Williamsburg outlets lose their exclusive, but maybe not their edge

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WBPO faces competition
“Kate Spade is one of my favorites,” said Nicole Wilkens, a Virginia Beach resident who shops at Williamsburg Premium Outlets and blogs about individual style and fashion. Starting this summer, she may go outlet shopping in Norfolk.(WYDaily file photo)

Come July Fourth, Williamsburg outlet stores will have at least one fewer customer.

Nicole Wilkens, a blogger from Virginia Beach, no longer plans to make the 60-mile trek to the Historic Triangle to shop for fashion bargains. 

Instead, she’ll shop at the Southside’s first outlet mall, Norfolk Premium Outlets, which is scheduled to open June 29 with 332,000 square feet of space at the intersection of I-64 and Northampton Boulevard.

The lineup so far includes nine outlet stores, all of which are already at the developer’s Williamsburg Premium Outlets: Under Armour, Tommy Hilfiger, Banana Republic Factory Store, Calvin Klein, Columbia Sportswear, Kay Jewelers Outlet, Levi’s Outlet, Converse and Zales.

About a tenth of roughly 85 planned stores have been revealed so far, and the developer, Indianapolis-based Simon Property Group, expects to unveil more names later this month, Director of Corporate Public Relations Les Morris said in a recent interview.

“I’m excited to see what else is going to be there,” said Wilkens, a Virginia Beach native who blogs about individual fashion and style at theeverydayrunway.com. “To have it in our backyard is simply convenient.”

Williamsburg loses its exclusive

Southside’s gain means Williamsburg, long an outlet destination, will face more competition. For the first time, a center by the same developer, featuring some and perhaps even many of the same stores, will be roughly 45 miles away.

The new outlet mall comes amid an expansion push by the developer, which develops, owns and operates real estate and malls, including 67 outlet malls to date and centers such as Potomac Mills in Woodbridge.

Simon opened a total of five “Premium Outlet” centers in 2016 and 2015, according to its 2016 10-K, an annual report filed with the Securities and Exchange Commission. The new locations were in Tampa, Tucson, Columbus, Ohio, Gloucester, N.J. and Clarksburg, Md., which is outside of Washington, D.C.

NPO rendering
A rendering of the Norfolk Premium Outlets, scheduled to open June 29. “It’s very picturesque and very pretty,” said Les Morris, a spokesperson for the developer. (Courtesy Simon Property Group)

When asked about Norfolk’s potential impact on Williamsburg’s outlet center, Morris said Simon would not have gone forward in Norfolk at the risk of damaging its Williamsburg property. Simon has a 65-percent interest in the Norfolk center and its estimated share of the cost is $70.9 million, according to the annual report. 

“We know what we’re doing,” he said. “We’re very sophisticated real-estate investors. We know our portfolio obviously better than anyone.”

In addition, Morris said, Simon has put other outlet centers within comparable distances of each other. Simon opened Twin Cities Premium Outlets in Eagan, Minn. in 2014, about 45 minutes from Albertville Premium Outlets, and both are doing well, he said. Simon also opened Gloucester Premium Outlets in Blackwood, N.J. in 2015, not far from Philadelphia Premium Outlets, he added.

Also, Williamsburg Premium Outlets, which Simon acquired in 2010, is doing well almost 30 years after opening. Enlarged in stages between 1989 and 2008, Morris said in an email, it now occupies more than 500,000 square feet. And he said in an interview, Williamsburg’s stores include “hot” brands such as Vineyard Vines.

“That property is still going to maintain its edge in the marketplace,” he added.

A retail-strategy expert echoes this view.

“My guess is they’ve done a million studies,” said Lawrence Ring, professor of marketing at the College of William and Mary’s Raymond A. Mason School of Business.

The Williamsburg outlets may lose some customers when Norfolk’s mall opens, but the Williamsburg center likely won’t suffer, said Ring, who had looked at Simon’s most recent annual report. Norfolk’s outlet mall will also likely do well, he added — even if it has many of the same stores as Williamsburg — because Simon attracts wanted brands.

“When you think about it, it was probably our turn to get another one,” he said. “I wouldn’t worry too much about Simon. They’re a pretty big operation.”

The value of competition 

A state tourism official offers a similar take.

“Everybody is competing for tourism dollars,” said Esra Calvert, director of research for Virginia Tourism Corporation. 

To cater to digitally savvy travelers with “bucket lists,” destinations must offer a range of experiences, such as craft-beverage tours and outlet shopping, according to Calvert.

 “Sometimes competition is a good thing,” she added.

The Greater Williamsburg Chamber & Tourism Alliance echoed her view.

“We think it’s great,” said Bob Harris, senior vice president of tourism. “We see the two complementing each other, just giving people more reasons to visit the region.”

Ring of malls
Norfolk’s new outlet mall sits roughly 45 miles from Williamsburg Premium Outlets, and within range of 10 enclosed or traditional malls, according to a fact sheet prepared by the developer. (Courtesy Simon Property Group)

 

 

 

Possible risks: enclosed malls and brand devaluation

A Southside marketing professor, though, points to a potential downside.

Previously, outlets were located in out-of-the-way places and attracted bargain hunters, while enclosed malls targeted more affluent customers, said Chuanyi Tang, an assistant professor of marketing at Old Dominion University’s Strome College of Business. Now, outlet malls are being located in urban areas and offering a more upscale mix of entertainment and dining.

“Basically, they are competing with each other,” Tang said, referring to outlet malls and enclosed malls. “So local competition between the retailers, I think, will become fierce.”

Ring, from the Mason School, also sees a potential risk — for retail tenants.

“I think the outlet malls themselves might be a threat to the brands that are in the stores,” he said. “If pretty much everybody has an outlet mall in their back yard, why would you pay full price?”

The Norfolk outlet center will launch amid a revitalization of the city, including the planned arrival of an IKEA store in 2018.

“It seems like things are really jumping there in terms of the market,” said Morris. “The excitement is just off the charts.”

The Norfolk Department of Development was not available to comment for this story.

Wilkens, though, will be watching for more Norfolk store announcements. She’s curious about whether Coach or Kate Spade, one of her favorite outlet shops in Williamsburg, will open at the Norfolk center.

“That would be great, because I wouldn’t have to travel an hour to get there,” she said.