China’s outlet mall boom is proving immune to the online shopping threat, and more investment funds are taking a look
- Price discounts combined with the ‘weekend leisure destination’ concept have helped fuel the rise of outlet malls, while other brick and mortar retailers struggle
- Outlet malls seen as attractive physical assets for developers and private equity
Designer outlet malls, which enable brands to sell stock directly to the public through factory outlets, have continued to see strong growth in sales throughout Asia-Pacific, bucking the downturn that has affected other brick and mortar retailers during the e-commerce boom.
The gains have been particularly noticeable in China, where a building boom has led to a doubling of outlet malls in the last two years. China has 110 outlet malls nationwide, or about 45 per cent of the 244 such malls across Asia-Pacific.
Real estate investment funds remain upbeat on the outlook for these factory outlets, saying the model retains its appeal to consumers even as online retailing continues to cannibalise other parts of the retailing world.
Consumers are attracted by pricing discounts offered through the factory outlets, as well as the architectural design that help create spaces that function as “weekend leisure destinations”, according to Harry Tan, head of research for Asia-Pacific at Nuveen Real Estate.
“Designer outlet malls are inherently experiential centres as the unique architecture, village style concept combine to create an immersive effect for shoppers,” Tan said. “Visitors want something unique, aesthetically pleasing, visually stimulating and the outlet mall caters in this regard.”