While strolling through Plaza 66 on a Saturday may still look sexy, China’s label-conscious consumers are rapidly discovering one of the staples of suburban America – the outlet mall.
According to a statement from London-based outlet mall developer Value Retail, the company is due to open its first suburban shopping venue in China today – April 15th in Suzhou, just outside of Shanghai.
For a country that moved rapidly from monochromatic Mao suits to Michael Kors, the migration to discounted fashion outlets is the next step in China’s retail evolution.
An Italian Resort Town in the Venice of the East
Value Retail, which is already one of Europe’s largest discount outlet developers, promotes its Suzhou Village as “evocative of a romantic Italian resort town, infused with the elegant Eastern influences that can be found in such famed Shanghai locations as the French Concession and The Bund.”
Initially, around 100 brands will have outlets at Suzhou Village, including recognizable names such as Burberry and Prada. The company indicates that goods will be discounted by 40 to 50 percent from the retail prices at the brands’ Beijing and Shanghai stores, although the items displayed may be out of season and are not likely to be exactly the same as those currently displayed in flagship stores.
The company plans to open a second China location in Shanghai in 2015, adjacent to the city’s Disney resort.
According to a report in the Wall Street Journal, Value Retail plans to invest about $450 million in three further outlets in China over the next five years, bringing its total to five.
Affordability Becomes a Priority
The move to discounted luxury brands seems timely, as China’s shoppers have recently begun to shift their allegiance from cost-be-damned high end luxury brands, to fast-fashion retailers such as Zara and H&M.
According to a recent market survey by real estate consultancy Knight Frank, 65 percent of luxury retailers failed to reach their targets for new store openings in 2013, as consumer appetite for high end fashion proved to be more limited than was earlier anticipated.
The slowdown for couture sellers was in contrast to the success of mid-range fast fashion brands, such as Uniqlo, Zara, H&M and C&A, which increased their total store count by 40 percent from mid-2012 to the end of last year.
In addition to Value Retail, the Wall Street Journal says that London-based investment management firm TIAA Henderson Real Estate is expanding an existing outlet in Tianjin, and adding shops in Shanghai and Foshan.