Yahoo Finance Simon Ties Up With Rue Gilt for Digital Value Shopping Platform
Simon Property Group Inc. SPG recently joined forces with Rue Gilt Groupe (RGG), which is backed by e-commerce entrepreneur Michael Rubin, to start a new multi-platform venture for digital value shopping.
Combining Simon's in-store retail leadership with RGG's e-commerce expertise, this new venture will include RGG's Rue La La and Gilt platforms together with Simon's new online outlet marketplace — Shop Premium Outlets (SPO).
Around $280 million will be contributed by Simon to this new venture. This will also include the value of Shop Premium Outlets that has been successfully beta tested since March this year. Simon and Rubin will emerge as equal partners in Rue Gilt Groupe as well as the new online outlet marketplace, ShopPremiumOutlets.com.
The latest venture will be promoted by Simon over the coming year by using part of its more than $100-million annual marketing budget. Also, it will benefit from access to two billion annual shopper visits. Moreover, the partnership will capitalize on the pooled databases of Simon and RGG touching more than 35 million shoppers. The move is a strategic fit as the combined company is poised to exceed $1 billion in online sales.
With a debut on Oct 2, SPO is set to deliver top-notch brands at outlet pricing. Presently, SPO includes more than 2,000 designers and 300,000 products. Further, with additions of new enhancements to the site, several other merchants are expected to join in the upcoming period.
Notably, the online retail platform, weaved with an omni-channel strategy, will likely be accretive to Simon Property’s long-term growth. Admittedly, the rapid shift toward e-retailing, store closures and retailer bankruptcies have long prevailed as pressing concerns for retail landlords, including Simon Property, Kimco Realty Corp. KIM, Macerich Company MAC and Taubman Centers, Inc. TCO .
However, Simon is navigating through the retail apocalypse by actively restructuring its portfolio, aiming at premium acquisitions and transformative redevelopments. For the past few years, the company has been investing billions to transform its properties focused on creating value and drive footfall at the properties. These transformational plans included addition of hotels, restaurants, residences and luxury stores.
Further, the company is undertaking strategic measures to help online retailers fortify their physical presence, besides taking steps to support omni-channel strategy. In addition to the above, Simon Property is exploring mixed-use development option which has gained immense popularity in recent years as it helps catch the attention of people who prefer to live, work and play in the same area. Nonetheless, implementation of such measures requires a decent upfront cost and therefore, may limit any remarkable growth in its near-term profit margins.
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