david Simon

The nation’s largest developer and operator of malls, mixed-use properties and outlet centers has formed a partnership with the Rue Gilt Groupe to help drive its Shop Premium Outlets online value platform.

Simon said Wednesday it is spending $280 million on the venture. In exchange, Simon will become a 50 percent partner in the Rue Gilt Groupe, which includes the Rue La La and Gilt Groupe web sites. Michael Rubin, an entrepreneur, is chairman of the Rue Gilt Groupe.

Each web site — Rue La La, Gilt Groupe and Shop Premium Outlets — will continue to operate separately and maintain their own identities, the companies said.

In the venture, Rue Gilt Groupe will drive the day-to-day operations for ShopPremiumOutlets.com. The team at Shop Premium Outlets will transition to Rue Gilt Groupe, which will be responsible for the day-to-day operations of Shop Premium Outlets.

A page from the Shop Premium Outlets web site. 

In an interview with David Simon, chairman, chief executive officer and president of Simon, and Rubin, the executives said the partnership will result in a sharing of expertise, data, customer information, ties to brands and retailers and lead to enhancements as well as accelerated growth of the web sites. The executives also said there’s little overlap of customers between the three web sites, noting that they have different business models.

Rubin said a significant portion of Simon’s $280 million contribution will be used to boost the marketing of the web sites. Over the coming year Simon will promote the venture, utilizing a portion of its $100 million-plus annual marketing budget and access to two billion annual shopper visits. The partnership will also leverage the combined databases of Simon and RGG, reaching more than 35 million shoppers.

“The number-one priority is to build Shop Premium Outlets into a leading outlet marketplace,” Simon told WWD. “Rue Gilt Groupe is a big company and it’s profitable. Between their expertise in respect to consumers and their relations with merchants, plus our relationship with the merchants and retailers, we can both grow faster and better than if we were acting individually.

“We think there’s white space in the outlet online marketplace,” Simon added. “There’s nobody with scale. It’s kind of an open field for us to take. Consumers love going to outlet centers but don’t do it as a weekly visit. In between visits, why not go online for outlet shopping,” where there’s great brands at great prices, he said.

“Rue La La, Gilt Groupe and Shop Premium Outlets are three distinct businesses,” noted Rubin. “The customer overlap is surprising small.”

Simon’s online outlet marketplace has been in beta testing since March and officially debuts today. It encompasses more than 2,000 designers and 300,000 products. With the venture, many more merchants are expected to join over time as enhancements are introduced to the site.

Simon said the $280 million contribution to the venture includes the value of Shop Premium Outlets.

Simon said Shoppremiumoutlets.com has tested successfully with VIP shoppers. “Our strong capabilities in the physical outlet space, combined with Rue Gilt Groupe’s exceptional e-commerce success, will give shoppers enhanced access to the world’s best brands and the most compelling deals both online and in-store,” he said in a statement. “We believe online value shopping presents a tremendous business opportunity for Simon, given our credibility, trust and relationships with brands, retailers and shoppers.”

“The online value shopping market is a massive opportunity ready for the next disruptor,” added Rubin in his statement. “Partnering with industry leader Simon allows us to capitalize on this significant opportunity and accelerate RGG’s growth to quickly surpass $1 billion in sales. This transaction brings together the leaders in online and physical commerce to deliver the excitement of outlet shopping online to consumers and innovative solutions to our brand partners.”

Rubin said the venture creates “a growing value shopping e-commerce portfolio.”

“Rue Gilt Groupe has a track record of success in growing and operating profitable businesses, including the Gilt acquisition (from the Hudson’s Bay Co.) a year ago,” commented Mark McWeeny, ceo of Rue Gilt Groupe. “Our expertise in e-commerce, data science, curation and customer experience was the foundation for this partnership. Together with Simon’s leadership, we are excited about the future opportunities ahead for this new, innovative retail platform.”

The Gilt  mobile web site.