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Luxury discount malls will double

News, 20 March 2015

SHANGHAI: China's middle classes aspire to buy European luxury brands, but for those who cannot afford a trip abroad, or don't want delivery, the option of shopping in a European-themed luxury discount mall is growing in popularity.

These luxury "villages", which often feature mock castles or piazzas, are expected to drive retail growth in the next few years and two major operators already making plans for expansion are Value Retail and Fingen Group, Bloomberg reported.

According to CBRE China, a commercial real estate firm, there are currently as many as 80 outlet malls in the country and another 100 will open over the next five years.

UK-based Value Retail operates a huge "village" outside the city of Suzhou which it estimates will cater for four million visitors this year with the spend on fashion and luxury brands averaging more than $700.

The company plans to open another outlet at Shanghai Disney in October and at least three more at other locations after that.

Not to be outdone, Italian retailer Fingen opened its second Chinese outlet near Shanghai in January and plans at least five more by 2017 with each offering discounts on more than 100 brands in one place.

Its existing outlet in Tianjin features gondolas, fountains and porticos – features that may appear a little gaudy for European tastes – yet it means "people can make a trip to Italy without going to Italy," explained Maurizio Lupi, managing director of Fingen's Florentia Village.

Indeed, the experience of a visit is at least as important as the discounted prices, according to Vincent Lui, an analyst with Boston Consulting Group (BCG) based in Hong Kong.

He said purchases made at discount malls "are still big ticket items for most Chinese consumers so the experience needs to match", especially as BCG estimates that consumers who value convenience, store design and service spend twice as much.

Data sourced from Bloomberg; additional content by Warc staff