Scott Malkin is not a real estate developer. He’s also not a retailer or a manufacturer. Instead, the chairman of Value Retail plc considers himself to be in the tourism business.
“Value Retail is in the experience business,” he said during his presentation Monday afternoon.
Malkin said the company, which operates luxury outlet “villages” in nine Western European cities, is “in the long-haul tourism business. The standards are changing; they’re moving quickly. What was good enough last year is not good enough this year and certainly won’t be good enough next year.”
To make sure his company endures, Malkin said he considers Value Retail’s properties as similar to a “five-star destination hotel. You journey to get there, and you have an expectation of what you’ll get when you get there.” He said that, on the surface, most luxury resorts are the same, but some manage to create “energy and pizzazz” that is “not the standardized experience.” That is what Value Retail strives to do for customers as well as the brands that call its centers home, brands that range from Alexander McQueen and DKNY to Tory Burch and Paul Smith.
“The difference in a great experience is in the execution and the inspiration you provide the user,” he said. “If retail is detail, experiential retail is 10 times that. And with the Internet eating into store-based and physical experiences, we’re all moving toward focused, clustered, targeted and intensely delivered ‘experiences.’”
Malkin cited the late Marvin Traub as one of his mentors and the king of delivering memorable experiences. Calling Traub the “Wayne Gretzky of the retailing industry,” he noted Gretzky, the former NHL player nicknamed “The Great One,” said he was “good at ice hockey because he went where the puck was going, not where it had been.” Traub applied the same skills to retail.
As a department store retailer, “that meant he had to orchestrate something special, create that magic without absolute control. He had the ability to identify brands, to select product to develop an environment and create an experience. And our business model is fundamentally built on that,” Malkin said.
Traub said that retailing and shopping centers were becoming boring, an issue that has been exacerbated by the Internet. “The world has already polarized between efficiency, which is defined by the Internet, and the experience,” Malkin said.
He pointed to 2 Rodeo Drive, the luxury retail complex in Beverly Hills that was his final project before forming Value Retail. He said 2 Rodeo Drive provides a “flat” experience despite its stellar brand lineup.
To keep that from happening, Value Retail’s villages seek to offer the “marriage of a high-quality experience with the energy of a special moment — a resort destination combined with elements of Studio 54. Where can you find that today? A department store, a great flagship on Fifth Avenue and in villages that we create and operate.”
Malkin said the company measures the success of its philosophy by identifying the “world-class consumers” that flock to its centers and their opinion of the brands offered there.
Although prices are significantly below traditional retail, Value Retail ensures that it “conserves and respects the full-price positioning” of the brands within its center by retaining “the quality and core of the brand.
“A woman who spends $5,000 on an item that might have been $10,000 is not a normal consumer,” he added. The centers attract “fantastic, high-maintenance shoppers” and “terrific high-maintenance brands,” requiring Value Retail in turn to “provide high-maintenance service.”
The result is that Value Retail’s four most established locations rank in the top 15 shopping centers in the world in terms of sales productivity. “Seventeen years of double-digit growth, 13 percent like-for-like growth in 2012,” he said, “but we’re not a shopping center company. We are not in the business of collecting rents, we’re in the business of driving experiences through distinctive environments.”
Bicester Village outside London produced sales per square foot of over $3,000 last year, he said, and two out of three visitors from China to the U.K. last year traveled to the center. Eighty percent of visitors overall were tourists, he added, and 40 percent were from outside the European Union. From 2008 to 2012, non-EU attendance at its centers rose from 8 percent to 26 percent, he said.
To further grow, Value Retail is now preparing to enter the Chinese market and has formed a company called Value Retail China. Its first center is currently under construction in Suzhou outside Shanghai and is scheduled to open next year with additional centers to be built in Beijing, Hong Kong and other cities after that.
“Why are we in China,” he asked. “Marvin would say China is the future and you can’t be part of the future without participating. It’s, after the Internet, the second big change we are living through now: the shift of power and focus and energy to the East. And the brands pushed us to go. Because there’s a tipping point that is arriving right now where you can’t dump out the back door in China anymore.” Additionally, “the Chinese consumer is well-informed, sophisticated and ever more demanding, and the Chinese market is fundamentally about authenticity. The only people buying counterfeits in Hong Kong and Shanghai are Westerners.”
He said, “The moment is now in terms of market demand and the brand requirements, the behavior of the consumer and the expectation of the Chinese consumer for a technology transfer of this innovative, sophisticated retail platform.” But, he cautioned that there is a “simple guideline for China: there are no shortcuts and to succeed you will need to exceed what you do in the West.”
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews