By Chris Igwe
It has now become clear that outlets must be seen as a vital part of the brands’ distribution strategies and not simply as places to offer merchandise at a reduced price.
The outlet sector remains an essential part of their business strategy because it offers a way to drive revenue, clear inventory, and engage with a different customer segment, possibly discovering outlets for the first time. At the same time, existing customers need to experience something more than they have been used to, such as VIP services, personal shopping, customization, dining options, and more. The consumers have high expectations.
However, for the retailer, the success in this space requires a careful balance – maintaining brand value (where this matters to the brand), protecting margins, and adapting to changing consumer behaviors. Those navigating these challenges while leveraging omnichannel strategies and creating a differentiated experience will continue to find substantial opportunities in the outlet sector. However, the successful retailers and brands will be those who realize that the consumer does not see channels, but sees one single experience with the brand, high street, shopping center, e-commerce, or outlet.
Each retailer or brand looks at their market to decide which type of outlet center they want to be in, which corresponds to their market positioning. As in any other form of real estate, the location and consumer needs must fit with the retailer’s.
The outlet sector remains a valuable tool for retailers across all segments, but each category must uniquely balance brand perception, profitability, and consumer demand. Luxury brands tread carefully to maintain exclusivity, aspirational brands use outlets more for expansion and accessibility, while fast fashion brands are likely to prioritize efficiency and volume.
The one advantage the retailers or brands have in common is that outlet shoppers are often new or different from the ones they get in the high streets or city centers. The key is to engage with them, engage them with your brand, and retain them to shop there rather than search for discounts online.
Retailers and brands are looking for operators to provide more opportunities to drive traffic to the outlets through digital channels, loyalty programs, VIP events, and other marketing strategies that mutually benefit the outlets and the retailers. They are also looking for outlets to be kept attractive, with improvements to amenities, including parking, security, and overall upkeep.
Retailers are also looking to operators to provide opportunities for consumers to remain longer, such as a much improved and more extensive offering of dining experiences and entertainment facilities, as well as adding art and cultural experiences, thereby increasing the dwell time.
Retailers today are looking for operators who understand their business challenges and are willing to work with them to address and resolve these. Many retailers and brands, from fashion to outdoor, sports to accessories, health and beauty, as well as pop-up concepts, are not currently in outlets but wish to explore these. There has never been a better time for dialogue.
Chris Igwe
Chris Igwe is the President of Chris Igwe International
