New mall concept set to take SA by storm

"Outlet malls" are a phenomenon with which the South African property sector will become increasingly familiar over the next few years, predicts Mike Flax, chief executive officer of Spearhead Property Holdings.

On a recent trip to the USA, Flax spent time researching outlet malls and concluded that they are a powerful force in the new retail sector - and very definitely here to stay.

"Outlet malls," he said, "have swept through the USA - and it is not difficult to see why. Usually laid out in strip configurations, they face outward to the passing trade to which they present a cheerful, welcoming, informal front. The branded goods they stock are slightly older or behind season but they are offered at the sort of big discounts which many buyers find quite irresistible."

The success of outlet malls in the USA, said Flax, has resulted in their being able to attract big name manufacturers like Gucci, Polo, Versace, Nike and Reebok. Certain manufacturers, he said, have now begun making goods specially for this market.

His investigations, said Flax, indicated that outlet stores often achieve higher sales per m2 than regional mall and other enclosed stores - and this was confirmed in a published report by the respected US retail consultants, Green Street Advisors.

Many of the delegates at the Young Presidents' Association Realtors Round Table Conference, which Flax attended in New York, told him that this type of retail trading, initially regarded as a slightly frivolous offshoot without prospects, is now taken seriously.

The largest "outlet" in the city was, in fact, recently bought by the giant retail property group, the Simon Group.

At Spearhead's new R150 million Sable Square development at Century City, 80% of the 27 000m2 retail space will be of the outlet type, said Flax, because "we foresaw the trend some time ago". (The remaining 20% will be convenience retail stores.)

"Big SA retailers were quick to see the changes taking place in the market and responded well to the call to go the outlet route at Sable Square," said Flax.

This article was originally published on page 6 of The Cape Argus on October 31, 2004

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