First Irish discount unit is gradually developing profile as tenants sign up

Three months after opening to the public, Ireland's first discount outlet centre has now achieved 40 per cent occupancy. The Killarney Outlet Centre began trading at the very end of July and at the time had only four of its units occupied; this has now grown to nine, with a tenth due to begin business this week. Four years in the planning and construction, the centre was originally expected to open last March; the delay meant that it lost much of the tourist season this year and, says manager Paul Sherry, a number of companies are waiting to take up places in the building until next spring. By then, he expects an occupancy of 85 to 90 per cent.

Although a number of other discount centres are under consideration, Killarney is the sole example to have been developed to date. The concept is well-known in both the United States and Britain; the latter has some 27 such centres at the moment, with more under way. Killarney is not typical of these shopping centres in that the building is located close to the heart of the town rather than in a rural location which is more usually the case. The new discount centre stands next to Killarney railway station on a site formerly occupied by old sheds and outbuildings. It also incorporates the town's bus depot and has a 270-bay car-park on its grounds.

The main structure itself was built in traditional style incorporating a mixture of cut stone and stucco, both inside and out. The main trading area of some 90,000 sq ft is on two levels - most of the outlets currently trading are on the ground floor - and large sections of the roof, together with the two main facades, are in glass ensuring plenty of natural light. The 70-odd units vary in size from just over 1,000 sq ft up to around 2,500 sq ft although a number of retailers have taken more than one unit for their shops. While relatively discreet on the exterior, this is by far the largest building in Killarney and, according to Mr Sherry, is the single biggest commercial development in Co Kerry for the past 25 years.

Because both Irish traders and consumers are relatively unfamiliar with the concept of discount shopping centres, the Killarney venture has been only gradually developing its profile. However, Paul Sherry says, the recent October bank holiday weekend saw the centre's car-park consistently full and the number of people visiting the premises so great "it was like the centre was completely full of shops." One powerful draw is the presence of a Nike Factory Store, the only one in Ireland and the centre's anchor tenant. Its own opening proved to be one of Nike's best trading days anywhere in Europe. The presence of this sportswear company sets the tone for many of the other companies which have taken sites so far.

Other shops include Jeans Scene Factory Outlet, Paco Sport & Leisure, Leading Labels and Shoe Collection. These share certain features: they are British-based companies; they tend to offer sports or casual clothing; and they sell stock which is usually end-of-season or excess to orders from other retailers. More sports-oriented names such as Kappa, Sportsmill and Karrimore are scheduled to move into the building over the coming months. Thornton's Chocolates, Ladybird, menswear brand Petroleum and a leather goods label are also likely to open before next spring. Mr Sherry is also optimistic that Mothercare will take a site. Paul Sherry says: "We're on the verge of signing a fairly substantial Irish retailer/manufacturer." At the moment, the only Irish outlets are jeweller Brian de Staic and O'Brien's Sandwich Bar, with non-clothing companies Travelling Accessory Outlet, The Book Depot and Ponden Mill (which sells homeware) taking the rest of the present sites. All of them offer items at a minimum 30 per cent less than the recommended retail price but this figure can rise up to 50 or even 70 per cent. Paul Sherry says guarantee of discount is a condition of all leases offered to tenants who are expected to comply with this arrangement. Figures can be checked to see that the retailers are keeping to the agreement and all goods must be tagged to show both the original and discounted price.

"It is up to us to police the situation," Mr Sherry confirms, adding "this is not an opportunity for people to sell off gear cheaply and temporarily and then go full price." However, he explains that in certain circumstances retailers will be allowed to sell a small percentage of their stock without any discount although "in each case, this user clause is negotiated individually." Looking around the outlets last week, it was clear that the markdowns, while real were not necessarily enormous. At the Nike Factory Store, for example, a hooded sweatshirt was reduced from £37.99 to £26.50. In Shoe Collection, a pair of very solid black leather brogues had their price dropped from £110 to £79.99, while in Leading Labels, a woman's fleece top from Gap, originally £49.99 now cost £29.99. Among Ponden Mill's home goods, bath sheets in a wide range of colours now cost £11.99 (originally £16.99) and duck down pillows £29.99 (originally £44.99).

At the moment, Killarney Outlet Centre's customers tend to be drawn from the immediate vicinity and until more units are occupied, there has been little effort to publicise the new venture. However, Mr Sherry has more ambitious plans for the year ahead. He points out that both Limerick and Cork are each less than an hour and a half from Killarney and that the centre's catchment area covers the entire south-west of the country. However, he expects to draw business from right across Ireland once the entire building has been filled. "At present, we're not doing too much, but the seeds are being planted. I'm talking to marketing people, the tourist board, Iarnrod Eireann, etc. for when we're full. There's no point in pushing this place in Dublin right now but we're getting there," Paul Sherry says.

He hopes to arrange special weekend packages with local hoteliers which will act as an additional draw for prospective customers, together with train and bus services being located so conveniently close to the centre. He believes that the new business will be particularly beneficial to Killarney during the quiet winter months when the number of tourists traditionally declines. This part of Kerry tends to be full of visitors from mid-March to October and obviously the centre will be able to take advantage of this influx. But in return, from November to February, "it would be a real boost for the town if we can become a tourist attraction in our own right. The aim would be to drive business into Killarney during the quiet months of the shoulder season."