Outlet leader uses ‘village’ for shopping
Facing a slowdown in China’s luxury market, Value Retail, the world’s leading outlet developer, is looking to redefine luxury shopping in China with more than just competitive prices.
“Our intent is to create an authentic experience, including the artwork and restaurant, which would be something you can only experience in our village,” Mark Israel, Value Retail’s CEO, told China Daily.
Although Value Retail may not be familiar to most Chinese customers, one of its star projects — Bicester Village in England —has gained recognition among overseas Chinese tourists who love fashion. Located in northern outskirts of London, Bicester Village is among the must-go destinations for the nearly 300,000 Chinese travelers to UK every year.
“We attract more and more customers from China. In fact, 80 percent of Chinese tourists visiting the UK also visit Bicester Village,” Israel said.
Bicester Village has the highest per square meter annual sales volume in the world at 13,000 pounds ($21,926). But Value Retail’s ambitious growth plan isn’t stopping there.
“China is the most important consumer market. If you are going to be truly global business today, here is where you need to be,” Israel said.
In May, Value Retail opened its first village outside of Europe, in Suzhou, an affluent city in East China’s Jiangsu province. The Suzhou Village is twice as large as Bicester Village, and it’s the largest among Value Retail’s 10 villages worldwide. There are about 100 boutiques and 15 restaurants in the development’s first phase, and Israel said the village will be expanded by another 50 percent in phase two.
Scattered among the stores’ European-style architecture are some of Chinese customers’ favorite brand names, including Gucci, Coach, Hugo Boss, Givenchy and Ralph Lauren.
Although only fewer than 10 stores have opened, Israel said the objective for Suzhou Village is to exceed the European sales volume.
Suzhou Village is the first step for Value Retail’s longterm strategy for China.
A shopping village in Shanghai, which will be even larger with 150 boutiques and
We attract more and more customers from China. In fact, 80 percent of Chinese tourists visiting the UK also visit Bicester Village.” MARK ISRAEL CEO OF VALUE RETAIL
restaurants, will open in the autumn of 2015. The Shanghai Village will be located in the Pudong New District and be a neighbor to the Shanghai Disneyland Resort as part of a new international tourism community.
“Over the next five years, we’ll add another three to five villages in China,” Israel said. Total investment for the five-year expansion may be around $450 million, the Wall Street Journal reported.
In 2012, Chinese going abroad became the biggest spenders among overseas shoppers, with $102 billion spent in foreign countries. UnionPay estimated the number of outbound Chinese tourists will grow by another 15 percent in 2014. A report by McKinsey & Co suggested that over the next decade China’s urban families that can afford a private car or luxury products will grow by six times.
But Israel said there can be only so many Chinese tourists going overseas, and the huge potential for purchasing power is still within China’s domestic market.
“A lot of our brand partners are planning to build a future in China, and they need to have a proper way of being in the outlet market. They asked us to come here,”he said.
Israel said that when it comes to prices in China, Value Retail offers the same discount as in Europe.
“For us, one of the most important things is authenticity,” Israel said, explaining that because Value Retail only works directly with brand partners, products will be authentic, new and within one or two seasons.
“So you may find less expensive products somewhere else in the world. But you won’t find the entire experience, the selection and range of products, the service and hospitality, for a cheaper price,”he said.