The latest major addition to Alabama's retail scene will open its doors Thursday, as Birmingham-based developer Daniel Corp. cuts the ribbon on a new upscale outlet center in Leeds and counts on shoppers to flock there despite tough economic times.
The Shops of Grand River, with a total project value of $127 million, has a prime spot on busy Interstate 20 near Barber Motorsports Park and Bass Pro Shops, two developments that already are attracting tourists and shoppers from across the metro area, as well as far-flung locales.
And while the center is making its debut in time for the retail industry's all-important holiday shopping season, it's also arriving as many merchants and consumers are struggling to regain their financial footing after two years of strife.
Industry trends are on its side, however, as statistics show outlet stores have held their own during the downturn, while traditional retailers have reported steep sales slides.
"In this economy, a lot of people began making a trip to check out outlet centers because they didn't want to give up quality, but they did want a better price," said Linda Humphers, editor-in-chief of Value Retail News, a publication of the International Council of Shopping Centers.
Between April 2008 and August 2009, the gross leasable area of U.S. outlet centers edged up 1.6 million square feet, to 58.6 million, according to VRN. The latest numbers, which are still being evaluated, show the stability continued into this year, Humphers said.
The sector's strength, which has prompted major real estate developers to plan new outlet centers and also rebrand existing malls, is buoyed by consumers' need to be frugal while also maintaining their preferences to some extent.
"We define value as a combination of price, selection and quality," she said. "Walmart apparel is not going to do it for everybody."
Another advantage for outlets during the downturn is that many were already the subject of aggressive marketing plans, Humphers said.
"Outlets generally have to market much harder than any other retail format, because you're trying to market to people who don't live in your backyard," she said. "When the economy fell to pieces, outlet companies were already doing this aggressive marketing."
As for The Shops of Grand River, Humphers said it's a nice complement to the other attractions in the area. And, it fits in with the social aspect of outlet shopping: People tend to make an excursion out of them.
"I think it's going to be a center where certainly the woman shopper -- and that's who shops -- is going to feel comfortable and happy there," Humphers said.
31/2 years in making
The first phase of The Shops of Grand River -- the section that's set to open Thursday -- includes 330,000 square feet of space that is about 85 percent leased. Retailers include such high-end names as Brooks Brothers, Talbot's, DKNY, Coach and Jos. A. Bank.
The center is laid out in a grid, as opposed to a long strip, giving the feel of walking through an enclosed town of connecting streets. There's also a food court and children's play area, along with benches and decorative fountains.
Over the years, the outlet industry has continued to evolve and refine itself, said Mickey Gee, executive in residence for the department of marketing and industrial distribution at the University of Alabama at Birmingham.
For example, many of today's successful venues are at "destination points," such as Destin or Dollywood. In other words, they're feeding off, and also contributing to, the traffic at other nearby attractions.
Centers also are locating closer to population centers than they used to.
"This clustering effect is certainly important," he said.
Outlet merchandise also has changed along with centers themselves, Gee added. They're no longer all about the cheap leftovers, and in many cases, retailers design and manufacture products specifically for their outlet stores.
"What the outlet mall has become is another channel of distribution for the vendors, not a way to get rid of distressed merchandise or overruns," he said.
The Shops of Grand River has been in the works for about 31/2 years, said Doug Neil, vice president of development and marketing for Daniel.
Along with its partners in the project -- USS Real Estate and the Retirement Systems of Alabama -- Daniel was looking for a way to kick off development of the 6,500-acre Grand River community and also complement the predominantly male-oriented Barber Motorsports Park and Bass Pro Shops, he said.
Long-range plans call for thousands of homes, as well as office space, to be added to the area over the next 15 to 20 years.
The development team, which also collaborated on Hoover's Ross Bridge community, researched the outlet industry and knew there was nothing comparable to an upscale outlet venue unless shoppers traveled to the other side of Atlanta, Nashville or the Gulf Coast.
"It really did leave, at least from our perspective, the opportunity to fill a void in the market," Neil said.
The leasing success of The Shops of Grand River so far has led Daniel to say that a second phase for the project could break ground next spring.
"This really is the front door to this property, and the front door to this community as it develops over the years," Neil said.
The competition
The Shops of Grand River is the most ambitious outlet center in metro Birmingham, but it's not the first. WaterMark Place was built a decade ago next to what's now called the Alabama Adventure amusement park in Bessemer.
That outlet center has seen its stores dwindle in recent years, and Bessemer businessman Anthony Underwood is shaping a new plan for the property, focusing on tourism, dining, entertainment and some specialty shopping.
Gee, a longtime retailer in Leeds as the owner of The Pants Store, said he believes the new outlet center will be a success, and it's likely to leave a lasting imprint on the area's retail scene.
For instance, local retailers in Leeds, such as The Pants Store, will be affected, he said. The business, which has its original store in Leeds and three other locations, is now operated by his sons.
And come Christmas, area shoppers should see a big tug-of-war between The Shops of Grand River and another major shopping venue, The Summit Birmingham, which is just a short drive away.
"With the outlet malls trying to dig their heels into the market, and The Summit trying to protect their footprint, you're going to see a real battle crank up here," Gee said.
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