Listening to shoppers J'Nai Buchanan of St. Louis Park, Jana Miller of Bloomington and Alana Lea of Shakopee praise the new Twin Cities Premium Outlets in Eagan on Thursday, I became a bit worried for Premium Outlets of Albertville. The three co-workers talked about how Eagan's layout, food and store selection is superior to Albertville's.
"Goodbye Albertville," said Miller laughing. The others quickly nodded in agreement.
Initially, it's easy to jump to that conclusion. Eagan's outlet mall is much more convenient in terms of layout and parking, and the store selection is impressive. But it's not surprising that residents from southwestern suburbs would prefer Eagan. It's a lot closer for them than Albertville.
When I asked Megan Kleve and Libby Schuett of Blaine which outlet mall they like better, Eagan won. But the two said they were more likely to visit Albertville more often. "I might come to Eagan twice a year and around the holidays," said Kleve.
What a lot of shoppers may have missed in the hubbub of the new outlet mall with exclusive stores such as 7 for all Mankind, Calphalon, Cole Haan, Armani, Vera Bradley and Steve Madden is that Albertville has just as many exclusives.
In other words, Albertville has more than 20 national brand stores not found in Eagan---stores that I'm guessing Buchanan, Miller, Lea and others wish were in Eagan. Stores that may have them driving back to Albertville include Lululemon, Kenneth Cole, Ugg, Aerosoles, Aldo, Bose, Harry & David, Aeropostale, BCBG Max Azria, Columbia, Guess, Icing, Izod, Jones New York, Lane Bryant, Levi's, Nautica, Rockport, Rue 21, Zales Jewelry and Zumiez.
My hunch is that residents of Maple Grove, Brooklyn Park, Brooklyn Center, Plymouth and even Minnetonka will check out Eagan if they like outlet malls, but they'll go back more often to Albertville for convenience. It's simple--Albertville is closer. Both malls have 100 stores and they have nearly 60 of the same stores in common.
It's difficult to imagine Simon Property Group, the owner or co-owner of both Twin Cities outlet malls to let one flounder at the expense of the other. Let's hope that it will strengthen both as even more tourists will be drawn to the Twin Cities for the sudden expansion of outlet stores.
Seems as if the most common comments people say to me about outlet malls are "Are the deals really that good?" and "Why shop there when I can go online?"
Those comments are usually said by people who don't shop outlet malls much. They don't realize that since 2006, more than 40 outlet malls have opened and only 1 full-priced mall. Much of the reason that new full-price malls aren't being built is the lackluster economy but also the Internet. More than $1 out of every $20 retail dollars is now spent on the Internet, according to the Census Bureau. But the reason that outlet malls and even Mall of America are less affected by the Internet is that they are shopping destinations. Take Orlando and Las Vegas, for example. Both are huge tourist draws and their outlet malls do extremely well, according to Mark Silvestri, COO at Simon Property Group, which co-owns Twin Cities Premium Outlets and centers in Vegas and Orlando. And Mall of America is a huge retail success aka "shopping destination" in our back yard.
Consumer Reports polled shoppers and asked their opnion of outlet malls. They found that 60 percent of shoppers are completely or very satisfied with the outlet shopping experience and believe that outlet malls offer exceptional value. Shoppers' most common complaint? Higher than expected prices.
I suspect there will be a little grumbling from shoppers visiting the high-end designer stores at TCPO in Eagan. But outlets haven't been a rock bottom source of deals for decades. The typical savings is 38% according to Linda Humphers at Value Retail News, which follows the outlet industry. The days of seconds and overstocks are gone. Now 85% of outlet store inventory is made specifically for the outlet. It's of slightly lower quality that the dept. store merchandise, thus the lower price, said Marshal Cohen, chief retail analyst at the NPD Group.
More to come later today as I blog after visiting the mall. Meanwhile check out my story in today's paper for more details.
With the addition of newly-announced tenants Reebok, Old Navy, True Religion, Lucy, Talbots, Gymboree and Movado, the Eagan outlet mall is now 90 percent leased. Owner Paragon Outlet Partners announced the additions Thursday.
Lucy and True Religion fill a couple of holes in the retail assortment, including an upscale fitness wear store (Lucy) and luxury brands (True Religion), according to retail brand experts Mary Van Note and Beth Perro-Jarvis of Ginger in Minneapolis.
Stores for men, especially an electronics store such as Bose, are still underrepresented in the mix, although Reebok and Old Navy will draw some.
When it opens in August, the center will include about 100 shops. Other retailers previously announced include American Eagle, Asics, Calphalon, Cole Haan, Crabtree & Evelyn, Helzberg Diamonds Outlet, Watch Station, Janie & Jack and Crazy 8 (owned by Gymboree), J. Crew, Johnston & Murphy and White House/Black Market. All are exclusive to Minnesota.
