Monday, June 28, 2010

Bargain shoppers find their outlets in Texas

Malls that specialize in name brands have held their own by being a destination for consumers who are ready to buy

Joanna Heffernan and her teenage daughter, Kayden Graham, walked out of the Coach outlet store at Houston Premium Outlets, each holding a Coach bag with a purse inside. They had driven from their Richmond home to the sprawling outlet center in Cypress on Wednesday, “just to get away and out of town,” Heffernan said. “It's far enough away that you went somewhere.” And she likes to shop for deals, she added. There are many people like Heffernan who enjoy bargain hunting for name brands and are willing to go a ways to do it.

Developers are opening more outlet malls with such consumers in mind. For example, Simon Property Group, the world's largest shopping center developer, noted in its first quarter earnings report it had four construction projects — all for outlet malls.

In the Greater Houston area, Simon has the two largest collections of outlet stores. Katy Mills at 5000 Katy Mills Circle is more than 1.2 million square feet and has more than 175 stores, 65 percent of which are outlets. Katy Mills opened in 1999 and was acquired by Simon in 2007.

Private school teacher Nikki Vlasek and her 8-year-old daughter, Kate, were in Katy Mills on Tuesday, “making a day out of it. We rode the carousel, she played some video games and she might climb the rock climbing wall,” Vlasek said.

Katy Mills has outlet and traditional stores, and Vlasek said she was gravitating toward bargain shopping at the outlet stores, including Ann Taylor and J. Crew, although she also went to a traditional Old Navy and Claire's there.

Simon's other outlet-focused property, Houston Premium Outlets at 29300 Hempstead, is an upscale concept, said Michele Rothstein, senior vice president of marketing for Premium Outlets.

In November, 25 more outlet stores are slated to open at Houston Premium Outlets, bringing the total to 145. The expanded mall will be 541,000 square feet.

Among the soon-to-arrive merchants, Saks Fifth Avenue Off 5th will become the center's largest store.

High occupancy
For the fourth quarter of 2009, Simon saw 91 percent occupancy for its traditional regional malls, compared with 98 percent for outlet malls. Sales per square foot in regional malls, excluding anchors, was $433, compared to $500 at outlet malls.

The Outlets at Conroe at 1111 League Line has 38 outlet stores including Bass, Guess, Izod, Kitchen Collection, Nike and Tommy Hilfiger. Owned by Newport Beach, Calif.-based Craig Realty Group, the Outlets at Conroe has been doing good business considering the economy, general manager Tanya Tounzen said. “We've seen sales increases every month this year. It's because of our value pricing,” she said.

The economy is helping drive the growth of the outlet sector, said Howard Davidowitz, chairman of Davidowitz and Associates, a national retail consulting and investment banking firm in New York. “More Americans are under financial stress and watching every penny, but they still are drawn to name brands,” he said.

An investment in time
More so than the traditional mall shopper, an outlet mall shopper is likely to buy, said Kit Yarrow, a professor of business and psychology at Golden Gate University in San Francisco.

“Going to an outlet mall is destination shopping,” she said. “The time and energy spent to get there is an investment. People will buy so they won't feel like they've wasted a trip.” 

SOURCE: David Kaplan Houston Chronicle

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