, marketing experts, leasing professionals. It’s an exciting time for us.

This post is sponsored by McArthurGlen Group. To explore career opportunities at this company, please visit the McArthurGlen Group company page on BoF Careers, the global marketplace for fashion talent.