Dive Brief:

• Simon Property Group and the parent of Rue La La and Gilt have partnered to launch a "multi-platform" venture dedicated to online discount shopping.
• Simon and Rue Gilt Group (RGG) are equal partners in the joint venture, which the companies expect to quickly surpass $1 billion in sales, according to a press release. Simon said it would contribute $280 million to the new venture, a figure that includes the value of its Shop Premium Outlets (SPO) e-commerce site that it began testing earlier this year.
• The venture combines Rue La La and Gilt platforms with Simon's SPO, which will now be run by RGG under the agreement. The two companies are also using their combined customer databases, totaling more than 35 million shoppers, to help push the venture. The deal is still subject to typical closing conditions.

Dive Insight:

Simon may be getting more serious about its move into the digital space, which could be a way for the mall owner to counter falling foot traffic at its physical malls.

Earlier this year, CEO David Simon called the introduction of its own digital platform "not a big deal."

"[T]he earnings impact to it will be, I think, completely on the margin. I hope the market appreciates that," he told analysts in February. "It's not a big deal. It's a couple of cents here and there. And it's an unbelievable investment in our future, and we'll see where it goes."

Later, in July, he said of SOP that the company could "create a real business opportunity for us in this area."

Tying up with RGG gives Simon expertise where it previously had little, and without having to build it in-house, which could potentially be costly, risky and distracting, given the company's massive core real estate business. RGG, meanwhile, can accelerate its growth through the venture. Michael Rubin, RGG's chairman and backer, called online value shopping a "massive opportunity ready for the next disruptor."

RGG CEO Mark McWeeny told Retail Dive last year, after the company acquired luxury-focused site Gilt from Hudson's Bay, "Our model is all about discovery — certainly storytelling is core to what we do. It's great storytelling and great use of data and analytics." That is one way its platforms try to compete with brick-and-mortar off-price sellers, who benefit from the "treasure hunt" vibe at their stores. 

While RGG has the digital chops, Simon brings credibility and relationships with both brands and customers to the venture, David Simon said in the release. Simon's online outlet site, that RGG will now be running, already includes 2,000 designers and 300,000 products, with more to come, the company said.