You turn attention away from off-price outlets by doing a better job of alerting consumers to the deep discounts on apparel items of most interest before they make their way to the outlets. In working with the off-price outlet of one of the majors, we’ve found that by offering new apparel item alerts by specific fashion designers, 30 percent of the customers who use the outlet are net new customers, not in the CRM database. All the customers of this outlet return to the website five to 10 times more often than those on the generic email blast list. Again, if retailers would use personalization to identify the specific interests by designer, item, size, color, etc. of their core shoppers, and give each of these shoppers alerts for the ability to buy on discount before the items are shipped to outlets, that should be a win for the core store in getting shoppers in to buy and likely increase their baskets with more margin-rich items while in the stores (or online).

Many consumers are still feeling the pain of the Great Recession, as wages have not kept pace with the general market recovery. They want value when shopping for clothes and are finding it at off-price chains, where one sacrifices some of the selection for significantly reduced prices. In a way, the leading department stores have brought this phenomenon on themselves by opening these stores, as well as outlet shops. Until wages rise significantly, I don’t see this pattern changing. Consumers will shop where they receive value, and traditional department stores will literally pay the price.

Several years ago, my husband’s luggage failed to show for a golf trip on the Southeast coast. Try finding shorts at Kohl’s, Macy’s or even Saks in August. It’s 94 in Charleston, SC and the stores were showing corduroy and jackets. On sale. Duh.

So off to TJMaxx we went. Oh, and to Tanger’s outlet mall as well. Bingo. Everything we need in 90 minutes. On sale.

Our brains have been trained this way by the very retailers who now suffer from lack of shoppers. Is it any wonder why the tide is shifting?

I think it is important to note that the original intent of outlets was to liquidate unwanted or unsaleable inventory. As retailers realized the potential market and demand for heavily-discounted goods, they created chains of stores designated as outlets. So while the outlets may appear the same, one was out of necessity, the other for profit. As a result, customers have been trained to never buy at full retail and retailers are caught with declining margins and increasing competition (sometimes from their own brand).

If I understand the survey correctly, 2/3 thirds of shoppers shop at off-price ALONG WITH OTHER RETAIL; for some it’s all the time, for others once a year. To label all of them as “off price shoppers” — as if that’s all they are — is misleading in the extreme.

The answer for department and specialty retailers on how to attract customers is the same: have a compelling product … if there’s nothing remarkable about what you sell other than price, you’re always going to lose to whoever sells for less.

Department stores/full-prices businesses should focus on building loyalty by offering discounts or exclusive sales for loyal customers, adding value in other ways (service, selection, etc.). Also, you mention many department stores opening their own off-price businesses, but that they have not benefited each chain’s primary business — this is not surprising. I would be curious to see what top and bottom line impact those businesses have had though. (Is it taking business away from their primary business? Or is it attracting a different more value conscious buyer segment? If so, how profitable is that new segment/is it worth more investment?) Being middle of the line can arguably be the worst place to be (not a value retailer, but not a luxury one) since it’s more difficult to differentiate your value proposition.