Taubman expands in China with Zhengzhou shopping center

Leading mall investor and operator Taubman Centers Inc from the United States has vowed to expand its presence in the Chinese market through its long history of management experience and expertise in localization.

The group opened a new project in Zhengzhou, capital of Henan province, on March 16. It is another result of the collaboration between Taubman Asia, a subsidiary of Taubman Centers, and Wangfujing Group, one of China's largest department store chains. The first project was launched in Xi'an, the capital of Northwest China's Shaanxi province, in April 2016.

Located at the heart of the Zhengdong New District, the six-story CityOn.Zhengzhou Shopping Center covers an area of 94,000 square meters and is designed to host around 200 international and local retailers.

"We are thrilled to introduce the new CityOn.Zhengzhou Shopping Center, our second project with Wangfujing and our third ground-up development in Asia," said Robert Taubman, chairman, president and chief executive officer of Taubman Centers.

"This center will set a new standard in retail experience for the people of Zhengzhou, while driving significant shareholder value over time," he said.

The CityOn.Zhengzhou Shopping Center is managed by Taubman Asia and Wangfujing Group, including central management, operation and leasing.

To date, all the shops in the center have been leased and about 93 percent of businesses had already settled in by opening day. By the end of April, it is expected to be 100 percent occupied with today's most in-demand retailers, restaurants and entertainment venues, according to the group.

"We are delighted to again work with Taubman Asia to offer a world-class shopping experience in Zhengzhou," said Liu Yi, chairman of Wangfujing Group. "The CityOn.Zhengzhou Shopping Center perfectly combines our extensive experience as China's leading retail brand with Taubman's 67-year legacy in shopping center development.

"The center is now one of the most exciting retail destinations in the region and will undoubtedly attract significant investment, economic activity and job opportunities to the Zhengdong New District," Liu said.

Taubman has opened three projects in Asia in less than 12 months. China and South Korea will remain at the core of Taubman's strategy for the region.

The company will continue looking at China's first, second and third-tier cities for growth opportunities.

"Compared with other areas, the second-tier cities in China are relatively less competitive," Taubman said. "The population there is expanding, and people's living standards are also on the rise. The markets in such cities have gradually become mature."

The Zhengzhou and Xi'an projects have met their requirements and standards for developing shopping centers, he noted.

Zhengzhou is a major finance, business and transportation hub in Central China. One of China's fastest-growing cities with GDP growth of 8.4 percent in 2016, the city is home to more than 9.5 million residents, a number expected to reach 15 million by 2020. In December 2016, Zhengzhou was named a National Central City, recognized as a driving economic force in Central China.

"We are very selective in choosing projects. We always look for projects with great business potential," Taubman said. "With a population of 9 to 10 million, the two are very important cities in their regions with enormous growth potential."

Despite the development of e-commerce and its impact on the traditional retail industry, brick-and-mortar stores will still be a key part of the retail industry in the future, he said.

"We believe that the retail strategy in the future should be a whole channel strategy, of which a brick-and-mortar store is a core part. We are seeing more online retailers opening offline stores, which is a good channel for them to attract customers and build their brands' reputations.

"In the US, more than 90 percent of total retail sales are done through physical stores. We believe that in the coming decades, physical stores will still be a major source for retail," Taubman said, adding that, no matter what way the consumers choose, the focus is to improve sales and to meet the needs of the consumers. "In an era that is full of changes and innovation, the physical retail business and e-commerce work in an interactive way and they mutually promote each other's development," Liu said.

"Compared with online shopping, physical stores have their own advantages in logistics, service and experience. The combination of online and offline business is the future direction of the retail industry development," he said.

Successful retailers are now introducing full-channel retail, in which physical stores serve as the main platform for brand promotion and distribution, he added.

"We are in a very good position, which means we can provide a platform for retailers who use full channels," Liu said.

According to the All China Federation of Industry and Commerce, China's retail sales of consumer goods is predicted to increase by 10.2 percent to 37 trillion yuan ($5.37 trillion) in 2017, accounting for more than 70 percent of the country's overall economic growth. Retail sales in the next four years is expected to grow at an annual rate of 10 percent and reach 48 trillion yuan by 2020.

wanghongyi@chinadaily.com.cn

Focus on food and family

Amid an intensifying market environment, Taubman Centers has taken a series of steps to create unique advantages to improve consumers' experience and maintain competitive strengths in its shopping malls in China.

Data from the Yingshang Data Center show more than 800 shopping centers will open across the country in 2017.

Robert Taubman, chairman, president and chief executive officer of Taubman Centers, said their projects in China are full of local characteristics that meet local demand, such as family needs and a diverse array of food.

"One important factor in our design is meeting children's needs," Taubman said. "In the center, there are a lot of entertainment facilities for children. We also have at least 15 brands for children.

"With large public spaces and good light, we believe that the shopping center will be an important destination for family leisure and entertainment."

As part of efforts to incorporate local characteristics, the center also houses more food and beverage stores.

"Food culture is an important part of Asian culture," he said. "We found that Chinese families like to eat outside, so we arranged for more than 50 food brands to join the center, including more than 20 fast food brands and more than 20 restaurants. These will be important food destinations for families."

According to Taubman, the dining area in the CityOn. Zhengzhou Shopping Center accounts for 30 percent of the total space, while the proportion in Taubman's other malls in the United States is about 12 to 15 percent.

(China Daily 03/23/2017 page14)