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Value Retail Brings High-End Outlets to Europe

MILAN - The growth of outlets throughout Italy in the last decade has dramatically changed the retail landscape.

MILAN — The growth of outlets throughout Italy in the last decade has dramatically changed the retail landscape — translating into a major business for fashion brands and developers.

Value Retail plc has been in the forefront of the trend. The company operates nine high-end outlets in Europe — no more than one per country — and sells year-old designer brand merchandise at an average 50 percent discount.

“Value Retail has a different approach; it owns the [real estate] properties and partners with the tenants, providing its own merchants who work alongside the brands’ merchants, the way American department stores work,” said Marvin Traub, president of his namesake consulting firm, who has advised Value Retail. “Positioning and tenancy is determined by performance.”

In an interview here with Traub, Value Retail chairman Scott Malkin and luxury goods consultant Silvio Pinto, Malkin said the company this year is investing 100 million euros, or $158.1 million at current exchange, in Italy’s Fidenza Village, less than a one-hour drive from Milan and near Parma.

The group will open 25 additional boutiques, such as Missoni, to augment the 75 existing stores, which include Versace, D&G, Guess, Moschino, Calvin Klein Jeans and Miss Sixty. Fidenza Village opened in 2003 and had 42 percent growth in sales last year compared with 2006. The company does not divulge sales per country, but Malkin said he expected revenue to reach more than 900 million euros, or $1.31 billion, for all nine villages in 2008.

“Our goal is not to open more and more outlets but to expand and improve the existing ones,” he said.

The outlets are strategically positioned on thoroughfares in London, Paris, Madrid, Barcelona, Frankfurt, Munich, Dublin and in Belgium’s Maasmechlen, between Bruxelles and Düsseldorf, in addition to Fidenza. The executive insists on a high-end image — no fast-food restaurants in sight— quality staff and top service.

“We are focused on fashion for women who are knowledgeable about brands but not fashion-forward, aspirational collectors,” Malkin said. “We think quality of experience is defined by quality of destination. Also, we think opportunities to communicate to consumers the values of the brand are more narrow and this is one of those opportunities.”

Malkin, who started the company with 10 employees in 1992, said he always reminds staff they are in a retail business. Value Retail now counts some 400 employees of whom 375 come from retail.

As the global economic weakness spreads, the company is challenged to prevent sameness, grow more efficient and assist customers.

“We are entering a negative cycle economically and emerging markets are slowing down or stable compared to a year ago,” Malkin said.

In addition to word of mouth, Malkin said he relies on help from the Internet, blogs, “links with voices that have credibility,” such as a Visa card gift offer, and Value Retail’s own chicoutletshopping.com Web site to promote the retail destinations and tourist locations around the outlets.