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

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(continued from page 27)
going didn’t materialize. “Then comes
the global financial crisis and the opportunity
was lost,” Hamilton said.
“I mention this because this was an
extremely prime site. But the partnership
was not able to work and the opportunity
was lost – so no matter how good the
site is, if you can’t make the partnership
work, the real estate opportunity you
think you have is really not there.”
Choosing the right partner in China
requires ensuring each side’s interests
align in every way possible, Hamilton
said. And where they don’t align, success
requires a deep understanding of each
partner’s differences, whether it’s the
pace of each other’s decision-making,
their different cost of capital, income
streams, perspectives on risk, everything.
2 views of domestic brands:
Keep them in?
Or kick them out?
EWB’s James Rickson said Chinese
outlets centers should lose their domestic
brands because they spoiled the fun and
festive feel of the shopping experience.
“In China, when I look at outlets, the
mixing of local brands and international
brands dilutes that
experience,” he
said. “Visitors see
several stores that
meet their expectations
and then they
see several stores
they can drive to
James Rickson
down the street.”
The point
reminded him of a slide that Rockvale’s
David Ober showed at an earlier
conference session. Citing recent surveys,
it showed that only 10 percent of
outlet shoppers made repeat visits to
the same center.
“We need shoppers to come back time
and time again. The industry can’t survive
on a 10-percent return. We need 25, 40,
50, 100 percent, hopefully,” Rickson said.
“In China, we still haven’t seen an outlet
mall with 100-percent international brands
to give the customer that same experience
she gets in Europe or the United States.”
The presence of so many domestic
tenants in China’s outlet centers,
Rickson suggested, means international
brands would be reluctant to support
center marketing campaigns to attract
shoppers from outside the local area.
28 InternAtIOnAl Outlet JOurnAl Fall 2011
“In China, the mixing
of local brands
and international
brands dilutes that
outlet experience.”
James rickson, eWB
In the conference’s closing session,
Chris Milliken, commercial director of
UK-based Freeport, offered a lengthy
rebuttal.
“Look,” he said. “We have our own
domestic brands in Europe and I’m
happy to have them. Don’t forget, the
uniqueness is in the price point – you’re
getting 30 to 50 to 70 percent off.
“We should pay more attention to
domestic brands
in this market,”
he said. “They
kind of got a bad
name in China,
partly because
outlets tend to
hide them around
the back – they’re
all put together
Chris Milliken
like a second division and they don’t
get the footfall so they’re bound to
spiral downward. If we took them
“We should pay more
attention to domestic
brands in this
market… If we took
them more seriously,
helped them with
their merchandising,
helped them fit out
correctly and helped
them with signage,
you’ll fill your center
and help it perform
better.”
Chris Milliken, Freeport
more seriously, helped them with
their merchandising, helped them fit
out correctly and helped them with
signage, you’ll fill your center and help
it perform better.”
The Freeport executive sees domestic
and mass market brands as an
important part of the overall outlet
mix. “People will buy luxury but they
accessorize with other things,” he said.
“A lady may buy an Armani coat for
$1,000 but then she might equally go
to H&M to buy a shirt for $35,” he
said. Consumers don’t buy only luxury,
he said. They buy a mix of things,
which means that domestic brands are
becoming become more important.
Milliken said he had recently surveyed
the 10 billboards in the arrivals hall of
Beijing Airport’s massive Terminal 3
and noticed that all but one advertised
domestic brands. The lone exception
was Gucci – which “doesn’t do outlets
in China,” Milliken pointed out.
Chinese millionaires
At an earlier conference session,
Shanghai-based KPMG partner Tracy
Yang walked attendees through the latest
luxury data. China’s luxury market grew
to ¥80 billion (€8.6 billion) in 2010 from
¥55 billion (€3 billion) in 2008 and is
projected to grow 18 percent annually to
¥180 billion (€19.4
billion) at current
exchange rates by
2015.
Yang also offered
some demographic
snapshots from
KPMG: 960,000
Chinese have
individual worth of
Tracy yang
more than ¥10 million (€1 million) and
60,000 Chinse have individual worth of
¥100 million (€150 million).
China’s millionaires, she said, tend
to be younger and more free-spending
than their Western counterparts. They
are found everywhere in China but
remain heavily concentrated in wealthy
coastal centers.
The wealthy account for the vast bulk
of luxury consumption, she said, but
China’s emerging middle class is becoming
aspirational, accounting for 13 percent of
luxury sales in 2010, according to Yang.
The data explains why more of the
world’s top luxury brands are focusing
on China. But Freeport’s Milliken of-