Next generation of retail outlets in China

October 21, 2014 / By

On a recent trip, I had the chance to visit Gotemba Premium Outlets, one of the most famous outlet malls in Japan. Sitting at the foot of Mount Fuji, and only a two-hour drive from Tokyo, Gotemba attracts millions of shoppers and tourists each year. Opened 14 years ago, with a mix of high-end and mass market brands, the property is frequently studied as a successful example of outlet mall execution. At 48,000 sqm NLA, this project is an average size by Japanese standards and was a JV between the then-largest outlet developer in the world, Chelsea Property Group (now part of Simon Property Group after a 2004 merger) and Mitsubishi Estate of Japan.

What makes Gotemba successful? Although the architecture is that of a typical American-style outlet, i.e. outdoor, one-storey and with a large land footprint, the view of Mount Fuji gives the property strong tourist appeal. Second, the outlet can be accessed by multiple modes of transportation, including free shuttle buses from the nearest train station and various buses directly from Tokyo. The outlet also appears prominently on free tourist maps. Finally, the outlet operator pays great attention to detail in marketing and customer service, including the following strategies:

  • The centre’s website can be viewed in six different languages,
  • All areas are handicapped-accessible,
  • There are strollers and wheelchairs available for rent; and
  • The directory not only lists shops, but also points out a Ferris wheel and the best spot to see Mount Fuji.

During my visit, besides loads of shoppers being dropped off by bus, I also saw local residents walking their dogs and children having a great time in the playground. It seems the centre is not simply an outlet, but also a friendly community gathering point.

Is there a Gotemba in China?

I think the answer is “coming soon”. In my view, China has experienced two generations of outlets. The first generation is represented by projects such as Yansha Outlet in Beijing: big box, simple construction, indoor format, and locally developed and operated. As China’s top outlet by sales, its success lies in its price advantage. Projects such as Tianjin Florentia Village represent the second generation: foreign developer, international style, outdoor and suburban location.

The third generation, in my opinion, will be projects similar to Gotemba Premium Outlets that offer more than just shopping. The outlet landscape is becoming more and more competitive. Suzhou Village, a recently opened outlet developed by Value Retail Group, has many of the advantages of the Gotemba outlet. It combines a relaxing environment with a view of Yangcheng Lake, lakeside dining, art galleries, and a playground. If Suzhou Village succeeds, other new Chinese outlets will follow suit and offer a more sophisticated shopping environment.

Today’s consumer is increasingly price-savvy as a result of rising international travel and extensive online shopping exposure. Also, as rents in full-price malls continue to rise, many retailers find outlet locations appealing. Specially-produced “made for outlet” product lines can be offered for the price-conscious consumer. With rising car ownership rates, the idea of a “day trip” outside the city is catching on.


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