For Designer Style, It's All Outlet - Value Retail News

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iOJ iNTErViEw retail icon Marvin traub speaks on outlet retailing Now working with Value Retail, the venerable retailer-turned-advisor gives his views on how the outlet sector can thrive and flourish. By linda Humphers Editor in Chief If there is one person around the globe who understands how to attract upscale shoppers, it’s Marvin Traub, the legendary former president of Bloomingdale’s. During his 41 years with the chain – including 22 years as its president – Traub made clear his conviction that retailing should be fun, energizing and compelling, in short, entertaining. He was one of the first Americans to begin importing European furniture and fashion to the U.S., beginning in the 1950s. For his involvement in the French economy he was awarded the Order of Merit and the Legion d’Honneur. The latter award also recognized his service in the U.S. Army in World War II; he was wounded at Metz when he was 19 and subsequently spent 15 months in the hospital. He has also received the Commendatore de la Republic for helping to build Italy’s economy. In 1992, shortly after he left Bloomingdale’s, he founded Marvin Traub Associates, a consulting firm with expertise in global retailing, marketing and consumer goods. MT’s lengthy list of luminary clients includes Banana Republic, Coach, Elie Tahari, Gap, Guess, Harvey Nichols, Missoni, Nautica, Ralph Lauren, Selfridges, Stuart Weitzman, Tommy Hilfiger and Tumi. Traub also served on the board of the 12 InternAtIOnAl Outlet JOurnAl Fall 2011 Marvin Traub former American outlet-center developer Prime Retail for 10 years, and he recently joined forces with Value Retail, which operates nine designer outlet villages throughout Europe. Now 86, he is the author of two books, “Like No Other Store” and “Like No Other Career,” a chronicle of his second career as a consultant and his account of the future trends in retailing. In August, he spoke with IOJ about outlet retailing. Here’s what he had to say. n n n IOJ: You have a reputation as a master merchandiser, the sage of bricks and mortar, the man who made Bloomingdales into a unique retail environment. But earlier this year your company invested in Ixtens, which is a technology company that provides services to online retailers. Clearly you see a place for all inventory channels. Can you talk about the meshing of inventory channels and where outlets fit? MT: In my book I talk about retailing requiring a multi-strategy approach. Most of the successful retailers – Saks, Neiman Marcus, Nordstrom – have a combination of bricks and mortar, outlet, internet and catalog distribution channels. It’s quite evident and research shows that people who shop across channels spend more money than those who don’t. So all of these channels help create a better customer. n n n IOJ: Do you think the outlet channel is essential to a brand’s growth? If so, at what point should the brand expand into this channel? MT: Well-run outlet chains serve a valuable function, not only as part of the brands’ growth, but also to dispose of excess inventory. Brands should expand into outlets as soon as they have a significant presence in a market, whether it’s the U.S., Europe or Asia. With so many brands moving to Asia, there is going to be a need for more outlets there, and we do know that Chinese consumers enjoy outlet shopping. I believe that outlets are essential as long as their outlets are authentic. Unauthentic goods not only weaken the store, they weaken the center and ultimately they weaken the brand. By that I mean that the brand can produce for the outlet stores – that can certainly be part of the strategy – but the quality and styling has to be in direct relation to the full-price products. Value Retail understands this point and requires that all the goods sold in their centers be authentic. When shoppers from Shanghai are routinely spending €5,000 to €10,000 per visit at Bicester Village, it’s because they know they’re getting authentic merchandise. n n n IOJ: Your list of the most compelling outlet tenants seems primarily high-end. Do you see upscale shoppers as the main driver of outlet retailing? MT: Most of the successful outlet centers have a balance between bridge
Value Retail’s Bicester Village in England is said to be the most productive outlet village in Europe, with sales of more than €2,080 per square foot. and midprice retailers, but the greatest way to create footfall is to have luxury brands at outlet prices. The excitement of those names is highly appealing. They’re the magnets that draw shoppers to the centers. Not everyone shops in those stores, but the presence of pure luxury adds spice to the experience. n n n IOJ: The outlet industry is doing very well, especially in today’s economic climate. With your strong department-store background, particularly from a parent company (Macy’s) that was famous for giving agita to outlet chains, did you think 15 or 20 years ago that this industry had legs? MT: Fifteen years ago I was on the board of Prime Retail, so outlet retailing absolutely was on my mind then. On the other hand, 25 years ago when it started in the U.S., the department stores were very concerned about the impact it would have on full-price retailing. Now the department stores want to go into the outlet business! Now we all recognize it as an important distribution channel. That opposition in the early days, though, may have helped establish the outlet sector’s differentiation and authenticity. n n n IOJ: Why do you think the industry is now successful? Do you see outlet retailing as a distribution channel or a shopping center sector? MT: The answer is complex – outlet retailing is both a distribution channel and a shopping center sector. It’s the only retail sector that is both. What’s interesting to me is that there is a very limited number of strong players – you have only Simon, Tanger, McArthurGlen and Value Retail. It’s a very small industry. Traditional shopping centers have declining traffic, whereas outlet centers are seeing increasing traffic. The sector has great growth potential and it gives the customer a new offering. Outlet developers see themselves as partners with the brands, which is unusual in retail real estate. Value Retail, for instance, has these strong retail teams in every center that work directly with the tenants to improve their performance. That model is more like a department store, but that has to be the way successful developers approach this business. n n n IOJ: What factors would you say separate the top performing outletcenter portfolios from the ones that struggle? MT: Two things immediately come to mind: marketing and attention to tourism. Both are hugely important to outlet-center performance, and those two aspects are quite different from full-price malls. Outlet centers must market beyond the local area and they must make use of all the social networking and technology tools they can find. Understanding the importance of tourism is what distinguishes a Value Retail from developers with less vision. Bicester Village, for instance, is one of England’s top tourism attractions – approximately 60 percent of Bicester Village customers are tourists. This is no accident. Value Retail sends teams around the world to do nothing but at- (continued on page 14) Fall 2011 InternAtIOnAl Outlet JOurnAl 13
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