Simon Property Group Eyes eCommerce Play

It looks like the biggest mall operator in America is officially deciding if you can’t beat ’em, join ’em. Simon Property Group has announced that it is teaming up with online shopping site Rue La La’s parent company, Rue Gilt Groupe, to launch a new website for the deal-conscious consumer.

The Oct. 2 announcement comes as Simon has been increasingly looking into and testing the “ShopPremiumOutlets.com” website since March, drawing on the  dozens of premium domestic outlet shopping centers, not to mention a few offering outside the U.S. Some of those centers have reportedly been targeted to test selling merchandise on the emerging new site. Simon Property Group also notes that it has signed on more than 2,000 designers, and has about 300,000 products and that it doesn’t expect this new offering will cannibalize its brick-and-mortar mall business.

Some of the brands that have signed on include Saks Off Fifth, Aeropostale, G.H. Bass & Co. Factory Outlet, Cole Haan, Nautica and Under Armour.

“Simon has definitely been upfront that they aren’t just going to sit on the sidelines and let the world move online and them not be a part of it,” Sandler O’Neill and Partners real estate investment trust analyst Alexander Goldfarb said. “The number of people who go through their malls is tremendous.”

Rue Gilt Groupe will run the site alongside its other digital properties like  Gilt. The Rue Gilt Groupe calls itself “the premier off-price e-commerce portfolio company.” It is backed by Michael Rubin, CEO of Kynetic, the parent company of Fanatics.

Simon will add around $280 million toward the endeavor and expects to promote the new business in the coming year using a portion of its more than $100 million annual marketing budget. Simon and Rubin will also now become “equal partners” in both Rue Gilt Groupe and ShopPremiumOutlets.com — if the deal closes with regulatory approvals.

“We believe online value shopping presents a tremendous business opportunity for Simon, given our credibility, trust and relationships with brands, retailers and shoppers,” Simon CEO David Simon said in a statement.

“The online value shopping market is a massive opportunity ready for the next disruptor,” said Rubin. He said he expects the business will “quickly surpass” $1 billion in sales and be profitable.