By Tom Ryan
With their palatial boutiques struggling at regional malls, luxury chains and many of their vendors are plowing money into their outlet mall locations that are seeing better traffic. According to the Los Angeles Times, upgrades by many "are creating an aura of prestige" at outlet malls.
According to the Times, outlet malls bear little resemblance to the stripped-down clearance centers that first arrived in the eighties far from the outskirts of cities. Today, outlet stores operate more like a discount retailer and designers no longer cut out the labels in selling to them. More high-end stores and brands have gone to outlets after renovations or new centers opened in tourist markets with more services and a cozier shopping experience. Rather than solely clearance goods, much of the merchandise is specifically made for the outlet and features lesser quality than those heading to regional malls, although overstocks and canceled orders are included in the offerings.
The Times noted that Kate Spade, Lucky Brand Jeans, Juicy Couture and True Religion are among the many high-end brands expanding their presence at outlet stores. Coach is seen as the poster child of success in outlets.
Among high-end chains, Nordstrom is opening up 10 Rack locations in 2009. In the fourth quarter, comps slid 1.5 percent at its Rack stores versus a 16 percent drop at its full-line stores. Neiman Marcus is adding three Last Call clearance center stores this year.
Cole Haan, a division of Nike Inc., introduced a revamped outlet store format last fall to reach luxury customers and its redesigned outlets have generated, on average, 25 percent more in sales than older outlet stores.
Saks is rolling out an Off 5th outlet prototype featuring a cleaner, brighter and uncluttered environment. Fixtures on casters allow for quick and inexpensive makeovers as merchandise changes. It opened four such prototype stores so far and plans another four this year.
"These days, customers are saying they want a brand, customer service and a deal," Robert Wallstrom, president of Off 5th, Saks Inc.'s outlet division, told the L.A. Times.
Discussion Questions: Are outlet malls becoming bigger opportunities for luxury selling? What do you like or dislike about how they've evolved over the years?