Interview With Value Retail CEO China: Creating the most Representative Shopping Destination

European shopping villages are attracting more and more Chinese tourists. Last year, Bicester Village, a well-known outlet center in the United Kingdom, attracted two-thirds of Chinese tourists traveling to the UK, while Chinese tourists also contributed 40% of the total sales for Value Retail, the parent company of Bicester Village.

Value Retail has pioneered the "travel shopping" business in the luxury retail sector. It has long been committed to creating "boutique travel shopping destinations" around the world. Its shopping villages are considered as one of the best performing shopping centers in terms of global sales density. Since 1995 when the first shopping village opened in Bicester, Value Retail has maintained double-digit annual sales growth for more than 20 years.

In 2014, Value Retail formally entered the Chinese market, opening its first shopping village "Yi Ou Lai" in Suzhou Yangcheng Lake Peninsula Resort. In 2016, the second shopping village in China settled in Shanghai, attracting nearly 1 million tourists in the first eight months after its opening.

How do China's two shopping villages combine "tourism" with "shopping"?

What are the commercial innovations for the Chinese market?

Faced with this hot land in the Chinese market, how will Value Retail lay out in the future?

During the just concluded Innobrand 2017 Contest, Value Retail (China) CEO Mark Israel accepted an exclusive interview with Luxe.Co.

Shopping is an Immersive Travel Experience

In the eyes of many consumers, Outlets are synonymous with "sale markets," old-fashioned, and usually sell items for the past seasons or defective items. Value Retail hopes to start from the brand, products ,services, art ,architecture and store design, etc., to change the inherent consumers’ impression on Outlets.

Value Retail refers to all visitors to its shopping village as "guests", as it is not only a place of consumption, but also a full-fledged travel destination. "We want to make shopping as an immersive travel experience. Traveling gives people enough time to explore and discover, which means being more receptive to new things and maybe just trying out new brands. If we give this brand good service and discount prices, then tourists are interested to come to try." Mark Israel said.

He said, "The good environment makes the brand richer in the selection of goods, so that tourists are more willing to come in and see, which is a brand new opportunity for consumers and brands."

Good experience can naturally be rewarded, in addition to maintaining loyal customers, but also easier to attract new customers. Value Retail internal research data show that 60% of customers come to known Value Retail through word of mouth. "If the guests get good experience for the very first time, they will purchase again, even purchase not only of discount products, but also the full price products. We found that many of our customers who shop in a brand in the shopping village for the first time become the brand's full price customers. "

In order to maintain the brand image, Value Retail also spent a lot of time thinking about brand portfolio, product selection and store layout. According to Mark Israel, the brand portfolio of two shopping villages in China includes both global brands and relatively niche brands, as well as local original cutting-edge brands. He also revealed that in the next 6 to 8 months, Shanghai Village will be settled in a series of internationally renowned lingerie brands.

In terms of product selection, Value Retail requires that the product must be of current season or last season style, "We must ensure that guests are interested in our products," Mark Israel said. Regarding store layout, the village retains the store's brand store design and display, completely breaking the traditional discount store approach.

Create an Artistic Experience

In the early stages of development, how to highlight the uniqueness and superiority of shopping villages and attract consumers to visit them are still the primary challenges facing Value Retail. Mark Israel said, " We invest much more than most other developers in the design initially, because we really think about how your experience will be and how you will interact with the building environment."

Take the example of Yioulai Shanghai Village, the venue of the InnoBrand 2017 Contest,the shopping village is located in Shanghai International Tourism and Holiday Resort. It is adjacent to Shanghai Disneyland Resort. On this land of 55,000 square meters, the shopping village consists of three crescent-shaped buildings.

The overall style of the Shanghai shopping village was inspired by the architectural style of Art Deco, which was popular in Shanghai in the 1930s. Here you can get acquainted with the Art Deco architecture of New York, Paris, Milan, Vienna and Shanghai. Each street also features named after a master of decorative arts. Walking in shopping village feels just as exposed to the art gallery, and it is so unique compared to many other magnificent but stereotyped shopping centers.

"We want to make sure that the overall building environment is telling a story, not just a bunch of buildings," said Mark Israel, "The story of Shanghai shopping village is a story about Shanghai. In fact, all of our villages have a story. "

In addition to art architecture, Suzhou and Shanghai Shopping Village hold various themed fashion art shows all year round. Last year, for example, Shanghai Art Village invited Stefano Giovannoni, a famous Italian designer, to open the "Rabbit Art Installation". 1001 rabbit-shaped lighting chairs appeared in the shopping village. This year coinciding with the 88th anniversary of Audrey Hepburn, Suzhou Village held a image exhibition, introducing a number of precious photos of Audrey Hepburn.

In addition, the "Si Qing Hua Yi" Handmade Silk Experience Halls at Suzhou and Shanghai Shopping Village allow visitors to experience the entire process from taking silk to garments, customize silk manually and immerse themselves in Chinese traditional crafts and culture.

