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

fered a caution on going overboard on
upscale tenants.
“Don’t get too hung up on uberultra-luxury
brands,” he said, mentioning
Hermes and Chanel, among others.
“Half of them don’t do outlets.”
Besides, he added, most sales come
not from the super-luxe segment, but
from good, upper-level mass brands.
“Tommy Hilfiger, Burberry, Polo Ralph
Lauren is where the volume is.”
Build it, and then what?
Several speakers at Outlets Asia zeroed
in on that favorite maxim of wishful
thinkers, “Build it and they will come.”
But Allan Tang,
managing director
of Beijing-headquartered
T&C
Asset Management
Consulting, stepped
back to fine-tune
the question: Build
what exactly? As he
pointed out, only
Allan Tang
23 of China’s 40 malls labeled as outlet
centers really qualified as such.
Essentially, local governments aiming
for fast-track economic growth opened
up development zones, discounting land
for preferred investors, including outlet
players. These offers attracted not just
retail developers and store groups, but
developers primarily interested in building
residential and commercial towers and
hotels – basically, projects promising fast
payback. To qualify for land discounts, the
developer would throw an outlet center
into the package, even if he didn’t know
malls from snowballs. When these afterthought
outlets open, without the benefit
of proper research or commitment,
“Most will fail,” Tang says bluntly.
On the issue of overbuilding, Rickson
expressed concern about a recent visit
to 14 outlet sites. “It is incumbent on
us as an industry to tell people when
their projects are not going to work, or
at least tell them that their timeframe is
unrealistic. If we are to have confidence
in this model and grow it in China, we
have to talk realistically about what will
and won’t happen.”
Richard Hamilton, of Taubman
Asia said, “Our product is very simple.
We create meeting places where our
customers can engage with retailers.
This raises two obvious questions. Do
retailers need this place? Do customers
want it?
“If the driver of the decision is
someone other than the retailer and the
customer – if the development is being
pushed by a local government keen to
see outlets in their jurisdictions,” he said.
“There’s a very great risk the decision is
being made incorrectly.”
David Ober agreed and pointed out
that outlet locations in China were often
settled by local governments who hand
over designated land at a discount, along
with project financing, all pre-arranged
at the local bank. “There isn’t any of
that background research,” Ober said,
recalling the early days when more than
a few U.S. outlet projects opened on a
hunch instead of research.
Ober urged government officials in
the room to do their research before
bringing an outlet project to market.
“You will save yourself a lot of longterm
political pain,” he said. “The sad
part is there will be consultants and
developers who will take advantage of
projects that will not bring any longterm
gain for your community.”
Then he added: “Is this something that
happens only in China? Look, we have
many centers in the United States that
opened with outlets but couldn’t maintain
outlet tenancy because they should
never have been built in the first place.”
Brad Stipe said he understands the
excitement the Chinese feel about outlets.
But, he said, government-backed
projects may fail to meet the essential
criteria for successful outlets and will
be overshadowed when a properly
researched and planned project opens in
the market. c
ASIA BRIEFS
EWB, APOC form outlet JV for China
u.S.-BASED EWB has joined with
multinational APOC to lease outlet
centers throughout China.
EWB’s team of outlet experts have
leased and marketed more than 40
outlet projects in the past 15 years,
including centers in the U.S., Europe
and the Middle East. The mission is
to develop a portfolio of outlet centers
in China that would be tenanted
exclusively by international luxury
and fashion brands.
APOC is a group of U.S. and U.S.educated
Chinese developers who are
leveraging their Chinese governmental
contacts to secure development
rights across a number of provinces.
The developer plans high-quality,
Western-style management that will
differentiate APOC projects.
EWB said in a press release that it
has been pushed by its U.S. tenants
to enter the Chinese outlet market.
However, the developer initially
resisted working in China due to
the current frenzied state of retail
development there. APOC, through
its Chinese connections, will ensure
locations that meet brand expectations.
In turn, the architectural
detailing, focus on quality construction
and day-to-day management
will help bridge the gap between
Western brands’ expectations and
the desire for foreign brands by
Chinese consumers.
APOC and EWB say their outlet
projects will be smaller than have
been typically built in China. The
JV will focus on 30,000-m2 projects
built in two or three phases to
limit vacancies and to maximize the
return on investment. The JV will
also introduce high-quality food and
beverage operations, along with a
small number of lifestyle and entertainment
venues to heighten the
shopping experience, build repeat
business and position the centers
as central to the local community.
Principals in the joint venture are
Garth Everhart, APOC; and Peter
Edelmann, Lisa Wagner and James
Rickson, all of EWB. c
Fall 2011 InternAtIOnAl Outlet JOurnAl 29