Simon Property Group and Rue Gilt Groupe (RGG) have entered a joint venture to publicly launch and expand the mall operator’s online shop, ShopPremiumOutlets.com (SPO). Simon first piloted the online outlet shopping platform in March to members of its VIP Shopping Club in a beta test, with approximately 2,000 brands on the site including Saks OFF 5TH, Karl Lagerfeld Paris, Aéropostale and Cole Haan.
As part of the venture, Simon will become an equal partner in RGG — the parent company of Rue La La and Gilt Groupe — splitting ownership with entrepreneur Michael Rubin, Executive Chairman of RGG. Simon will contribute approximately $280 million to the new venture.
The goal of the digital marketplace is to deliver “world-class brands at outlet pricing,” which presents a major opportunity to grow both businesses, according to statements from Rubin and David Simon, Chairman, CEO and President of Simon.
The move comes as Simon seeks more options to get out in front of shoppers, especially in an era when mall operators must maneuver through store closures and slowing traffic. In July, Simon announced a deal with Allied Esports to build venues for e-sports competitions in its malls. The company also recently partnered with Green Growth Brands to open 108 shops selling CBD-infused products.
Simon is still thriving financially: The property owner generated a net income of $2.437 billion in 2018, compared to $1.945 billion in 2017, according to its annual earnings report. The leasing rate at its mall and outlet properties was 94.4% as of July 2019.
When the beta first launched in March, David Simon said the platform would aim to leverage the company’s huge customer base — its more than 200 properties draw more than 100 million customers who make 2 billion visits a year — without undercutting its shopping center tenants.
Over the coming year, Simon will promote the new venture using a portion of its more than $100 million annual marketing budget. The partnership also will leverage the combined databases of Simon and RGG, which reach more than 35 million shoppers.
The SPO team will transition to RGG, who will be responsible for the day-to-day operations of SPO. Each platform will maintain its unique identity and continue to serve distinct customer segments, according to a statement.