Outlet centers on the rise amid quest for modern lifestyle
By Tang Zhihao, China Daily/Asia News Network
April 30, 2012, 12:06 am TWN
China Daily/Asia News Network--Buoyed by China's growing middle class and people's desire for a modern lifestyle, property developers are leaving no stone unturned to cash in on the outlet industry.
According to media reports, more than 200 outlet centers have opened in China over the past decade.
To put this into context, the United States, where the concept of outlet stores has been around for decades, had 179 outlet centers by June 2010, according to U.S.-based Value Retail News.
For many middle-class people in China, outlet centers have become a good place to buy quality products at a discount.
"I visit outlet centers several times a year to buy clothes for the next season," said Liu Jing, a white-collar worker in Shanghai.
"The discounts offered might not be as big as overseas, but they are better than at regular stores."
Products sold at outlets will normally be up to 50 percent cheaper. Extra discounts might be given for purchases of more than one item at certain stores.
David Ng, executive deputy general manager of Shanghai Welead Investment Co. Ltd., subsidiary of Pearl River investment group and the operator of MEGA MILLS Outlet center in the Qingpu district of Shanghai, said the key factors that attract shoppers to outlet centers are the guarantee of genuine products and a comfortable shopping experience.
Many people might feel embarrassed asking for price information at regular retailers. People who are keen to know about a new brand might visit outlet stores as a starting point to learn about the brand, said Ng.
"Consumers will feel more relaxed asking about prices at outlets."
Success stories in China's outlets sectors include Beijing-based Yansha Outlets Shopping center and Shanghai-based Bailian Outlets Plaza.
Yansha Outlets Shopping center reported sales revenue of 2.5 billion yuan (US$396 million) in 2010, a more than eightfold increase from 300 million yuan in 2002.
Yansha was the first outlet center to open in China in 2002. The new retail practice grew rapidly after Yansha made its debut, bringing hundreds of shops under one roof, usually outside a major city and near large expressway interchanges, rather than expensive city center locations.
Experts said the growing middle class is one factor contributing to the success of outlet center operators.
In addition, "for brand owners, outlets are an effective way to sell out inventory, without damaging their brand image in regular stores. In addition to global luxury brands, outlets are a good way for sportswear giants such as Nike and Li-Ning to clear heavy inventories," said Sherri He, a partner at consulting firm A.T. Kearney.
"For consumers, outlets offer luxury or famous brands at good value for money," added He.
Despite outlet centers having become one of the key sectors in the retail sector, the prospects for the development of outlet centers around China are not universally rosy.
At Lake Malaren Outlets in the Baoshan district of Shanghai, some stores have closed. On working days, sales assistants often outnumber customers.
Comments on dianping.com, an independent online platform for people to comment on service providers, suggest Lake Malaren Outlets is having problems drawing in the crowds.
In the cities outside Beijing and Shanghai, several outlet centers have closed in the past few years, including Kingcity Outlets Shopping center in Qingdao, Shandong province.
"The development of outlet industry is faster than normal speed," said Ng from Welead.