In the world of outlet shopping, Belz Enterprises is one of the first names real estate executives associate with the industry. The company develops high-profile centers in high-profile locations that in 1997 attracted more than 31 million shoppers.

"In the outlet industry, we are known for three things," says Andrew J. Groveman, senior vice president of the Memphis, Tenn.-based company. "We build projects that are initially larger than those of our outlet counterparts; we build enclosed malls rather than the open-air variety; and finally, we build in tourist destinations."

Explaining the Belz strategy, Groveman says the company builds larger initial phases because the consumer wants a wide variety of shopping choices; enclosed malls provide a greater level of comfort for the shopper, and tourist destinations attract large numbers of vacationers who want to shop for bargains.

Ascertaining the right tenant mix for each location is not easy, but the choices of outlet concepts are increasing. "The number of manufacturers getting into the outlet business is steadily growing," Groveman says, adding that the merchandise sectors best represented in outlet centers tend to mirror trends in traditional retail.

"Women's apparel and footwear are very popular, but it is growing across the board," he says.

No one can argue with success. Belz's five outlet centers - two in Orlando, and one each in Las Vegas, Pigeon Forge, Tenn. (near Knoxville), and Lakeland, Tenn. (near Memphis) - attracted an all-time high of 31.3 million people last year, a 9.1 percent increase over 1996 figures.

"There has been a lot more acceptance by consumers of outlet shopping in recent years," Groveman says.

The Las Vegas Belz Factory Outlet World has been particularly impressive. More than 6.5 million people visited it in 1997, a 34 percent increase over 1996. But all of the company's outlet centers increased their traffic counts last year, with the other four centers enjoying increases ranging from 2.6 percent to 15.8 percent.

Groveman attributes this growth to good locations, shoppers wanting quality goods at discounted prices, and a strong national economy.

However, Groveman argues, good economic times do not necessarily equate to a booming outlet industry. "Outlet is inflation-proof and recession-proof," he says. During inflationary periods, he explains, consumers seek to stretch their money, and during recessionary periods, consumers have less money. Either way, outlet shopping provides a way to get more for less.

Not just outlets While the company is probably best known as an outlet center developer, the Belz portfolio is very diverse, filled with other types of retail as well as industrial distribution facilities, office parks, corporate campuses, and residential and hotel properties, including the well-known flagship Peabody Hotels in Memphis and Orlando.

"We have a portfolio of 25 million sq. ft.," says Groveman, adding that retail makes up only about 15 percent of the total.

In fact, when Phillip Belz founded the firm in the early 1940s, the firm was developing warehouse distribution space, which still is a large part of the portfolio.

The firm's 40 shopping complexes cover most every retail type, from community shopping centers to regional malls and, of course, its outlet centers.

Belz is experimenting with another retail center concept with the development of Orlando's Festival Bay, a 1.1 million sq. ft. lifestyle retail center scheduled to open in early 2000. The center will include a 20-plex Cinemark theater with stadium seating and state-of-the-art digital sound systems.

The project will also count among its tenants Bass Pro Shops - Outdoor World, an interactive sporting goods retailer targeted to outdoor enthusiasts. With a design featuring aquariums, waterfalls and streams, the 162,000 sq. ft. store will have departments for fishing, hunting,camping and boating.

Entertainment has also figured prominently in Belz's outlet developments. The large carousel in the center court of the Orlando Belz Factory Outlet World remains a very popular attraction for the center.

"Entertainment is a very important component," Groveman says. "We want shopping at our centers to be a fun experience for the whole family."

Groveman stresses that entertainment is created by the architectural environment of each center. Belz centers are not based on a theme from the history of the surrounding community, but each project does have a design that ties the entire project together.

A string of firsts Belz was among the first outlet developers to introduce such amenities as large, convenient food courts and diaper-changing stations. Tile floors and other finishes not previously associated with outlet shopping are also standard for Belz developments.

"It doesn't take a great deal of money to decorate in good taste," Groveman says.

The company's retail history includes a string of firsts. It developed the first enclosed mall in the state of Tennessee, 100 Oaks mall in Nashville, in 1967. And 12 years later, the firm opened what is considered the first enclosed outlet center in Lakeland, Tenn.

Now, Puerto Rico's first enclosed outlet mall will debut in fall 1999 with the San Juan opening of Belz Factory Outlet World Canovanas.

Unlike other Belz projects, the theme for this project will be based on the local community, with each of five buildings sporting a different theme of Old San Juan. The food court will carry a rainforest theme, complete with rockscapes and waterfalls.

Construction began earlier this year on the 350,000 sq. ft. first phase, which will be home to approximately 80 tenants. The retail mix will be similar to that of the company's Orlando and Las Vegas outlet projects.

The project, which will benefit from the 4 million tourists that visit the island each year, is the company's first center outside the United States. But it is not the beginning of any major international expansion plans.

"We are not looking to go worldwide," Groveman stresses. "There are still plenty of good locations within the United States."

Belz management maintains that the biggest obstacle to a successful outlet project is too much competition. "We like to categorize our company's growth as opportunity-driven," explains Groveman. "We are not a believer in head-to-head competition."

For example, the growing country music haven of Branson, Mo., was scheduled a few years ago to be the location of a new Belz outlet mall. Belz purchased the property but decided against the project after numerous other outlet projects were announced.

"We still own the property, but under the circumstances we thought too much outlet was being built in the area," Groveman says.

The company is also careful when selecting sites in tourist areas. "We have always said that site criteria is specific to each individual location," says Groveman. "We don't believe that outlet can live side by side with traditional retail centers. There is a healthy sensitivity issue to consider. But that said, we do try to get as close as we can get."

Bucking the REIT trend The company's conservative approach to expansion is one reason the private company plans to remain private. Many of Belz's competitors in the outlet arena are real estate investment trusts, but Groveman argues that the pressure of having to grow to meet investor expectations is not conducive to developing good projects.

"Unlike REITs, we are not forced to grow," he says. "We don't like the idea of having to perform quarter to quarter for the public. That makes you more apt to make development mistakes."

For some companies, remaining a private firm could result in difficulty obtaining capital. But Belz has maintained strong ties with capital sources.

"Financing has never been a problem because of our development track record, our reputation, and what we feel is a conservative approach to business," explains Groveman.

In fact, he says, the company's success stems from the assurance tenants have that Belz projects will live up to expectations.

"Our success is based on good relationships with our customers," Groveman says, "and the fact that they have confidence in our ability to deliver what we say we are going to deliver."