What Bicester Village says about the luxury industry

At first glance Bicester Village looks like any other in the Cotswolds, the bucolic corner of England it is located near. It is filled with low-rise buildings with gabled roofs, cobbled streets, wooden benches and greenery. It is, in fact, a shopping centre where designer brands, from Armani to Zegna, sell their wares at discounts of 30% or more. Announcements on the train from London come in Mandarin, as well as English, testament to its status as one of Britain’s most popular tourist destinations.

Bicester Village was built 30 years ago by Value Retail, a privately held group founded by Scott Malkin, whose father once owned the Empire State Building, and backed by L. Catterton, a private-equity firm part-owned by lvmh, a French luxury-goods giant. The group has since built 11 similar sites around wealthy cities including Shanghai and Milan. It seems shoppers can’t get enough of cut-price designer gear.

Value Retail takes 15-18% of sales plus a service fee from brands, rather than charging rent on their stores in its villages. As a private company it is coy about giving precise numbers but does say that it recorded double-digit growth in net sales in 2024 and it is on track for the same again this year. The firm reckons 50m people will visit its shopping centres in 2025. So what does the success of Value Retail say about the current state of the luxury industry?

First and foremost, it is a sign that luxury brands are struggling. Demand for pricey frocks and handbags has drooped amid an economic slump in China and a cost-of-living crisis in the West. This in turn has prompted luxury brands to discount their wares and lean more heavily on bargain hunters. Of all the places for luxury shopping, including brands’ own shops and department stores, sales ticked up only in outlets last year, reckons Bain, a consultancy (see chart). As Mr Malkin puts it, in a downturn it becomes a “must have” for a label to have a store at one of his shopping centres, not a “nice to have”.

Value Retail’s growth also reflects changes in distribution. Brands are eager to take more control of discounting and customer experience to avoid damage to their image. In recent years luxury brands have sold more through their own shops, websites and concessions within department stores combined than through wholesale channels for the first time, according to Bain. This shift, says Anita Balchandani of McKinsey, another consultancy, is making outlets the “prime channel” through which brands are able to offload excess inventory.

As far as customers go, the throngs at Value Retail’s sites are evidence that in-person shopping is not going away. Returning unsuitable online purchases is a bother and the opportunity to see and touch items is still valued, especially for costly goods. bcg, yet another consultancy, estimates that 75-80% of luxury sales this year will take place in person.

Shoppers do, however, expect more from stores nowadays to make a visit worthwhile. That’s why Value Retail’s outlet centres boast fancy restaurants, storefronts pretty enough to post on social media and toilets that wouldn’t look out of place in a five-star hotel. vip customers at Bicester Village get access to a lounge and can use a “hands-free shopping” service, whereby shoppers can pick up all their purchases from one place when their spree is concluded.

Value Retail still faces limitations. Its carefully designed spaces and highly trained staff come at a high cost. There is only so much room for growth, too. The firm opened its first village in America last year. Expansion into other fast-growing markets, such as India and parts of the Middle East, is out of the question because of local regulations that complicate foreign investment, says Mr Malkin. That leaves a ceiling on the number of places around the world with droves of customers willing to drop large sums of money on discounted luxury goods. ■