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Explores the potential impact of recent changes in planning policy on the growth of a new UK retail format ‐ factory outlet centres. Factory outlet centres are a new out‐of‐town shopping genre which has been imported from the USA. In 1993, there were two such centres in the UK; by 1994, there were proposals for 18. During the same time period, government policy towards out‐of‐town shopping developments changed, with successive guidance notes aimed at restraining out‐of‐town developments in a bid to enhance the vitality and viability of town centres. Examines the impact of changing policy on the development strategies of factory outlet centre developers and outlines the current and potential future shape of factory outlet centre retailing in the UK.

Outlines the origin and development of factory outlet shopping centres in the UK and explores some of the tensions and relationships between developers, planners and retail operators, as a means of helping to understand the development and property management process.

The research paper examines the commercial evolution of retail tenants within the UK factory outlet sector. The research aims to identify the key characteristics of commercialisation and the resulting strategic positions occupied by tenants.

The paucity of research surrounding the research objectives necessitated exploratory research based on 32 in‐depth interviews conducted with factory outlet tenants, managers and owners.

The research presents four tenant segments used to analyse commercial evolution. Although many tenants are initially pushed into the channel to solve a physical stock problem they invariably increase their level of commercialisation as they apply the experience curve, economies of scale and opportunism. Ultimately, the key to commercialisation lies in the ability of a factory outlet tenant to make adjustments to their retail business model, through sales productivities and improved cost ratios. The single biggest adjustment lies in the potential of made for outlet merchandise which secures both product continuity and enhanced margin.

The research provides a conceptual framework for evaluating the relevance of current factory outlet leasing and performance management programmes. Practical application of the framework will require a correlation to be established between the stages of commercialisation and actual sales performance across a wider sample of tenants. The finding provide possible stepping stones to further research within the sector, not least the evolutionary pattern of factory outlet tenants across Europe. The findings provoke many questions related to the role of outlets within a tenant's overall multi‐channel distribution strategy. The sophistication of certain tenants' outlet business models and the high level of integration across channel of distribution suggest factory outlet centres are becoming increasingly accepted as part of mainstream growth strategies.

Factory outlet shopping centres are one of a number of new “out‐of‐town centre” retail formats within the UK. Outlines their major characteristics and origins within the USA, describes current developments within the UK and focuses on the planning issues raised by these developments.

It is not uncommon for the USA to be the origin of innovative retail formats. In recent years in the UK, the most recent retail out‐of‐town developments have their roots in the USA, most notably warehouse clubs and factory outlet centres. Charts the growth of one of these formats, factory outlet centres, in the UK and discusses the prospects for development potential in other European markets. Semi‐structured interviews were carried out with major developers and development consultancies to ascertain the type of strategies pursued, the locational criteria for site selection, the role of tenants in this process and the degree of customization or standardization of the format in market entry strategies. Although the UK appeared to offer US developers the best opportunity for market penetration, planning policy has progressively worked against the development of this retail format. It is unlikely that any more than seven to eight US‐style factory outlet centres will be built out of a total of 26 developments by 2001. There has been a considerable downsizing of initial proposals, with the creation of smaller, more downmarket centres than in the USA. US developers have been forced to seek sites in the rest of Europe much earlier than originally intended. Their strategies have differed from the standardized, upmarket brand character of one operator compared with a more customized approach adopted by the market leader.

Prior research has demonstrated that reference prices can affect consumer responses, but the reference prices examined have been presented along with semantic cues [e.g. manufacturer’s suggested retail price (MSRP) and Compare At]. This study is unique in investigating the effects of reference prices that do not include a semantic cue (i.e. “cue-less”) on consumers’ responses. It also studies consumers’ beliefs about factory outlet stores, a seldom-studied store type in which cue-less reference prices are used.

One qualitative study and one experiment were carried out in this research.

The qualitative study revealed that a price tag including cue-less reference prices was unlikely to be viewed as a seller mistake or with suspicion, but nonetheless did confuse some respondents. The experiment demonstrated that while consumers find cue-less reference prices to be somewhat less believable that high MSRPs, these beliefs do not appear to come into play when consumers judge attractiveness (e.g. perceived value). Additionally, the results suggest that consumers believe that a product available for sale in a factory outlet store is likely to have been previously available at a different type of store.

This research advances the theory of the effects of reference prices on consumers’ responses by examining the common practice of not labeling reference prices with semantic cues. It also extends the literature regarding consumer beliefs about factory outlet stores.

Discusses the historical evolution of out‐of‐town shopping developments in the UK, from the superstores retailing food, DIY, carpets and electrical products to new formats of warehouse clubs, factory outlet centres and airport retailing. Argues that this fourth wave of development may die prematurely, like proposals for regional out‐of‐town shopping centres, because of an increasingly hostile political environment. Comments that formats such as factory outlets will not be lured to traditional town centres and that potential investment will be lost.

This research note discusses the difficulty which factory outlet operators are experiencing in finding suitable sites in the UK and, using the example of Freeport Leisure’s acquisition of United Norwest hypermarket in Stoke and other converted “failed” shopping formats, shows how redeveloped sites with low acquisition costs are a likely option for future factory outlet developers. The acquisition has been successful because of the selection of product type for sale (ceramics which lend themselves to discount prices) and location (at the heart of the Potteries).

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐17; Journal of Property Investment & Finance Volumes 8‐17; Property Management Volumes 8‐17; Structural Survey Volumes 8‐17.

Compiled by K.G.B. Bakewell covering the following journals published by MCB University Press: Facilities Volumes 8‐18; Journal of Property Investment & Finance Volumes 8‐18; Property Management Volumes 8‐18; Structural Survey Volumes 8‐18.