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by Laura Baverman

In today’s recession, the last thing retailers need is more competition for customers.

But Thursday’s grand opening of Cincinnati Premium Outlets in Monroe gave local shoppers 70 new options – and a compelling way to spread their dollars further.

Record low consumer confidence has put retail sales in a tailspin. Some of Greater Cincinnati and Northern Kentucky’s malls have lost major stores and are operating with high vacancies. Even discounters like Target and Walmart, which tend to weather recession well, have cut costs and scaled back growth plans.

Meanwhile, outlet centers have lost their stigma, and their operators have gotten smarter. They have the unique advantage of offering a wide selection of recognized brands at a fraction of traditional prices.

“Any new retail is attrition to other retailers in an industry that is quite vulnerable,” said Stan Eichelbaum, president of Marketing Developments Inc./Planning Developments Inc., a Fort Lauderdale, Fla.-based retail planning and research firm. “In many cases, the best offering of quality fashion isn’t in the traditional mall anymore. It’s a few extra minutes drive in an outlet center.”

When the last wave of outlet mall construction happened in the early 1990s, developers bought up cheap farm land 50 to 60 miles from a city or vacation destination. Outlets attracted a discount-hungry shopper willing to drive a distance, spend a weekend and dig through boxes of damaged or unsold goods.

Chelsea Property Group, developer of Cincinnati Premium Outlets, threw that approach on its head in recent years, building its new centers in suburban areas within a half-hour drive of large metro populations. The land is more expensive, but Chelsea brought a higher quality brand of retailer to appeal to a more affluent shopper.

Its sales per square foot outpace that of its regional malls. In its second quarter 2009 earnings release, sales hit $493 per square foot at Chelsea outlet centers compared to $442 per square foot at its Simon-branded traditional malls. Occupancy rates also exceeded regional mall standards. Chelsea’s 41 centers are 97 percent full. Its traditional Simon centers 90 percent.

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