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

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China’s outlet growth is
rapid, ambitious, evolving
The authors caution
that outlet retailing isn’t
as easy as it looks, and
those in the sector must
play by the rules.
By XINGuO JIANG,
Shanghai Zaihang real
Estate Consulting
JuN JIANG, Shanghai
Zaihang real Estate
Consulting
yIQuN WANG,
New York university
The Chinese outlet industry
continues to grow rapidly. At
least seven outlet projects opened
between May 2010 and May 2011, and
another eight to 12 projects are set to
open by the spring of 2012.
With 30 to 40 more in the pipeline
under land acquisition or in various
stages of development, the peak of new
outlet openings could occur between
2012 and 2016. The Chinese outlet
industry is still in its early stage compared
with most parts of EU and North
32 InternAtIOnAl Outlet JOurnAl Fall 2011
America. It is very much development
driven rather than retailer driven.
Some of the trends in the Chinese
outlet sector are obvious. Developers
have figured out that village-style centers
best fit the market. They also understand
the appropriate size of a typical outlet
center, and they’re looking more at
second-tier cities. Developers, who are
increasingly forming joint-ventures and
partnerships, are also planning chains of
outlet centers all over the country.
But a couple of outlet centers have
already closed or are on the brink of
failure. The failing centers provide a
clear signal to the industry that outlet
retailing is a business that requires much
expertise to develop and much time to
mature. On the bright side, reputable retailers
– including first-tier international
brands – are pouring into Chinese outlet
centers, a signal of the quality of some
of these chain developers.
Chain developers
Currently, there are about 13 outlet
chain developers in China, with eight
having opened at least one center and
five with planned centers only. By 2016,
each of the biggest five owners (Bailian,
PCD Stores, RDM, Richly Field and
Outlet China Ltd.) will be operating an
average of eight outlet centers.
n State-owned Yansha, which brought
the outlet concept to China, has somehow
paused after opening two departmentstore-style
outlets.
n State-owned Bailian, which currently
owns two village-style centers, has recently
set ambitious plans to open five to eight
outlet centers around the country in the
next couple of years.
n Regional operator MGS has just
opened its second outlet center in
Chongqing; its first is in Chengdu.
n Taiwan’s department store giant Pacific
Group has opened three enclosed
outlet centers and has two in the pipeline.
n Recently Hong Kong-listed department
store chain PCD Stores has set
up an outlet platform named Scitech.
There is currently one Scitech Outlet in
operation in Beijing and five to six more
are planned.
n State-owned textile manufacturing
company Tianfang has also formed an
outlet platform called Stage. The first
Stage is open and at least three more
Stages are under construction.
n Friendship Apollo Group, a stateowned
regional retail giant opened an
outlet center in Changsha in early 2011
and plans to open another in Tianjin.
n Italian retail group Fingen’s real
estate wing RDM, opened its first outlet
(continued on page 34)
Ratio of Full-Price Stores to Outlet Stores by Luxury Retailers in China
AQuASCuTuM ARMANI BuRBERRy CERRuTI COACH DuNHIll GIVENCHy ZEGNA PRADA SAlVATORE
1881 FERRAGAMO
Beijing full-price stores 9 7 6 7 7 15 3 6 3 8
Beijing Scitech Outlets no Yes Yes no Yes Yes Yes Yes no no
Shanghai full-price stores 10 10 4 10 6 11 4 9 3 6
Shanghai Qingpu Outlets Yes Yes Yes Yes Yes Yes Yes Yes no Yes
Tianjin full-price stores 3 1 1 1 2 2 1 2 2 2
Tianjin Florentia Village no Yes Yes no Yes no no Yes Yes Yes
Chengdu full-price stores 4 2 3 1 4 4 1 3 2 1
Chengdu MGS/Times Yes Yes Yes Yes no no Yes no no no
* Some stores in this list may be operated by distributors
Source: Li & Fung Research, Zaihang Real Estate Consulting