In the context of slowing economic development and declining retail industry, where will outlets go? The consumption view of the emerging middle class is a good measure.

Although the national economy shows signs of stagnation and the financial market also shows great fluctuations, China's outlets industry still shows a steady development trend. In 2015, China's economic growth slowed to 7.4%, the lowest in 24 years. However, none of this has had a negative impact on China's outlets industry. As consumers' consumption consciousness tends to be rational, more and more consumers want to buy famous brand clothing at a lower price. As a result, in the context of the decline of China's luxury market, outlets' sales have continued to grow.

According to Bain's research report, China's luxury market will decline by 10% - 15% this year. This decline may become an opportunity for China's outlets industry and bring some benefits to the future development of the industry.

Investors are focused on market trends and plan to further expand their business in China. For example, RDM group, an Italian luxury real estate developer and fashion retailer, recently confirmed its expansion plan to this magazine: by the end of 2017, it had opened five outlets in Chengdu, Chongqing, Hong Kong, Qingdao and Wuhan. RDM has opened three outlets in Tianjin, Shanghai and Foshan, and plans to expand the existing three outlets in 2017.

Since the opening of the first Florence town in China in 2011, RDM's sales in China have increased by 25%. Maurizio Lupi, managing director of RDM Asia, said that RDM group has invested eight outlets projects in China, with a total construction area of 380000 square meters and a total investment of US $1 billion. After all the above projects are opened, the annual turnover of the company will reach 2.2-2.9 billion euros.

Another well-known Chinese outlets development operator, Shazhichuan group, is also vigorously expanding its outlets business. Recently, the Fifth outlets of Shazichuan group has opened in Hefei, and another three are under preparation, respectively in Kunming, Xi'an and Guiyang. Although there are signs that China's economy is declining, Shazhichuan group still has high hopes for the outlets industry in recent years. It is reported that in recent years, thanks to the outlets project, the sales of Sazhichuan group has been growing rapidly.

In recent years, China's outlets industry has attracted a large number of foreign investors. Previously, China strictly restricted foreign investment into the retail industry, but since its accession to the WTO in 2011, according to the agreement, China has gradually eliminated market access barriers for foreign enterprises. In recent years, due to the activity of outlets and shopping centers, the rise of commercial real estate, foreign enterprises entering the Chinese market in the form of joint venture is more and more common.

Ambitious foreign capital enterprises hope to take advantage of the increasingly mature Chinese outlets market, its advanced experience in operation and management of outlets, as well as rich brand resources, and quickly occupy the development opportunity. In the table below, outlets invested and developed by foreign-funded enterprises has been firmly established in the industry, and some of them have become representative excellent outlets projects.

But China's outlets market has its particularity. Even foreign enterprises with rich operating experience and brand resources of outlets will not be easy to succeed without in-depth investigation of China's Aolai market. In 2006, Fox town factory stores, a famous European discount retailer, invested in the construction of Oriental Fox town in Songjiang District of Shanghai. By 2009, it had a turnover of nearly 4 billion. However, in 2012, fox city of the East frequently spread the news of unsatisfactory operation, continuous loss, transfer of equity and so on, facing the crisis of closing down.

At first, Changsha global outlets cooperated with horizon group, a well-known outlets developer. However, during this period, it encountered many problems, such as investment attraction, concept discord and capital chain fracture, and the operation pressure after barely opening was obvious to all.

Xu Rongcan, chairman of Shazhichuan group, said that the growth of China's middle class is very fast. This group is the main consumer group of outlets, and their consumption concept is more rational, which coincides with the concept of "famous products + discounts" of outlets. In addition, anti-corruption also indirectly affected the outlets industry. Nowadays, people buy luxury goods for their own use rather than gifts, so outlets is more suitable for their shopping needs.

"There is still a huge development space for China's outlets market," said Xu. "Because China has become the world's largest luxury consumer market, consumers' demand for outlets, especially high-end outlets, has been growing." Xu added that China's outlets industry as a whole is growing rapidly, with the most promising commodity categories being core luxury brands, sports brands and fashionable women's wear.

Analysts predict that China's outlets industry will follow the development trend of the United States, and may surpass the United States and Europe in the near future, becoming the world's largest outlets market. This trend has emerged. After the first tier city outlets projects tend to be saturated, developers began to focus on the second and third tier cities (see the right page for the urban distribution map of China outlets projects).

Brendon O' Reilly, managing director of fashion house group, is also optimistic about the future of China's outlets industry. "The rapid growth of the retail market and the rise of China's middle class show that the development potential of outlets can be further explored," said Brendon O'Reilly. Fashion house group has invested in outlets projects in Poland, Romania and Russia, and is a well-known outlets developer in Europe. "The recent stock market turmoil, some people think it will affect the purchasing power of consumers to some extent, which is a good example in the United States and Europe. I will not deny but will not overestimate the impact on the purchasing power of Chinese consumers. "

"I think the fast-growing middle-class group will effectively make up for the possible decline in purchasing power that I mentioned earlier," said Brendon O'Reilly. "Generation after generation, Chinese consumers are becoming more and more westernized. They like foreign brands and pursue things that highlight their personalities. Therefore, the excellent China outlets project brings together well-known brands from all over the world, and also brings excellent financial performance report. "

The development and operation of outlets can not only rely on the brand, but also study the consumer characteristics of shopping in outlets. According to Maurizio Lupi, the type of tourists in Florence town is those who are not price sensitive. They are the new middle class in the city, with a monthly income of 30000-50000 yuan. This part of the population also pursues high-quality lifestyle and services, and has loyalty to the brand. They have enough disposable income, and the popularity of new products in the current season is not high. It is a cost-effective shopping plan for them to buy several "affordable" products in outlets with the money of a positive price brand.

Xu Rongcan has repeatedly publicly stated that the middle class is the backbone of outlets' development. "Now it's a period of consumption iteration, and the consumption mode of consumers is also changing. First of all, Chinese consumers have a certain degree of education. More than 70% of our consumers have bachelor's degrees. Second, China's middle-class consumers are becoming more rational and price sensitive. Third, many of our consumers have families and children. This part of middle-class families with culture and cars account for more than 80% of our core consumer groups. "

These shopping channels are their destinations, where they can spend the whole day shopping, watching movies and eating. It's very important that they don't want to go out and go shopping alone because of the hot weather or the noisy streets in China. For women of this age, many are impulsive or shopping by the way, and always with friends and family. Their demand is the same as the business philosophy of outlets, which is also an important reason why outlets can thrive in the context of the overall weakness of the retail industry.