Outlet Mall Sprawl

Shirley Selim will go to great lengths to get a bargain--90 miles, to be exact.

That’s the distance from her Irvine home to the factory outlet center in the border community of San Ysidro where she shops for silk and cotton clothing at upscale shops such as Georgiou.

“I can leave at 8 a.m. on Saturday and return by 1 p.m. because I know exactly what I want to buy,” said Selim, a contract administrator for a federal agency.

“It’s worth the trip because I can find the right fabric in the right color at the right price. Besides, there aren’t many outlet centers in Southern California.”

That’s about to change. Hoping to lure value-conscious consumers who have been streaming to outlet malls as far away as San Diego or Solvang, Southland developers are planning to build eight outlet centers--many of them near major cities--between now and 1998.

The buildup will force the existing outlets in Southern California as well as traditional retailers to be even more competitive in their pricing, industry analysts say.

“Outlets arrived relatively late in Southern California, but everyone wants to be there now,” said Linda Humphers, senior editor of the Florida-based trade publication Value Retail News. “The region has a huge population base and plenty of potential sites.”

Most of the 15 existing outlet sites are on the periphery of the region’s metropolitan centers--San Ysidro, Cabazon, Oxnard and Lancaster, for example. Many of the new sites, by contrast, will be built in suburbs such as Carson, Yorba Linda, Orange and Carlsbad--much closer to the urban centers of Los Angeles, Orange and San Diego counties.

New malls are rising as fast as the fortunes of outlet store operators--manufacturers and designers such as Donna Karan, Levi Strauss and Armani. On average, outlet stores offer savings of 30% to 40% compared with department store prices, analysts say. (Some of the merchandise is not available at department stores in the region, however, making it difficult to gauge the savings.)

Growing consumer demand for such discounts is behind the spread of outlet malls, analysts say. That increasing appetite was recently measured by America’s Research Group, a South Carolina-based retail consulting firm that conducts weekly polls of the nation’s consumers. Polls this year indicate that consumers are 50% more likely to patronize a retailer offering a significant discount than they were a year ago, said Britt Beemer, chairman of the research firm.

“Consumers no longer want to get a cheap blouse at a low price,” said Beemer. “They now want a medium- to high-quality blouse at a low price.”

Beemer said developers are beginning to build outlet centers closer to urban centers partly because apparel manufacturers need more access to the marketplace in the wake of recent department store consolidations. In the Southland, for example, some apparel manufacturers lost some or all of their space when the Broadway stores were converted to Macy’s earlier this year, he said.

Developers have traditionally built outlet centers far from shopping malls to avoid competing with the department stores that sell their goods. The strategy has paid off in Southern California: Parking lots at outlet centers from Oxnard to Palm Springs are packed.

On average, sales at outlet centers in Southern California outstrip those at outlets in the rest of the nation, in part because many are in areas that attract legions of store-hopping tourists.

For example, shoppers flock to the San Diego Factory Outlet Center in San Ysidro, across the border from Tijuana, for deals at outlets such as Eddie Bauer, Guess and Mikasa. About 40% of the shoppers are from outside the San Diego area, including many from Mexico and other countries. About one in four of those shoppers is from a community in or around Los Angeles and Orange counties, said Irene Rodriguez, the center’s property manager.

Some of these shoppers stop at the outlet center before or after an excursion to Tijuana. Others make the trip solely for the outlet bargains.

Take the Orange County man who stopped at the center’s Men’s Designer Outlet recently, picking up a $1,500 Zegna suit for $699, a $325 Zegna sports jacket for $220 and several accessories.

Outlet stores typically keep prices down by maintaining low-cost operations with small staffs and no-frills interiors.

The San Ysidro center--35 shops nestled in an area isolated from other commercial strips--is among the top 20 revenue-producing outlet malls in the nation, according to Value Retail News. Cabazon’s Desert Hills Factory Stores, near Palm Springs, also ranks in the top 20, along with the Citadel Factory Stores in Commerce.

Sales at all three of the outlet centers are nearly double that of the national average on a square-foot basis. The Citadel, the only Southland outlet center near downtown Los Angeles, has been so successful that it is being expanded by about 60%.

Developers and mall operators have taken note of the Citadel’s success--among them, Washington-based Mills Corp., which operates a number of large shopping centers in Virginia, Florida and other states. Mills plans to build a shopping center in Orange, with about half the retail space set aside for outlet operators.

“We’re expanding the concept of outlet shopping by taking it into a more urban environment,” said Howard Samuels, executive vice-president for leasing for the City Mills at Orange, which is scheduled to open by late 1997.

Those who have had success in remote areas are also eyeing property closer to cities. Steve Craig, who developed Desert Hills Factory Stores, plans to open a 300,000-square-foot shopping center next summer in Carlsbad in booming northern San Diego County. About half the space will be dedicated to outlet stores.

“There are obvious advantages to being closer to [more] customers,” Craig said, adding that many of the consumers who shop at outlet malls used to shop for discounted top-shelf clothing in downtown Los Angeles’ Garment District.

“Outlets brought a fresh approach because consumers could see an entire [clothing] line at a store operated by a designer without worrying about parking or the safety of the environment,” Craig said. “Before outlets, the Garment District was the only game in town.”

Outlet centers are moving closer to Los Angeles just as the Garment District is trying to reclaim shoppers by touting improvements to downtown. Property owners there began taxing themselves this year to provide private security and additional sanitation crews for the area they’ve re-dubbed the “Fashion District.”

Fashion District merchants and the outlet malls will be competing for shoppers such as Larry Weiner, a fifth-grade teacher who lives in Alhambra.

Weiner beats a path to his local supermarket at 6:30 a.m. because that’s the only time discounted lean hamburger, ground the previous day, is available.

“I look for discounts,” he said. “I don’t care if it’s ground beef or Ralph Lauren shirts.”

However, Weiner, like many other shoppers, will only go so far for deals.

“I’m not going to drive to Cabazon to save $10,” he said. “We need more bargain shopping in this area.”