Simon Property Group’s New Business Model
Simon Premium Outlet VIP members received an invitation to ShopPremiumOutlets.com via email today. Members now have access to a marketplace of the retailers in Simon’s outlets, can browse products on the Simon platform and can purchase either directly from Simon’s site or be re-directed to the retailer. For instance, Nike purchases go the Nike site, while Wilson’s Leather occur on the Simon site.
In March, David Simon, the Chairman of the Board, CEO and President of Simon Property Group, first described this venture as “completely on the margin” yet “an unbelievable investment in our future.” That’s a bit confusing – but presumably this means Simon is testing a format that could potentially cause a major shift in its business model.
- There is an opportunity to pool a value business online. Value player Marshall’s is just opening its first commerce site. Sister brand TJMaxx and competitor Ross have an online presence but it is clunky.
- Simon can use the marketplace as a further gauge to monitor the health of its tenants and explore location expansion or changes.
- But most interesting, Simon presumably gets access to consumer data at the transaction level, beyond the store-level performance they would normally receive, of all its tenants.
This could be a major strategy shift if property groups stop thinking of themselves as property groups and think of themselves as data aggregators.
Retailers have always struggled to gather a holistic view of the customer’s wallet and their preferences. Knowing that a customer spends $500 on the brand’s dresses in a year at your store is great information for style, color, and size preferences. It isn’t great information on the potential of that customer. What money is the retailer leaving on the table? Amazon has a better grasp of that information. It might know that the customer actually spends $2000 a year on dresses but only $500 at a particular brand. That brand might have opportunity in its offering. Simon claims it will carry 2,000 brands and 300,000 skus – so its reach will be large.
For Simon, this could mean more revenue from marketplace sales, better tenants (and tenant mixes) and an additional product to sell participating retailers: a view of their consumer’s wallet.
For now, Simon is only testing the concept. But effectively creating a retail exchange that spans large swathes of the physical retail business and a digital one, and selling that information to your tenants, could cause a major shift in the retail landscape.
This article first appeared in Forbes.