Scott Malkin is outcompeting the world's malls in sales per square foot. Why? He has created a company operated by retailers who serve the fashion brands and the women who love them, while his competitors think of outlet malls as another form of real estate development.
Malkin is the scion of one of New York's leading real estate investors. As he told me in a June 21st interview, after graduating from Harvard Business School, Malkin started Value Retail in 1992. As Malkin said, Value Retail has married Freeport, Maine (famous for its L.L Bean Store and hundreds of other outlet stores) with locations in Europe like Disneyland Paris.
19 years later, Value Retail has €1.5 billion in revenue, growing at 20% a year, and operates nine Villages in the major tourism markets of Western Europe. At £1,500 its Bicester Village, outside Oxford, England has the highest sales per square foot of any mall in the world.
At $2,250/ft. sq., this is far better than Value Retail's portfolio average of about $1,200/ft.-sq. (growing at about 15% per year) and several times better than the high end regional mall industry average of $500 to $700/ft.-sq.
A big reason for Value Retail's superior performance is its corporate mindset. While its competitors are construction and finance guys who understand how to build retail space, Value Retail is a company run substantially by women who are creating an environment that appeals to women shoppers.
Value Retail focuses on a very specific group of customers -- people who are traveling or have a traveling mentality. It offers discounts on popular brands in destinations near major cities. More specifically, its Villages give consumers discounts of up to 70% on roughly 100 brand name fashion boutiques on year-old, retail items from raincoats to purses. Its Villages are retail destinations near European capital cities. And with their sense of place, they are what Malkin called, "an antidote to the Internet."
Value Retail has financed its operations through €1 billion in capital -- €100 million in equity and €900 million in debt. And it generates revenues by charging a percentage -- typically 12.5% -- of the revenues that the brand stores sell in the Villages. Value Retail also retains ownership of the real estate in the Villages.
Value Retail has 500 employees. Of these 20 are real estate experts and the other 480 are experts in its various retail brands -- such as Donna Karan or Gucci.
Value Retail's superior productivity and growth prove that Malkin is an extremely able competitor who has carved out a strong position in a very attractive niche. Odds are he will be able to continue to grow his business by attracting travelers who want to spend the increased wealth they are generating in emerging markets.
Also Read
There are no comments yet