Sunday, December 4, 2011

If you build it will they come?

By JAKE BERRY Staff Writer Nashua Telegraph

MERRIMACK – They are building it. Now the question is, will they come?

By the next holiday season, area shoppers will have a sparkling new selection of stores available at the Merrimack Premium Outlets center, currently under construction off Exit 10 of the F.E. Everett Turnpike.

When it opens, likely in June, the $100 million shopping center will consist of 100 upscale clothing, home goods and other retail outlets, offering products at factory rates. But, with the general retail market still suffering under the weight of the national recession, critics may wonder if this is the time or the place to open a large scale outlet center.

Project managers and retail industry analysts alike answer in a single word: Yes.

“Outlet shopping has become more integrated into consumers’ shopping routines, which bodes well for the opening of Merrimack Premium Outlets,” said Michele Rothstein, vice president of marketing for the project developer, Premium Outlets, which has projected as much $140 million in annual sales from the center.

“Outlet shopping is a different mentality,” added Nancy Kyle, president of the Retail Merchants Association of New Hampshire, which represents 800 businesses across the state. “Outlets become a destination. … They seem to do well regardless of the economy.”

Even during a recession, these claims play out in the sales numbers.

Retail sales continue to suffer around the state and across the country, analysts said. In New Hampshire alone, several major retail stores, including Building 19 in Nashua and Lowe’s Home Improvement in Manchester, have recently closed their doors. And, across the state, the retail industry has lost about 2,000 jobs in the last year alone, according to Dennis Delay, an economist for the New Hampshire Center for Public Policy.

But, while these numbers continue to fall, industry analysts report that outlet stores have either maintained or increased sales around the country. Across the map, general retail sales rose an average of 1.4 percent from April 2010 to April 2011, according to a recent consumer tracking study by the NPD Group, an international industry company. By comparison, outlet sales jumped more 17.9 percent, more than 10 times as high, during that time period, the study concluded.

“Consumers are much more careful today with their shopping dollars,” said Jack Plunkett, president of Plunkett Research, a Houston-based market research company that focuses on the retail industry.

“They want to feel like their money is well and wisely spent. … But they also want selection, and when they can get it, they want a brand name,” he said. “An outlet mall, if it is a good mall, it’s well positioned for today’s market.”

These trends are reflected locally, according to outlet managers around the region.

Officers at the Tanger Outlets in Tilton, the closest outlet center, did not return calls for comment for this story, but stores at the Kittery Outlets in Maine have thrived during the recession, according to Lynn Smith, the center’s marketing manager.

To a one, each of the center’s 120 stores have either maintained sales or grown over the last few years, Smith said earlier this month.

Some stores, like Liz Claiborne clothing, have closed because the parent company either shut down or downsized, she said. But, in total, the outlets have maintained their yearly average of about 5 percent turnover, meaning about five or six stores close per year. And those vacancies still tend to fill quickly, Smith said.

The Kittery outlets, located just across the state border from Portsmouth, currently have two vacancies, which is about average with or without a recession, she said. By contrast, more than 9 percent of stores in traditional retail malls remain vacant, according to recent study of the country’s 80 largest markets published by Reis Inc., a New York-based real estate research company.

“You hear what’s going on around the country and we just haven’t seen a lot of that,” said Smith, of the Kittery Outlets. “People are still shopping. They’re just making smarter decisions.”

From Kittery to Tilton to North Conway, outlet shoppers generally don’t hesitate to drive a distance to find their deals, according to industry analysts and business leaders. And the Merrimack center’s location along a major traffic artery only benefits it further, they said.

Positioned strategically between Manchester and Nashua, the outlets will draw heavily from New Hampshire’s two largest population centers, according to Chris Williams, president of the Greater Nashua Chamber of Commerce.

And with the Massachusetts border less than 20 miles away, Bay State shoppers will likely flood the area to take advantage of the absence of a state sales tax, which will drive prices down even further, Williams said.

“When you consider the proximity of Merrimack to the Massachusetts border, I think you’ll certainly see a lot of people from northern Massachusetts coming up here,” he said.

“But conversely, you’ll also have a lot of residents in the central and northern parts of the state who will now come down to Merrimack. … They’ll come from all over. This is going to have a very tremendously positive impact on our retail economy.”

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