Simon Property Group has partnered with online shopping site Rue Gilt Groupe on a new e-commerce platform, with the retail REIT contributing about $280M to the venture.
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According to the partners, their goal is to create a new destination for discount shopping online. The site will include Rue Gilt's Rue La La and Gilt platforms, as well as Shop Premium Outlets, Simon's online outlet marketplace that the company has been testing since early this year. Going forward, Rue Gilt will operate SPO as well as its own existing platforms.
SPO currently encompasses over 2,000 designers and 300,000 products, with many more merchants to join over time as the site is enhanced, Simon says. Aeropostale, G.H. Bass & Co. Factory Outlet, Cole Haan, Nautica, Saks Off Fifth and Under Armour are all brands on SPO.
Over the coming year, Simon will promote the new venture using part of its annual marketing budget. The partnership will also leverage the combined databases of Simon and Rue Gilt to reach over 35 million shoppers.
“Simon has definitely been up front that they aren’t just going to sit on the sidelines and let the world move online and them not be a part of it,” Sandler O’Neill and Partners REIT Analyst Alexander Goldfarb told PYMTS.com. “The number of people who go through their malls is tremendous.”
The announcement came as Simon and other retail property owners struggle to cope with waves of retail closures, which is partly attributed to the rise of online retail sales. So far this year, more than 8,500 retail locations have been announced (versus more than 3,400 openings), with as many as 12,000 expected by the end of the year, Coresight Research says.
Earlier this week, Forever 21 became the latest retailer to plan to file for Chapter 11 bankruptcy, with the closure of about 180 U.S. stores expected as a result. Forever 21 currently has about 815 stores worldwide.
Two of Forever 21′s largest landlords, Simon and Brookfield Property Partners, were trying to come up with a restructuring deal that would give them a stake in the company to keep it afloat, but the deal didn't come to fruition, CNBC reports.
According to Simon, Forever 21 is its seventh-largest tenant in terms of rental revenue. With 99 stores at Simon properties, the company also said that Forever 21 takes up 0.8% of its total U.S. square footage.
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