Malaysia cashes in on luxury retail to lure tourists

Fidelia Sol was a picture of radiant joy as she practically skipped out of the Salvatore Ferragamo shop with a pair of pink heels and a leather belt, bearing testimony to the perplexing power of luxury retail therapy.

Malaysia is targeting shoppers like Sol, who had spent more than 2,000 dollars within her first hour and was not about to stop, with the launch of its latest attraction and the first of its kind in South-East Asia, the Johor Premium Outlet.

Positioned in the southern state of Johor, the 16,000-square-metre Premium Outlet boasts 80 stores, a large food court, cosy cafes, a bank, post office and, of course, cash machines.

Malaysia is eager to boost its stalling tourism industry and is trying to draw on the rapid growth of high-end brands in Asia to lure mainly South-East Asian luxury shoppers.

Prime Minister Najib Razak attended the outlet's official launch on December 11 and called the project one of Malaysia's leading tourism projects, adding that the government aims to establish the country as a 'shopping haven of branded goods.'

Tourism is the country's second-largest industry after manufacturing. Last year, the government recorded 24.6 million tourists who spent 56.5 billion ringgit (18.8 billion dollars).

The tourism industry had been steadily growing since 2000 with international arrivals up by almost 9 per cent every year. However, the numbers began floundering this year, and the government was forced to revise its earlier target of 25 million tourists, down to 24 million.

It is now hoping the new outlet helps to reverse the trend.

'I was in Singapore for a holiday and heard about the outlet, so I came all the way here to check out the goods,' said Sol, 48, from the Philippines.

'And I am so happy I did,' she said, heading into the Ermenegildo Zegna shop with her group of fervent shopper friends.

Najib was equally exuberant. 'Since opening, attendance has been beyond expectation,' the prime minister said. 'Within the first year, the place could possibly draw as many as 3 million visitors.'

The opening occurred as the luxury market showed one of the few bright spots in a world economy shaken by the eurozone debt crisis and sluggish recoveries from the recent global recession. High-end consumers have not been impacted by falling incomes and unemployment like other populations, and sales of luxury goods have hit record highs.

The trend has been particularly stark in Asia. As the region leads the boom in demand for luxury goods, Malaysia is hoping that the rebranding of a country largely associated with conservatism and cheaper Chinese-made goods to an upscale luxury shopping haven would turn its tourism tides.

'I am quite impressed with what I see as they have a fairly good variety,' said shopper Paul Black, a shipping merchant from Singapore, which sends Malaysia more than half its foreign tourists.

'I'm sure my girlfriend and I will be coming here more often from now on,' he said.

The outlet offers prices up to 65 per cent less than mall prices for past season items.

The outlet is fashioned after similar shopping havens in the United States, South Korea and Japan and is a joint venture between Malaysia's gaming operator and property group Genting, and US-based Simon Property Groups.

The 149-million ringgit outlet houses familiar names such as Burberry, Coach, Ralph Lauren, Canali, Michael Kors and Tumi.

'In my experience of opening premium outlets across the United States, I've discovered that the excitement of finding great bargains has no boundaries,' said John Klein, president of Simon Property Groups.

An expansion was already in the works. Najib announced that a second, 100-million-ringgit phase with 60 new shops and a 2,000-room hotel had already been approved.

'Honestly, I am surprised that there would be such large crowds of designer shoppers here,' said Indonesian Lily Putri, who had to queue for nearly 30 minutes to get into the Coach outlet.

'But I'm really glad they have caught on the designer goods shopping bandwagon,' she said, waving her new Armani sunglasses in her hands.

'Now I don't need to travel too far to get my shopping fix.'

Source - monstersandcritics