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Discount malls cash in
Last Updated(Beijing Time):2006-12-14 12:51

Discount malls cash in

Shoppers spend more than three million yuan at weekends at Shanghai Outlets Brand Direct Sale Plaza, in Zhaoxiang, western Qingpu District. Increased car use and brand awareness have spurred the growth in discount malls.
 
Finding a bargain is always satisfying. Even if you have to drive 20 kilometers to a suburban factory store and spend almost a whole day seeking good discounts on upscale brands.

Given that the average Shanghai consumer is familiar with world-class fashion and yet can't quite afford top brands, retailers have decided it's time to open discount malls and factory outlets in the suburbs.

As China's economy expands, factory stores have spread across major cities, selling all kinds of global fashion brands.

And they are popular with shoppers - who spend an average of three million yuan each weekend and one million yuan on weekdays at Shanghai Outlets Brand Direct Sale Plaza Co Ltd in the western Qingpu District.

The mall, which opened on April 28, was the first large complex of factory stores in the city, with 206 shops featuring brands such as Lacoste, Guess and Miss Sixty.

The center is a joint investment with local retail giant Shanghai Brilliance (Group) Co Ltd and Hong Kong-based Wharf (Holdings) Ltd.

The two companies invested a total of 470 million yuan (US$58.7 million) with Wharf holding a 4.96 percent stake. The Hong Kong retailer is in charge of the management of Shanghai Outlets.

To cash in on the Christmas and New Year shopping blitz, the city's first discount home improvement store will open shortly to expand the mall's choice of discounted products.

The store, named Demio, is scheduled to open on December 25. With a retail area of 4,300 square meters, it will sell middle-range to upscale homewares such as lamps, furniture and curtains at bargain prices.

"We expect one-third of the area will be opened by Christmas," said Jiang Jun, general manager of Zaihang Estate Investment Advisory Co Ltd Shanghai, which leases space at Shanghai Outlets.

"The furniture store will enlarge the range of discounted products, thus raising its profile among other city discount malls."

Shanghai Outlets also plans to rent space to hotel chains to cash in on the increasing number of tourists to Qingpu.

Brilliance has signed partnerships with 11 local tourist agencies, including China Youth Travel Service and China Travel Service, to bring visitors to Shanghai Outlets part of their package tours.

In nearby Songjiang District, Switzerland-based FoxTown Factory Stores opened its first Chinese discount outlet in June. The mall, named Orient FoxTown Factory Outlets, is a joint investment between the Swiss retailer and Orient International (Holding) Co Ltd, a local trader. The two companies invested a total of US$28 million in the site, with FoxTown paying 70 percent.

The 68,000-square-meter FoxTown sells more than 40 global brands, including Nike, Adidas, and Geox shoes and Ermengildo Zegna clothing. Sales have already reached 600,000 yuan on weekdays and exceed one million yuan on weekends.

"We plan to have a total of 100 brands by the end of next year," said company spokesman Zhao Wenjun.

FoxTown runs three outlets in Europe, each with more than 100 stores selling top fashion brands such as Gucci and Dolce & Gabbana.

But apparently two large-scale discount malls aren't quite enough for keen shoppers in Shanghai's sprawling outskirts.

Earlier this month, US factory-store retailer Craig Realty Group signed with Shanghai Jinluodian Development Co Ltd to invest 300 million yuan to build a discount mall at the Luodian North European Town project in northern Baoshan District. The mall, covering 70,000 square meters, is due to open in May next year.

The first phase of 45,000 square meters will sell 400 international brands including Louis Vuitton and Versace within a three-year time frame. Discounts will be up to 70 percent to fire up competition with other retailers.

"Stronger purchasing power has spurred consumption for brand-name goods, featuring better design and quality," said Fu Su, an analyst with Shanghai securities company Xiangcai. "And the increasing number of car owners ensures that the suburban factory-store model will work well. But whether a discount mall can succeed largely depends on the brands and the products."

Local names are getting in on the act, too. A discount mall named Outlets (not to be confused with Brilliance's Shanghai Outlets) in the western Putuo District has switched its focus to domestic brands such as Jiangsu, Changshu-based Bosideng and Shanghai-based Peimeng.

The 11,000-square-meter Outlets, run by Shanghai Outlets Enterprise Development Co Ltd, was the first discount mall to open in Shanghai in 2003. But business was reportedly sluggish, with top brands including Prada withdrawing due to poor sales.

Mall officials declined to comment on performance, only saying sales are improving since the focus switched to domestic brands.
Source:Shanghai Daily 
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