Behind the “massive” potential for premium outlet centres in Japan


On 20 October, Mitsubishi-Simon, a joint venture of the Japanese commercial property developer and American mall operator, opened Fukaya-Hanazono Premium Outlets, its tenth premium factory outlet centre in Japan. It was the culmination of a development that first broke ground in July 2021 as part of an area improvement project. The centre is located in Fukaya City, Saitama Prefecture, north-west of Tokyo. Fukaya is a city of just over 140,000 which is famous for, of all things, its green onions.

ns. Now it will be famous for its shopping, too.

Although Fukaya itself is not a big city, the surrounding population of Saitama is over 7 million, and it is not far from metropolitan Tokyo either. The trip from Tokyo Station to the outlet centre is only a little more than 90 minutes. From a tourist shopping perspective though, Fukaya is destined to be overshadowed by another Mitsubishi-Simon project, Gotemba Premium Outlets, about 200km to the south and within spitting distance of the famous Mt Fuji. 

The area around Fukaya-Hanazono outlet centre has some important shrines but it will not – or at least not yet – be anywhere near as much a mecca as Gotemba for the international tourists that are slowly trickling back into Japan. It will be more reliant on locals and tourists from within Japan itself. To this end, it even has a supermarket and everyday service tenancies that are more often to be found at a local neighbourhood centre. 

The total floor area is 34,500sqm (27,000 of it in stores) on a 177,000sqm site, with approximately 90 brands and 40 food outlets. In the pantheon of Japan premium outlets, it is the second smallest: the other nine have an average store floor area of 38,400sqm (Gotemba, checking in at 61,000sqm, is the largest). It is somewhat larger than the average outlet centre in Europe and somewhat smaller than the typical American version.

The store line-up at Fukaya-Hanazono features leading high-end brands that Japanese shoppers love, including Bally, Dsquared2, Marc Jacobs, Tory Burch, Valentino, and Versace. Of course it also sports your typical mid-end brands, such as the athletic apparel and footwear stores. There are also some noteworthy firsts: Korg, a musical instrument manufacturer that achieved fame as a pioneer in the manufacture of synthesisers, has its first factory outlet store here; and Ping, an American golf brand, has its first outlet in Japan. 

The restaurants emphasise local Saitama vendors and some feature menus with locally grown products. Example: anyone up for Fukaya leeks?

Where shopping and art coexist

‘Local’ is certainly a theme for this project, with construction materials typical of the area, artworks from the Chokoku-no-Mori Art Foundation (famous for its exhibitions of sculpture in natural outdoor settings) and wall art by local artists, all providing a more stimulating experience for shoppers. At the Food Lodge, work from 10 artists depicting regional flora is projected onto a glass window about 25 metres long. 

To drive the ‘local’ point home, there are pet facilities throughout the centre and the Food Lodge is pet-friendly so humans and their best friends can dine together. Heads up though, space is limited only to small breeds that can fit in a pet cart or be carried.

Economically, Japan’s factory outlets are the real thing

Outlet centres in Japan do well. Sales per square metre for the nine centres open before Fukaya-Hanazono averaged approximately JPY1.16 million yen (US$7,840) before Covid-19, of which about 5 per cent went to the joint-venture partners as base rent.

Potential for the outlet centres in Japan and, for that matter, in neighbouring Asian countries, is massive. The format is far from saturated and the global economy is likely to slow in 2023, increasing consumers’ motivation to look for bargains.

The first premium factory outlet centre in Japan, Gotemba, was opened about 20 years ago, at a time when Japan’s retail market was highly regulated and, with no hyperbole, the retail industry as a whole was teetering on the brink after a full decade of recession and weak consumption spending. Retail sales had been in freefall seemingly without a parachute for almost four years. How would Japan’s consumers get access to all the luxury brands that they had been accustomed to when they were all tapped out? 

Factory outlets provided the answer. The centres are distinctly upscale, in terms of both their brand line-ups and their showcasing. And from the point of view of the brands themselves, the discounted product gives shoppers an entry point that may subsequently lead them to become ‘full-price’ customers when their financial situations improve. 

There is also no intimidation factor: luxury boutiques with their door security and close personal attention from staff can be offputting. Factory outlet shops tend to be a little larger, a little more shopped, a little less staffed, and overall allow potentially uncomfortable customers to breathe a bit more.

That is not to say that factory outlet stores are anything like the places they used to be back in the Wild West days of the format in Simon’s native US, when brands used them as dumping grounds for stuff that wouldn’t move in their ‘full-price’ stores. Those were the treasure-hunt days, when merchandise looked to be in a perpetual state of pillage, the fit-outs were minimalist, the staffing sparse, the assortments shallow, and customers were left largely to their own devices to ransack the shop for whatever little trophies they could uncover. Now, store fit-outs and service have closed ground on those of mainstream stores. 

The elevated quality of the merchandising at Japan outlet centres, like that of the best European and American ones, is largely matched by the design content and amenities of the centres themselves. Inspired by the old European town square, Fukaya-Hanazono and its Japanese predecessors are open-air and upscale in their construction, street furniture and landscaping. 

Mitsubishi-Simon is far from finished developing outlet centres in Japan. Another one, the company’s eleventh in Japan, will open in Kyoto-Joyo, although the opening date is uncertain because of ongoing development of the area road network. Watch this space.


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