By  on December 27, 2000

MILAN -- Exactly one year after the groundbreaking ceremony, the first Italian outlet opened last week in Serravalle, a strategic location an hour away from the cities of Milan, Turin and Genoa.

"Outlets are still very much a novelty in Italy, and, during construction, I've been asked the most bizarre questions -- people in the area wanting to know how many rooms there were going to be, or how many golf holes," said Luca de Ambrosis, general manager of the Italian branch of BAA McArthur Glen, the Anglo-American company behind the project.

BAA McArthur Glen is a joint venture between the Washington, D.C.-based McArthur Glen, which runs outlets in the U.S., and British Airport Authorities, one of the largest owners of retail space in England, which manages several sales points at international airports.

De Ambrosis said the company has had to work closely with local authorities and the people in the area to explain the concept of outlets, how they don't conflict with traditional retailing, but actually help create new jobs and infrastructures.

"Eventually, we had the best support and works just went full-speed ahead, enabling us to complete the first phase of the project in one year, as scheduled," said de Ambrosis. The Serravalle outlet currently lists 62 stores in a 195,000-square-foot area. In addition to apparel, the outlet offers sporting goods, accessories, housewares, children's wear, beauty products, innerwear and a food court. Prices are discounted from 30 to 70 percent. By next summer, the second phase will be completed, with the addition of 60 more stores.

"Our goal is to complete the fourth phase by 2002, when the project will include 185 stores, a sports complex, a museum on cycling -- a sport favored by Italians -- and a cinema, covering almost 500,000 square feet, on a three-million-square-foot parcel, making it the biggest outlet in Europe," said Joey W. Kaempfer, president and chief executive of BAA McArthur Glen.

In Europe, the company currently controls six outlets in England, two in France and one in Austria. Another location will open in Scotland next month. Kaempfer said BAA McArthur Glen plans to begin construction of two outlets outside Florence and Rome in about nine months and a third outside Venice in 15 months.The company is supported by Italian partners Tuscan Fratini Holding and Fingen SpA, which manufactures Guess and Calvin Klein Jeanswear and has a 20 percent share in Van Cleef & Arpels. Fingen is owned by brothers Marcello and Corrado Fratini.

De Ambrosis said BAA McArthur Glen has invested about $60 million in the first phase of the outlet.

"By the end of the fourth phase we estimate an investment of around $300 million," he said. (Dollar figures are converted from Italian lire at current exchange rates.)

There are currently 350 employees working for the Serravalle outlet, and de Ambrosis estimated a total of 1,000 will be hired by the end of the fourth phase.

The Serravalle outlet, designed by architect Guido Spadolini, reflects local architecture in typical yellow, red and ochre shades, and each store is personalized by tenants.

"It's all shinier and newer than most Italian cities, but it looks Italian and not like anything else we have in England or the U.S.," said Kaempfer.

Dolce & Gabbana, Versace, Etro, Byblos, Trussardi, Benetton, Calvin Klein Jeans, Samsonite, Prima Classe, Fiorucci, Aspesi, Guess, Levi's, Diesel, Rifle and Nike are only some of the fashion houses selling at the outlet.

"We've had tremendous support from designers and we think of this as a tenant-driven business. Without them, it wouldn't exist," said Kaempfer.

Tenants pay a rent amounting to 10 percent of sales for a minimum of 12 years.

"The most amazing thing is that 90 percent of the total space that will be completed in 2002 is already leased out," he added.

Mario Boselli, head of Italy's Chamber of Fashion; Beppe Modenese, the Chamber's spokesman; Santo Versace, chairman and chief executive of Versace; and Alviero Martini, owner and designer of the Prima Classe label, were just some of the members of the fashion world gathered at the opening at Serravalle to show their support for the project.

"The fashion industry is watching this venture with great interest and attention. It's an intelligent, brave and useful tool for both producers and consumers," said Boselli. "It is no secret that there are always physiological remainders and end-of-season merchandise, and an outlet allows transparency in trade."Control on distribution and integrity of the brand were a priority with Versace and Martini.

"An outlet is the best way to defend a label and to control it from beginning to end," said Santo Versace, noting that Versace has a tradition of outlet retailing outside Italy.

"It's important for all fashion houses to sell remainders in dignified sales points and to avoid any exploitation of the label," agreed Alviero Martini, who said his line was available at an outlet for the first time.

"After I checked out the McArthur Glen outlet in London, I had no doubts on the quality of the Serravalle project."

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