High-End Discount Retailing Can Be Regarded As The Next Pot Of Gold In China'S Market.

ValueRetail China's first discount center, one of the nine largest discount Plaza operators in Europe, will start in March next year in Suzhou, 50 miles west of Shanghai, covering an area of 60000 square meters.

The project named SuzhouVillage is based on the BicesterVillage discount Plaza operated by the company.

The discount Plaza distance

"We will copy the European model in the Chinese market, focusing on high-end luxury and fashion brands."

ScottD.Malkin, founder and chairman of the London based discount Plaza operator, said in an exclusive interview.

"We plan to expand in the suburbs of cities such as Shanghai, Beijing and Hongkong," including the Suzhou discount Plaza, which will gradually open in the summer of 2013.

The first phase of the project covers an area of 25000 square meters, with 125 brands planned to enter.

The discount shopping center format has appeared in China, but the existing projects are mainly operated by local developers, lacking attractive and mature management, "far from New York's WoodburyCommon and British BicesterVillage."

Malkin points out.

In July this year, Florence Town, Beijing and Tianjin famous products outlets can be regarded as an exception.

The discount Plaza, which is only 17 minutes away from Beijing, is located between Beijing and Tianjin. Its architectural style is modeled on Italy town in sixteenth Century, which is jointly established by Italy Fingen group and Waitex group.

At present, the project has netted 40 designers and high-end brands including Prada, GiorgioArmani, Versace, SalvatoreFerragamo, Fendi, Bulgari and Coach, and the price of the products is about 3 to 40 percent off of the market price.

Of course, developers hope to eventually have 100 brands to enter.

Chinese market discrimination

The price of Suzhou discount Plaza will be less than 35% off of the market price. We plan to introduce all luxury brands of ValueRetail in European property, including Prada, MichaelKors, Coach, StaffInternational, RalphLauren, SergioRossi, Belstaff, Missoni, Ugg, Pink, Ugg, "", ",", "," and ".

Malkin has already started some initial communication with some tenants.

"Some of our existing tenants of the European project have expressed their desire to enter the Chinese market, which gives us a chance to see business opportunities."

Malkin says.

"The biggest challenge facing the Chinese market is

"Brand image is very important, and brand does not want its product to be questioned.

We will bring quality assurance to the Chinese market. "

He added.

Looking at the whole world, sales of discount products are very optimistic now. Sales of discount products including many retailers including SaksFifthAvenue, NeimanMarcus and Bloomingdale (all high-end department stores) in the United States continued to grow last year.

Recently, Ebay also launched a discount commodity website.

In China, according to ChinaMarketResearch research, the white collar customers who go shopping for discount Plaza are a fast growing group.

This group is usually composed of more than 20 year old women who earn no more than 400 to 500 dollars a month.

From a geographical point of view, from Shanghai to Suzhou, both the population and economic growth have ripe conditions for the establishment of high-end discount shopping centers, which are the most concentrated and economically active central regions in China.

From 2005 to 2010, the average annual economic growth in Suzhou was 18%, the fourth largest city in China after the north.

In addition, Suzhou attracts large numbers of tourists both at home and abroad because of its classic garden landscape.

According to insiders, Suzhou has lagged behind in the development of the discount sales market.

The common desire of luxury brands

"At present, China's high-end shopping center projects can be described as overwhelming, but there are few discount squares."

ChristopherAinsley, chief executive of a global retail stream measuring company, pointed out.

HuWeibo, a retail market analyst at CITIC Securities Beijing branch, said that at present, there are about 200 shopping centers in China, which are self defined as discount Plaza, but only 10% of the products they sell and their pricing are up to the world standard.

Although ValueRetail has had many successful experiences all over the world, Malkin will continue to cooperate in China.

The Chinese partner of the project is a large real estate company, which mainly helps ValueRetail take land in Suzhou and avoid all kinds of problems encountered by foreign property developers and retailers in China.

But Malkin refused to reveal the name of the Chinese partner.

In addition, MarvinTraubAssociates, which signed the 5 year consultancy agreement with ValueRetail, provides strategic advisory services to the project.

Traub suggested that the improvement of product mix should be focused on luxury goods, fashion and international products. Malkin is not a difficult thing to do.

"Brand regards ValueRetail as a partner rather than an owner."

Traub points out that "they pay the sales commission instead of the fixed rent."

Traub also said that ValueRetail usually has a general manager in the field to help the brand to maximize its benefits.

"They can improve the relationship between customers and discount Plaza and help them.

Malkin said he saw the Chinese market not only because he felt a strong desire to enter the brand, but also because new projects in major European cities tended to decrease.

ValueRetail has nine discount Plaza projects in Europe, including LaVall eVillage of Disneyland in Paris and FidenzaVillage near Italy, Palma.

"The growth of our existing projects is gratifying."

Malkin said ValueRetail expects sales to reach US $2 billion 180 million this year, compared with us $1 billion 820 million in 2010.

Last year its discount Plaza sales rate was $1250 per square foot, of which BicesterVillage, the first project to open in 1995, topped the list, reaching $2240 per square foot.

The flat effect has left much of the rest of the world's retail sales. Apart from the BalHarbour luxury shopping center in Miami, it is expected that sales in 2011 will reach $2306 per square foot.

Malkin is confident of the success of its Suzhou project.

"BicesterVillage75%'s customers are tourists, and 1/3 of them are from China."

He said that now is the great march.

Malkin said that this is not an exaggeration. "The biggest challenge is not in the construction itself, but in the implementation of the project and the growth in sales in the future. We have maintained a 15 digit two digit growth, which is the main task of the retailers."