Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, November 26, 1995 TAG: 9511250014
SECTION: BUSINESS PAGE: G-1 EDITION: METRO
SOURCE: MEGAN SCHNABEL
DATELINE: LENGTH: Long
The topic du jour at Roanoke eateries recently has been the downtown Heironimus building - specifically, what to do with it when the department store moves out early next year.
Overheard at breakfast one morning was an idea to turn the 80,000-square-foot building at Jefferson and Church into an outlet mall, a place where a collection of manufacturers could sell their factory seconds and catalog returns at discounts well below retail.
How realistic is such an idea?
No question, outlets have become a big business over the last decade. While just 2 percent of a typical manufacturer's sales are made through outlets, multiplying that by the number of manufacturers yields a big number. Sales at the nation's 335 outlet centers totaled $11.4 billion last year, says Dawn Frankfort, consumer marketing director for Value Retail News, an outlet industry publication. That figure is expected to rise by $1 billion next year.
A downtown outlet center could snag Roanoke a share of that wealth, as well as attract a new crop of customers - paying customers - to the other downtown shops. The arrival of an outlet mall tends to strengthen, not weaken, a downtown, Frankfort says. If an existing store doesn't survive the arrival of such a mall, it probably was weak to begin with and wouldn't have weathered any real competition, she says.
This has been the case in Blowing Rock, N.C., a mountain resort town that became home to an outlet center, Shops on the Parkway, not quite 10 years ago. Howard Gray, executive director of the Blowing Rock Chamber of Commerce, says local merchants initially were apprehensive about the outlet project, fearing that the new stores would destroy the town's quaint image and take business away from their own shops.
But attitudes changed, Gray says.
"It has really turned out to be a great partnership," he says. The discount shops, located in a strip mall on the outskirts of town, have attracted a new crop of visitors to Blowing Rock. And they offer different goods than the town's traditional merchants, he says, so there has been little problem with competition.
There isn't one comprehensive set of criteria that a community must meet to be considered for an outlet mall. Some developers will build only in resort areas that draw a certain number of tourists each year. Company Stores Development Corp. of Nashville, Tenn., the firm that developed the Blowing Rock center, has set up 24 such malls across the country, says Amy Smith, the company's vice president of marketing.
Other outlet developers will build malls only in metropolitan areas with high population densities and, because outlets rely heavily on drive-by traffic, easy access to freeways.
Although Roanoke is near Interstate 81 and is a regional shopping destination, the surrounding area likely doesn't have a high enough population to attract the largest developers. But it is very close to the Blue Ridge Parkway and reasonably close to resort areas including Smith Mountain Lake, which could catch the eye of developers who look for tourist-driven locations.
But there's a sizeable snag. An industry rule of thumb holds that outlet malls must not be built within 15 miles of other retail shopping areas. The policy is designed to protect manufacturers' primary customers - department stores and specialty merchants - from being undercut by outlets selling the same goods at lower prices.
This presents a considerable problem in Roanoke, where two major malls and several strip malls and the downtown shopping district are within a four-mile radius of the Heironimus building.
The building itself also could present a problem, Smith says. It's the right size to house an outlet mall - the average size of such a mall, according to Frankfort, is 150,000 square feet - but it may not be the right shape. Each of the building's floors would need an anchor tenant to draw customers to that floor. But each level is not really spacious enough, Smith says, to house both an anchor and an assortment of other shops.
Although Gray says Blowing Rock merchants are comfortable with the outlet presence, there remains the question of merchant reaction. But Matt Kennell, executive director of Downtown Roanoke Inc., says he can't imagine downtown businesses objecting to an outlet mall.
"Most of the merchants in general are open to new business," he says. "Any generator that would draw people downtown would be good."
Again, there are no hard and fast rules governing outlet placement. Many outlet malls may work in a certain way, but that doesn't mean all operate the same way. Chattanooga, Tenn., for instance, has an indoor outlet mall in the middle of its downtown shopping district, Frankfort says. In Hot Springs, Ark., an outlet mall stands next door to a regular shopping mall. And Blowing Rock's outlet center is just eight miles from the nearest mall, in the town of Boone.
Since each manufacturer has different requirements and supplies different retail stores, siting an outlet mall depends largely on the players and on the towns, she says.
Such talk should keep breakfast tables busy for a while longer.
by CNB