Other stores include Adidas, Chico’s Outlet, Children’s Place, Converse, Destination Maternity, Famous Footwear, Fossil, Jockey, Samsonite, Skechers and PacSun.Saks Off Fifth, Banana Republic, Brooks Brothers, Calvin Klein, Michael Kors, Nike, Polo Ralph Lauren, Puma, Swarovski, Tommy Hilfiger, Van Heusen and Wilson’s Leather.
The National Retail Federation had some interesting numbers from Thanksgiving/Black Friday weekend.
Low prices helped keep Americans’ budgets in check this weekend: on average, shoppers spent $407.02 from Thursday through Sunday, down from $423.55 last year.
That’s one way to look at it. Here’s another interpretation: consumers on average spent less than they did than the same period a year ago.
More than 141 million unique shoppers have already or will have shopped by the end of the big Thanksgiving weekend, up from 139 million.
More shoppers are always a good thing. But when you factor in how much money they spent, you get this: the number of shoppers over the weekend grew just 1.4 percent while average spending fell 4 percent.
Yikes. A 1.4 percent gain in shoppers hardly equals out a 4 percent decline in spending. Retailers are essentially brawling over a barely growing pool of Black Friday shoppers who are actually spending less on average than did a year ago.
In addition, there is one less shopping week this year because Thanksgiving fell on the last week of November. Suddenly, a season with an already low margin of (profit) error just got a little more perilous.
Target Corp. CEO Gregg Steinhafel acknowledges that the retailer suffers from a “price perception” problem in Canada. Consumers readily buy Target’s “discretionary” merchandise like clothes and home.
But when it comes to “non discretionary” items – such as food and healthcare – shoppers assume Target’s prices are much higher than that of Wal-Mart or Loblaws.
For that reason, Target’s Canadian sales have fallen below the company’s original projections. Still, the company’s price perception woes are not exclusive to Canadians.
Over the past three years, Target has struggled with weak U.S. sales during the crucial holiday shopping period. Part of Target’s problem is that the company has not cut prices as aggressively as its competitors, analysts say. Holiday is largely about discounting, but Target has refused to chase what it calls “temporary market share” at the expense of profit margins.
In any case, Target’s prices are probably not materially more expensive than rivals. The company already offers 5 percent off each individual purchase with a REDcard. And Target recently decided to match online and in-store prices of competitors like Wal-Mart and Best Buy, and offer free shipping.
“There isn’t going to be a meaningful change in our [holiday] strategy, because day-in and day ... our prices are competitive,” Steinhafel told analysts during a recent conference call. “We have a very strong value proposition and our circular pricing is even more aggressive than that and we take market leading positions.”
But perception doesn’t always match reality. Target’s prices may be competitive, but Americans looking for deals will likely assume Wal-Mart and Amazon have lower prices, analysts say.
“For the last three holiday seasons, [Target] has performed poorly,” Daniel Binder, a retail analyst with Jefferies & Co., wrote in a recent research note. “This appears to reflect its less aggressive pricing message even as its everyday low prices competitive.”
“We do remain concerned that its less aggressive promotional posture during the biggest quarter may contribute to a loss of mind share with its core customers,” Binder wrote.
In other words, for all of its marketing prowess, Target doesn’t effectively communicate to consumers its holiday prices are just as good if not better than everyone else’s.
To address soft sales in Canada, Steinhafel promised to take quick action to educate consumers.
“We’re going to make sure that our prices get more notice than they have been up to this point,” Steinhafel said. “Part of that was a conscious plan on our part to make sure that we really won in home and apparel and we feel real good about where we’re in those two businesses today, so we’re proud of that fact.”
“Now we have to just turn on the gas a little bit on the other side of the equation to make sure that we’re getting the Canadian guest to understand what great values we offer,” he said.
Steinhafel could easily apply that same logic to American consumers come November and December.
Southdale center announced Wednesday that three new stores will open this fall.
Sperry Top-Sider will open a 2,156 square foot store. Many Twin Cities' shoe retailers sell the Sperry brand, but the Southdale store will be the first in Minnesota.
Vera Bradley, known for handbags, luggage and backpacks, will open a 2,300 square foot store. A second Vera Bradley retail location opened in Mall of America in 2011.
Kay Jewelers, with 15 locations in Minnesota, rejoins the Southdale mix after a two year absence. "it's a mainstream acquisition but a good one, " said Jim McComb, a Twin Cities retail analyst with the McComb Group.
McComb expects more new tenant announcements from Southdale with Simon Property Group at the helm. Mall giant Simon of Indianapolis purchased the center in 2011. Since then, they've improved the mall's marketing, visibility and sightlines, said McComb. "The past few owners haven't had the capital necessary to make the improvements," he said. "Simon has saved the mall."
Southdale, the nation's first enclosed shopping center, opened in 1956. With more than 100 specialty stores, it is anchored by Macy's, Herberger's and JC Penney.