Photo: Simon Property Group
Will brands shine in a new online platform for shopping outlets?
Simon Property Group, the giant shopping center operator, is not taking online competition lying down. The company has announced the beta test of a new online shopping platform to help boost traffic and sales of tenants at its outlet malls in both the digital and physical world.
SPO (Shop Premium Outlets) is specifically designed for outlet lovers who, Simon says, can save up to 65 percent off full retail prices on the new platform. The mall operator is currently piloting the SPO platform with members of its VIP Shopper Club. The test includes over 300,000 products from around 2,000 brands. Simon plans a public launch during the spring.
“We’re utilizing the powerful equity and consumer connectivity of our Premium Outlets platform to drive incremental traffic and sales for brands and retailers, both online and in-store,” said David Simon, chairman, CEO and president of Simon. “This is not your typical marketplace and the brands will be the heroes of the experience and will not get lost in the crowd.”
Simon is looking to drive sales of the brands it works with while continuing to support traffic to its physical sites. The company currently generates 48 percent of its net operating income from U.S. malls and 42 percent from outlets, according to the Indianapolis Business Journal. The remaining business comes from international properties.
Discussion Questions
DISCUSSION QUESTIONS: How do you expect SPO to affect the overall sales of the brands selling on the online platform? Will the platform enable Simon to drive incremental sales both online and at its outlet malls as it expects?
Poll
BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Jeff Sward
Founding Partner, Merchandising Metrics
I appreciate the initiative by Simon to create the platform. It’s about time mall operators take a more active role in supporting their tenants/brands, and SPO has the potential to do that. But while this initiative is interesting, whether or not it actually leads to incremental sales for tenants/brands is yet to be seen. In any event, I expect the initiative to be well received and it won’t hurt traffic to malls.
“…to help boost traffic and sales of tenants at its outlet malls in both the digital and physical world.” Sounds kind of like a cheat sheet prior to the trip to the center. Probably will minimize some time spent at the centers when shoppers know exactly where to go. It may also draw customers to the mall. The big job, as I see it, with live shoppers constantly buying in outlets, is that the site must be inventory current and correct. Disappointing a customer who expects to find the item can be dangerous to the program.
So I just spent 10 minutes trying to get on the site and was unsuccessful. We (my wife and I) are members of the Simon VIP Club and had received invites to the new shopping platform. The sign-up process through the invite and directly on the site didn’t work. Not a great start.
I find this to be an interesting approach. Making it even easier for the customer to save 65 percent online instead of visiting the mall. Brands will be the heroes. (Aren’t they already?) I get omnichannel and integration, I’m just not reading here the HOW of this strategy. I’m reading how it helps brands and customers. I’m not reading how it helps malls.
This is great. Now I can go online and buy the outlet brands and won’t have to go to the outlet.
That is what I was thinking. Not sure about the incremental sales aspect. For my 2 cents.
If SPO is not a typical marketplace, then I will have to see it before I can score it. Selling online requires access to accurate inventory counts. Marketing online to drive traffic to the malls (outlet or first quality) is a different endeavor altogether. I am interested in seeing what Simon has had in mind.
Conceptually, online outlet marketplaces seem like a good idea, but there are a lot of challenges. I recently shopped at an outlet store and they didn’t have the size I needed and they said that I could look on the brand’s regular website to find the product, but it will be at full price. I left without buying and didn’t shop the full-priced website.
Inventory is the biggest challenge for online outlet stores. The accuracy of in-store outlet store inventory is typically not good enough for available to promise on online stores. Outlet stores could keep a share of their inventory at a distribution center and use it for their outlet store inventory. Individual outlet mall online marketplaces could draw from these inventories and it would be easier to maintain accurate inventories. It will be interesting to see if these marketplaces take off.
What have they to lose? That having been said, one of the major issues/complaints with “outlets” has been that they really aren’t that anymore but a venue for selling inferior goods (own brand knockoffs, if you will). One of the advantages of an actual store is the ability to inspect merchandise, and separate “treasures” from … well, junk. How effectively, if at all, will this translate to the SPO platform?
In my own personal experience I once bought a pack of undershirts from <> that were such complete **** it caused me to stop buying the brand entirely. Had the experience been thru something like SPO, I wonder if my dissatisfaction might have been transferred to not just the specific brand but the whole website as well.
There’s potential here. What I think would be a progressive move is to consolidate inventory feeds across all tenants in a specific location, and build out a BOPIS capability that aggregates pickup across all the stores in that mall/outlet. Would increase mall foot traffic helping the brands they sell, and could be a sizable revenue stream if they take a portion of the sales. As always, inventory (in)accuracy will prove to be a major hurdle to overcome.
I think it’s an interesting approach to create an online platform that’s focused on outlet fans, and the high savings on offer are sure to be of interest, but I’m not sure exactly how it will drive up in-store sales. Does it not just make it easier to find what you want without visiting the mall?
I suppose an effective cross-brand click-and-collect offering might help bring people in but with something like outlets, it’s tough to know exactly how much the online will translate to offline. There is a treasure hunting element to outlet shopping, but if customers can view products easily online they may decide not to in-store as they feel they’ve already “seen” everything.
I will keep an eye out for the full launch with interest. Accurate inventory (as others have noted) is sure to be one of the big challenges and I’ll be intrigued to know how Simon plans to tackle that.
This is a solution looking for a problem where one is not required (of this format). Instead, we should not be discounting the ability of strong online marketing to inform, connect and empower consumers, and instead that there needs to be some mix of other shopping to make online shopping even better. Why? Where are the weaknesses that this is stopping? I don’t see this as a solution alternative where none is needed.
Simon is a substantial stakeholder in their lessee’s survival. They understand the market is moving online. They should do whatever is possible to earn credit for their client’s sales.
This particular strategy is an easy long-shot they have to take. It will lead to other opportunities to help save their lessees – and their own real estate investments.