Can Outlet Malls Really Move Online? Simon Property Group Is Betting They Can

As more retailers shut their doors in favor of e-commerce sales, one of the biggest mall owners in the U.S. is also taking their retailers online. Simon Property Group (SPG) has partnered with Rue Gilt Groupe to offer a new kind of online shopping experience for consumers.

Simon Property Group is real estate company that provides what it calls “shopping, dining, entertainment, and mixed-use destinations” while Rue Gilt Groupe is backed by Michael Rubin, the CEO of Kynetic, the parent company of Fanatics, and is the owner of the Rue La La and Gilt brands.

With the new online multi-platform venture from the companies, Simon will lend its in-store retailer leadership experience to Rue Gilt Groupe’s e-commerce expertise. Simon will contribute about $280 million to the deal as well as its Shop Premium Outlets site, which the company has been testing since March.

The Shop Premium Outlets site will begin offering brands and retailers at outlet prices to drive “additional online sales and support inventory and customer acquisition,” Simon said. The company does not expect it to take away from its brick-and-mortar tenants, which includes dozens of mall centers in the U.S. and abroad, according to CNBC.

Shop Premium Outlets today has over 2,000 designers, which include Saks Off Fifth, Aeropostale, G.H. Bass & Co. Factory Outlet, Cole Haan, Nautica, and Under Armour, the news outlet reported. The website also has over 300,00 products, which along with its designers, Simon said it is looking to grow over time.

Simon said it will promote the new partnership with Rue Gilt Groupe through a portion of its over $100 million annual marketing budget. The company will also provide access to its 2 billion annual shopper visits while leveraging Rue Guilt’s shopper database to reach a total of 35 million consumers.

"Following our successful test of ShopPremiumOutlets.com with VIP shoppers, we're excited to expand our omni-channel capabilities in collaboration with a leading digital entrepreneur and the RGG platform,” David Simon, Chairman, CEO and President of Simon said.

“Our strong capabilities in the physical outlet space, combined with RGG's exceptional e-commerce success, will give shoppers enhanced access to the world's best brands and the most compelling deals both online and in-store. We believe online value shopping presents a tremendous business opportunity for Simon, given our credibility, trust and relationships with brands, retailers and shoppers,” he added.

The Shopping Premium Outlet staff will move under Rue Gilt Groupe with responsibility for the day-to-day operations of the business. The three sites will, however, keep their own identity and niche focus.

Shares of Simon Property Group were down 1.50 percent as of 11:23 a.m. ET on Wednesday.