Support New Young Designers

For more than a decade, Value Retail has been dedicated to advocating and hosting projects that support the new generation of designers globally, demonstrating local fashion and culture and successfully delivering a large number of emerging designers.

Last year, for example, the Bicester Village collaborated with Campaign for Wool and the British Fashion Council opened a boutique called “British Wool Collective” in the Village, displaying a range of indigenous knitwear brands made from Merino wool and British wool.

Last year, the Kildare Village in Dublin started a fashion scholarship program. The inaugural Kildare Village Fashion Bursary of €15,000 was awarded to designer Michael Stewart, to complete his two-year MA in Fashion Womenswear Design at the Royal College of Art (RCA). In June 2017 Michael graduated from the Royal College of Art.

In China, the Shanghai Village specially launched a multi-brand store named "Chuang X Yi"  specifically for Chinese designer brands. At present, the brands include By Fang, Ballon Rouge, chairEyes, Depot 3, Ji Cheng, Helen Lee, etc.

As a Outlets shopping mall, why Yioulai Shanghai Shopping Village launched a multi-brand store focused on emerging designer brands?

Mark Israel said, "Many young designers do not have the opportunity to display their products. We hope to provide support for these cutting-edge designers to help them make commercial achievements. We will work with the brand to develop high-quality business plans, which is the weakness of many young designers. "

"Chuang X Yi" inspired from Shanghai's most representative alleys, and echoed the concept of "support for China's original design". The entire store is divided into five regions, including the exhibition display space, dressing room, cashier, waiting area and logistics area. Mark Israel explains, " 'Chuang X Yi' is more like an exhibition space. By creating such an environment, guests can stay fresh and pay attention to the local designer brands while they buy discounted products."

Designer brand CHairEYES has settled in Dong Liang, Lane Crawford and other well-known buyers store, and "Chuang X Yi" is the brand's only physical outlets platform. Brand founder and designer Zhou Yuan said, "Any brand has inventory problems, if left to the stock to the third party or the seller, the brand image is unfavorable. Yioulai’s practice is not the same as that of traditional Outlets, being good at driving sales through the brand image, which is especially important for original brands. "

Strategy of Chinese Market

In 2014, Value Retail opened its first shopping village in Suzhou. Two years later, the Shanghai Village was officially opened. It is obvious that Value Retail did not start a lot of shopping village all at once in China, but a step-by-step cautious layout. In response, Mark Israel further explained the strategic logic behind the group.

Mark said that unlike other property developers who are pursuing speed and quantity, their only focus and goal is to "create the most representative shopping destination in China", and it takes time. "If we quickly open the third, fourth, fifth, we can not put enough time and attention in every village."

He also pointed out that Value Retail advocated for the cooperation of brands to provide quality services, so it’s very cautious to choose the site. Specifically, they will consider the index of tourism vitality of the target location, economic factors, etc., and choose the local market that is most likely to attract Chinese tourists and optimize the economically developed areas.

Phase II project of Suzhou Yioulai Shopping Village has been started and is expected to be completed in 2 years. It is reported that in the future Value Retail plans to build 3 to 5 large shopping villages in China. Mark Israel revealed that Chengdu, Beijing and some other cities are expected to become the next destinations.

More about Exclusive Interview with Mark Israel

Luxe.Co: Who are your target consumers? Who shops at the villages?

Mark Israel :Our core consumers are going to be 25 to 35 or 40 years old,they have disposable income, they are well-traveled maybe just inside China or maybe globally, and they are sensitive about fashion and design. They are aware of brands, meanwhile they understand that what we offer is focused on quality and experience. Everybody wants to get a fair price,but it's not the first thing that our guests care about.

Geographically, they are from all over China. There are two big groups, one group live within a three-hour drive of the village，another group who are tourists coming here for either business or pleasure. Our international guests are from Indonesia, Singapore, Taiwan etc.,which account for less than 10 percent.

Luxe.Co: Besides Disney, will there be more collaboration with supply chain players in the tourism industrial chain?

Mark Israel :Today everybody talks about shopping tourism, when we started 20 years ago, the term is not even existed. For going to build in that industry we have to build direct-to-consumer through things like OTA ,so we cooperated with almost all the OTAs in China(like Ctrip).

we also cooperated with Dianping. Besides,we have cooperated with airline companies and hotels. We officially became the member of the UN World Tourism Organization (UNWTO) in 2012 as the first one from retail industry, so we've been deeply embedded in the travel.

Luxe.Co:In recent years, brick-and-mortar retailers are struggling for growth given declining mall traffic, increasing competition from new channels like e-commerce. Do you think e-commerce will pose a threat to villages?

Mark Israel :Brick-and-mortar is sluggish partly because there's too much of it and maybe consumers find these stores seem to be no different than others.

E-commerce is about convenience and it's about price,if we do well, and the e-commerce does as well,there's plenty of room for both of us.

Those who don't focus on the differentiation will suffer, whether E-commerce or brick-and mortars. If consumers don’t care of you, no one will care anymore. Our job with our partners is to make sure that we deliver that in a seamless way as possible.