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Outlet mall in Grand Prairie will offer a taste of luxury

Paragon's inclusion of highbrow names like Bloomingdale's is part of a national trend

08/11/2012 12:46 AM

08/13/2012 5:10 PM

GRAND PRAIRIE -- Bargain hunters who visit the new Paragon outlet mall when it opens this week will notice that some highbrow names have joined the factory store lineup.

Retailers like Bloomingdale's, Saks, Coach and Hugo Boss will join companies like Nike, Haggar and J. Crew to give the Grand Prairie outlet mall an upscale flavor. The broad tenant mix, as well as the mall's location in the middle of the Metroplex rather than in an outlying area like Hillsboro or Gainesville, reflects changes under way throughout the industry.

Paragon Outlets Grand Prairie has its soft opening Thursday near the northeast corner of Interstate 20 and Texas 360, with the grand opening weekend starting Friday. The mall will stay open until midnight Friday and Saturday so shoppers can take advantage of the state's annual tax-free weekend.

Among more than 100 stores are several new to Texas, including Andrew Marc, Vince Camuto shoes, Bare Escentuals, Lancome, Love Culture and Swarovski crystal, Paragon spokeswoman Rebecca Galuppo said.

Some analysts see the higher-end banners as an example of a wave of mall expansions catering to people aspiring to enjoy luxury brands even if they're not quite on Easy Street. At Grapevine Mills, both Saks Fifth Avenue and Neiman Marcus operate outlet stores.

"The new mall seems to be well-targeted for the new luxury buyer who wants top-brand names but only has the buying power to pay for 'made-for-the-outlet-store' goods," said Eugene Fram, a professor emeritus of marketing at the Rochester Institute of Technology, who has tracked outlet malls for decades.

That strategy will be put directly to the test by Coach, the New York maker of handbags, shoes and accessories. It is opening discount Coach and Coach Men's stores at the new Grand Prairie outlet mall, just an eight-minute drive from The Parks at Arlington, where the company has a regular store.

"We generally see little overlap between our full-price store customers and those who purchase in the factory outlet channel," Coach spokeswoman Andrea Resnick said in an e-mail. In conference calls with analysts, a Coach executive said the cross-shopping amounted to just 20 percent of each consumer segment, Resnick went on. Coach also has an outlet store at Grapevine Mills, not too far from a full-price store in Southlake.

"The more value-conscious factory consumer prefers to purchase brands 'on sale.' Since we don't go 'on sale' in our retail stores, that customer tends to shop our factory channel," she added.

The $100 million, 417,000-square-foot Paragon project, announced in 2008, was delayed for years by the economic downturn. The mall was originally proposed by Prime Retail. But after that company merged with Simon Property, the Federal Trade Commission raised antitrust concerns.

Simon, which also owns the Grapevine Mills outlet and entertainment mall, divested three projects, two of which were snapped up by the newly formed Paragon Outlets, based in Baltimore.

The mall's debut this year might prove better timing than if it had opened as originally planned in 2009. The developers did lose Last Call by Neiman Marcus as a tenant but gained Bloomingdale's Outlets.

Bloomingdale's, an iconic New York department store banner owned by Macy's, is a latecomer to outlet mall discounting. Its first North Texas outlet store opened May 3 in North Dallas' The Shops at Park Lane. Arnie Orlick, senior vice president of Bloomingdales outlet stores, said the outlets will use Macy's logistical synergies, including distribution centers.

For shoppers disappointed at finding lines of lower-quality goods at some outlet stores, Orlick insisted that the same brands and quality that are carried at full-price Bloomingdale's stores will be available. And they will be sold at discounts of 35 to 70 percent.

Fram said that earlier outlet centers, near tourist destinations or along major highways far from large cities, often had retailers that put famous labels on inferior goods -- "thinner material, for example."

On top-quality items, many shoppers -- including Fram himself -- were upset when they found a department store sale offering the same product at about the same price "without having to drive 80 miles and wasting a Saturday afternoon," he said.

Those issues led to a decline in the number of outlet malls, from about 350 to 225 since the mid-1990s, he said.

But Linda Humphers, editor of International Outlet Journal, a publication of the International Council of Shopping Centers, disputes the figures, saying both numbers include shopping centers with a relatively small percentage of true outlet stores. Humphers said real outlet malls will number 185 by the end of the year and more are planned. She said she had no reliable figures from the past.

Humphers did explain why outlet malls are now moving into urban areas.

For years, full-price department stores had enough clout with suppliers like Tommy Hilfiger and Polo/Ralph Lauren to keep them from taking space at an outlet mall in the same market where the big merchants had a presence. Humphers cited a case in which an entire project was abandoned in a Northern state after department stores pressured potential anchor store tenants not to open outlet centers.

Galuppo, who previously worked for the Hillsboro Outlets, said there traditionally was an unwritten 60-mile rule.

But department stores like Macy's and Dillard's have met the challenge from discounters and outlets by boosting their percentage of exclusive merchandise, said Al Meyers, a director of PwC's retail and consumer consulting practice.

"In the last 20 years, we've seen a huge increase of private-label projects to insulate themselves, so [outlets] are not as much an irritant."

And outlet malls, whatever mixed experiences the shopping public may have had, are on the upswing nationally.

"From my perspective, they've been growing rapidly over the last seven years," Meyers said. "They're a bright spot in the mall industry in general. They're aimed at the bargain-hunting, value-conscious consumer. And this has made them well-positioned for this kind of economy."

It doesn't hurt that they are now "closer to suburbia, positioning themselves closer and closer to major metropolitan areas."

Galuppo predicted that the Grand Prairie mall will steal business from harder-to-reach outlet centers in Gainesville and Hillsboro, which have lost key retailers in recent years.

Unlike the others, she said, the Grand Prairie mall will attract shopping-tour buyers from Mexico and Asia. Foreign residents will be able to get tax refunds on the spot, in cash.

Grand Prairie believes that the new mall will increase its tax coffers by 5 to 6 percent -- or $2.5 million to $3.5 million -- annually, said Bob O'Neal, its economic development director.

"We've very excited about it," O'Neal said.

If the revenue comes in as predicted, it could mean that the $16 million in tax increment financing for roads and other infrastructure could be repaid in 41/2 to 61/2 years.

Barry Shlachter, 817-390-7718

Twitter: @bshlachter

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