Simon Property Group Is Breaking Barriers Around Unified Commerce

Real Estate will operate similar to a marketplace open to brands that are tenants of Simon Premium Outlets

Simon Property Group

Recently, Simon Property Group’s CEO David Simon told analysts on a post-earnings conference call “I think most of the bad news is behind us,” referring to store closures and retail bankruptcies. “But I can’t guarantee it.” Yah, I wouldn’t guarantee it either. The country is still over-stored and there are still too many retailers operating from a pre-internet playbook. Also, we are only in the early stages of the most profound evolution in retailing in about a century; that of unified commerce, aka omni-channel.

The stores don’t all need to “store” anymore, and many of them won’t in the future. The emerging phenomenon of the Display Only Retail Environment (DORE) is only one of the new-breed of retail idioms to enter the genre.  Stores like Bonobos, Nordstrom Local, and the latest inventory-less retail-wrinkle from Ikea are further blurring the line between online and offline. Even the metrics are changing. How will Ikea determine the dollar per square foot of sales from its new DORE showroom that just opened in New York? The answer: it won’t. This would be like asking how many horses does it take to pull a car? Retail has a new engine, it’s bigger than the store, but it won’t entirely replace it either.

When a store no longer “stores”, it’s a DORE – Display Only Retail Environment, as is the case at the Ikea Planning Studio in Manhattan.

David Simon knows this stuff. That’s why he is CEO of the largest mall developer in the country, with over 200 of the best remaining malls. It’s also quite likely that when the 1,300 or so malls that exist today are reduced to 500 or 600, in say the next decade, Simon Property Group will still own and manage the best ones. So, I wasn’t entirely surprised when I learned of Simon’s latest venture, that of an online shopping platform called Yes, the most influential mall owner/operator is itself going online. While the press has emphasized that the launch is intended to “support” and drive sales to its network of outlet stores, it’s clearly more ambitious than that.

The plan is that the brands and retailers will manage their own product pages and offerings, and shoppers will be able to consummate a sale on the site. Simon will take a commission on the sales. Initial press coverage suggests the marketplace will feature 2,000 brands with more than 300,000 products, all with discounts up to 65%. Interesting idea, and why not? Rather than sending unsold goods into the off-price world of TJX and others, it makes more sense to keep it in the family. Will it work given the well-oiled online machinery that already exists? Not sure it matters, because this is another opportunity for Simon to learn, and maybe even break new ground in the brave new world of unified commerce.

Fourpost at MOA and The Edit at Roosevelt Field are just the latest in Simon’s quarter century long retail entrepreneurial efforts.

Sanford Stein

Breaking barriers is not new to Simon, they have always been on the forefront of pioneering new retail frontiers, even when it seemed counterintuitive to do so. Over 25 years ago, they partnered with Edmonton, Alberta based Triple-Five Group, to launch and ultimately manage Mall of America. And to this day, MOA out-draws Disney World as a tourist destination, with about 40 million annual visitors. At MOA’s onset, Simons started a “retail incubator” program, in which they sought out entrepreneurs with unique concepts to test and develop for the mall. One such program involved short-term leases for developing only the front portion of unoccupied storefronts; effectively a pop-up, or bump-back as they were called. These temporary tenancies served to test new concepts and the chops of enterprising retailers. Neither party made a long-term commitment nor invested a large sum of capital—call it the retail equivalent of speed dating. They continue these initiates today with The Edit @ Roosevelt Field, and Fourpost at Mall of America.

While will initially be exclusive to the brands that physically occupy Simon Premium Outlet property, they indicated to Internet Retailer that they are open to expanding to other brands, as well. Why shouldn’t the mall owners become stakeholders in all aspects of unified commerce? Think of it as open-source retailing. It’s a virtual certainty that as malls and centers evolve from single-use to multi-use entities that there will be a whole litany of new hybrid product/experience/lifestyle/community models tried, tested, developed and distilled. Remember, what’s next in retail waits for what replaces it.

Leave a Reply

Your email address will not be published. Required fields are marked *