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  OUTLET CENTERS CONTINUE TO CHALLENGE DEVELOPERS

A year ago, the retail world in the Czech Republic was all aflutter at the prospect of having three outlet malls under construction at the same time. But the recent revelation that Airport Outlet Center won’t be opening until September fits snugly into a pattern that suggests the outlet format is a proving more difficult to successfully market here than first thought.


The Czech Republic continues to be a difficult nut to crack for would-be outlet center developers. Of the three outlets that have been talked about for some time now (Airport Outlet Center, Exit 66 and Fashion Arena Outlet Center), only Prague’s Fashion Arena by TK Development is actually open. And customers weren’t exactly trampling each other at the end of October to get in and shop, the way they used to in the good old days of Electroworld openings. Just around half of the stores were actually open and the food court was essentially empty. The developer claimed that another 20 percent was actually let and that retailers simply hadn’t moved in yet — a strange strategy with the Christmas rush on the way.

The real test of the three outlets won’t come until the next Christmas shopping spree begins. By then, TK Development will have had the advantage of being open for a year, and unlike the other two which are located in the middle of nowhere, it’s located next to a busy shopping zone.

With construction having begun two months ago, Exit 66 would appear set to open in November and crucially, it claims to be halfway leased already. Located just 66 km southeast of Prague, the project is more likely to pick up shoppers from the Brno region than from Prague. With that in mind, it can’t be good news that CTP Invest recently announced it would be building a new retail park in Brno, directly across the highway from the Olympia shopping center. On the other hand, Exit 66 has the advantage of offering a textbook outlet mall location, in that it’s far enough away from major cities for brands to feel comfortable offering serious bargains. The question for city-based outlets has always been whether retailers would want to offer their products at a standard price at, say, Chodov Centrum, and then at 30 percent off just down the road. Exit 66 has taken longer to get going than hoped, but the developer appears to have at least gotten the fundamentals right.

There are different questions surrounding Airport Outlet Center. The building, according to the developer’s leasing consultant Renzo Bartoloni, is nearly completed, but the opening has been put off until September. It’s a rather different approach than that of most developers, who are still throwing paint on the walls as the first customers walk into a mall.

“We open not in advance but at the beginning of the full season, because we want to give the best chances to the tenants,” says Bartoloni. This explanation is unlikely to convince suspicious minds from speculating that the developer simply wants to avoid opening with just half the stores filled.

In fact, there seems to be something more fundamental going on, as the Italian developer recently decided to rename the project Galleria Moda. Significantly, the new name features neither the word “airport” nor “outlet.” Bartoloni is confident they’ll be able to attract Prague brands that the company has worked with before in Italy, where outlets have long since established their place on the market. Bartoloni even claims some of the brands in the center will have their Czech premiere at the outlet and will then start to look for a flagship site downtown. Retail purists, though, would object that outlets can only work where a brand has been established locally.

The first phase is supposed to see the construction of 20,000 sqm and 120 stores, with another 20 stores plus entertainment set to follow. Bartoloni says he’s counting on bringing big fashion names to the center to act as a customer magnet, along with the center’s unique architecture and full air-conditioning, a feature missing from the other two. Taken together, it’s difficult to see in what way the center could be considered an outlet. Bartoloni insists the prices will be lower, as in all outlet malls, but if the brands are completely new to the country, it’s unclear how the savings will be measured.



Nina Fibigerová


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