Chic Outlet Shopping Villages expansion into China

Suzhou Village will house boutiques of local and international brands

By Benjamin Li on Feb 25, 2013 Campaign China

HONG KONG - Chic Outlet Shopping Villages, originating in Europe and operated by Value Retail, is planning its first step into Asian with a 130-store outlet in Suzhou, China, slated to open in Q1 2014.

Campaign Asia-Pacific met up with Ian Stazicker, head of tourism at Value Retail in Hong Kong, to explore the retail facility's expansion plans.

The Suzhou facility will be in the Suzhou Industrial Zone near Shanghai and will be opening in Q1 in 2014. The scale is as large as the company's biggest outlet Bicester Village, in Oxfordshire, UK.

The company chose Suzhou because the city attracts 70 millions domestic tourists per year, Stazicker said. The Suzhou Industrial Park is in a new part of the old city, with a scenic lake, opera house, IHG and Four Seasons Hotel. The Italian-style outlet village will have the look and feel of a luxury five-star development, he added.

"China has its local outlet shopping markets, especially in Beijing and Shanghai, but the product quality is quite average," he said. "Chinese consumers are suspicious of anything copied and some brand-made products for outlets sales only, whereas customers could buy the genuine and authentic mechandise in our outlets."

The China outlet will have a balance of international brands and local brands. "In Europe we try to keep a balance of local residents and international tourists in our outlets, but the new one in Suzhou will be predominenty targeting communities in Shanghai."

Cohn & Wolfe Impact Asia has been the PR agency for Chic Outlet Shopping Villages for more than four years. Value Retail has also appoined China marketing agency Aviareps Marketing Garden last year as its tourism marketing partner, to attract tourists to the outlet from new second-tier markets like Qingdao, Shenzhen and Nanjing.

The company has a second China location earmarked for additional future expansion.

Despite the recession in Europe, the company's nine outlet villages in Europe recorded a 18 percent growth for all markets, representing US$2.2 billion in sales.

The top 10 visiting nationalities to the company's outlet villages in Europe are China, Middle East, Russia, Southeast Asia, Hong Kong, Brazil, Korea, Japan, Taiwan and USA.

Year-over-year, tax refunded sales in 2012 grew 47 per cent from China tourists, 39 per cent from Southeast Asian visitors (Singapore, Malaysia, Thailand and Indonesia) and 25 per cent from Hong Kong tourists. However, Hong Kong shoppers on average spend more than tourists from other countries: USD$320 versus US$300, according to the company's statistics.

To make their outlets more attractive, the company has partnered with Cathay Pacific for its Asia Miles frequent-flier programme, plus Air China and British Airways. In addition, it works with tour operators, travel agencies and credit card companies, including UnionPay in China.

"We have a busload full of tourists, I am not painting a rosy picture but a factual picture," Stazicker said. "The economic situation and recession in Europe is our big challenge. Most of the growth comes from long-haul markets, with domestic European markets, especially in Italy and Spain, subdued."