Outlet stores (and shopping centers) have been around for decades. When they first opened, they sometimes occupied old factory buildings, focused on end-of-season merchandise and irregulars, and located miles away from traditional retailers so as not to hurt their retailers’ business. Most of the outlets featured manufacturers’ merchandise (and some still do now).
Today, outlet stores and shopping centers are more attractive (although clearly plainer than traditional stores), feature newer merchandise — as well as merchandise only carried by the outlets, are more conveniently located, and have many more retailers’ own outlet stores.
So, the question for retailers is this: Are they growing their outlet business at the expense of shopping at their traditional stores and at lower profit margins?
Consider these observations Suzanne Kapner, writing for the Wall Street Journal:
“Retailers long built walls around their outlet businesses to keep the bargain hunters from the gates of their full-price stores. Now, those walls are coming down. Desperate for growth at a time when outlet stores are a rare bright spot for shopper traffic, chains are taking the once unthinkable step of putting outlets near their mainline stores in cities and suburban malls and even putting full-price stores in outlet malls.”
“High-priced, luxury chain Neiman Marcus has been opening its discounted Last Call outlet stores in major markets like Dallas, Houston, and New Orleans. Nordstrom plans to open 27 Rack outlet stores this year, many of them near its full-priced department stores. Meanwhile, Macy’s is anchoring a wing of full-priced stores that opened last summer at an outlet mall in Gurnee, Ill. Macy’s chief financial officer said the company would consider opening more such locations.”
Click the WSJ chart to read more of Kapner’s story.
Retailing: From A to Z 