When you hear the term “outlet mall,” you don’t necessarily think “VIP,” but China’s luxury outlet scene is quickly turning that idea on its head.
One prime example of this trend is outlet mall Florentia Village, which is owned by Italian retail giant RDM. The RMB1.5 billion (US$240 million) Florentia Village-Shanghai Luxury Designer Outlet officially launched on January 22 with a star-studded red carpet event featuring top celebrities such as Zhang Zilin, Qin Lan, Jike Junyi, and more, as well as the deputy mayor of Florence, Italy’s ambassador to China, and Chinese business elites and political leaders.
The high-end outlet shopping destination has introduced 200 international premium and luxury brands including Versace, Gucci, Armani, and Zegna, which are housed in a structure featuring flamboyantly designed 16th-century Italian architecture, Italian food courts, and cultural performances showcasing the Italian lifestyle.
The opening of the designer outlet was also accompanied by an exhibit by A.N.G.E.L.O, one of the largest luxury vintage shops in Europe which holds multiple fashion archives at a national and international level. The shop’s vintage collection entitled “The Great Journey—Celebrating the Century of Fashion,” brought visitors through a fashion history timespan from the start of the 1900’s to the late 90’s.
“This is my first time showcasing my archives in China and I believe that it is important to show China’s customers/public the history and depth of fashion [not only] for both education and inspiration, but also to preserve the memory of fashion,” said A.N.G.E.L.O Founder Angelo Caroli. “These pieces have become a center of international reference to international brands, fashion magazines, and television productions, [as well as] video, music, and film producers. I strongly believe that China also can benefit from this.”
Shanghai is Florentia Village’s second opening in China after its Tianjin location, and the retailer isn’t stopping there. It seeks to expand to a location between Guangzhou and Foshan for June 2015 and build another four centers in the next four years in Qingdao, Wuhan, Chengdu, and Chongqing. By 2017, seven Florentia Villages are forecasted to be open across the country in order to immerse China’s consumers into the Italian lifestyle. To learn more about the company’s vision for the China market, we interviewed RDM CEO Jacopo Mazzei, who explained his view and future strategy for Florentia Village luxury outlets in China.
Where did the idea of building Florentia Village come from and what makes it different from other outlets?
RDM is an Italian company which has more than 20 years of experience in the development of luxury outlets. As the market leader, it has developed the five most important outlets in Italy.
We have done lots of marketing research before setting up the first authentic Italian luxury and designer outlet, Florentia Village, in China, and all the data support our confidence to bring the Western concept here with high-level Italian management, our experience and our special Italian creativity, our brand relationships, and our skills of development and management in luxury outlets. China is an important market—the fastest-growing market in the world; Chinese people are fashion-driven and they like authentic and beautiful things.
Compared with other outlets, Florentia Village blends classical Italian architecture of the Florentine and Venetian style with an unmatched roster of original luxury brands to create a designer experience par excellence, whilst offering permanently discounted prices of up to 70 percent all year round. This mix creates for our customer a very special experience that is not only shopping but also enjoying the environment, the food, the special atmosphere, and finally, Italian lifestyle.
Do outlets generally view daigou sellers as competition do to the pricing?
Obviously, daigou sellers can depart influence [on] our business to some extent. But up to now, we don’t see, neither in Europe, nor here, any impact on performances in the outlets under RDM. I believe that people want to see, to touch, and to try products. As you know, it’s always a pleasure for people to go out for shopping. We feel extremely safe in our center that customers will come for our environment, and that our capacity can also attract more and more customers. Moreover, you need to wait for a few days to get the goods through daigou sellers instead of feeling them and immediately getting the products you’ve chosen. On a medium-term strategy, we are considering introducing some e-commerce services for our customers.
What impacts do China’s tariffs on luxury goods have on demand for outlet shopping?
Actually, Chinese full prices for luxury goods are higher than the European and U.S. ones due to duties and currency rate of exchange, but outlet prices, thanks to heavy discounts (30 to 70 percent) are very competitive compared to Hong Kong and Macau prices, and also rather competitive compared with the European and U.S. offers. Due to the devaluation of the euro against the RMB, we would expect in the months for Chinese customers, some price reduction in the stores of European brands. Of course, a reduction of import duties would be the most welcomed.
Several outlets will soon be opening in Shanghai. Given the target market of approximately 1-2 million customers, how does Florentia Village plan to stand out against the competition and capture most of this market share? What makes Florentia Village unique compared to its competitors entering the market in terms of service, quality, and brands?
Our outlet—I speak for our outlet investment—it’s about shopping experience. Because when you are shopping in a pleasant environment with a lot of ornamentation around, you can spend the whole day shopping surrounded by a Renaissance environment; you can be pleased by the possibility of buying luxury goods at discounted price as well. People like the environment here, they take lots of photos and they buy something. This is an experience that is composed of different things—this is what we call “shopping experience.” This is very important to us.
This shopping experience [has been] boosted in recent years. We have had over 10 million visitors in our Jingjin center—[with] more than 4.3 million in 2014—[and] over 5.5 billion RMB total sales (US$800 million) since opening, and we are talking about only one investment.
This environment and leisure experience cannot be copied and can only be accomplished in a top-level and authentic outlets village. We keep creating a nice shopping environment with excellent experience by constantly improving the quality of our services. In Pudong, our plan is to attract more than 5 million people by the third year.
One of the strengths of the Florentia Village Shanghai is its convenient and very visible location at the crossroads of Huazhou and Haibin Roads at Zhuqiao Town, Pudong New District, in close proximity to Shanghai Pudong International Airport that counts more than 50 million passengers, and Disneyland. Plus, the Metro Line 2 Yuandong Avenue Station is only 400 meters to the village.
Who do you think will be your target market shopping at Florentia Village?
The target customers are fashion-oriented consumers: people who are white-collar and working for important companies—either Chinese or international companies—aged from 25 to 45.
What types of technology or CRM features and services are being introduced to help the consumers?
We have 150,000 loyal members in FVJJ as of the end of 2014, and for FVSH, we have nearly 3,000 high-quality members in the first week after opening.
In order to provide the best service, we have a VIP lounge with free high-speed WiFi and F&B service. Some specific programs are given for our VIP members: some luxury brands offer limited products and special discounts for VIP sales; we have VIP fast service and a “green” purchasing channel, including delivery service. We also have a newsletters for VIPs; it will be sent to them every month. In their birthday month or the end of year, our VIPs enjoy some other rewards programs.
Yanie Durocher is a lifestyle and fashion blogger at The Marginalist.