It wasn’t long ago when outlet malls were thought of as a place to buy slightly damaged goods, cheap knock-off brands and other items that simply couldn’t sell in traditional retail stores and malls.
But today, outlet malls are experiencing a major resurgence.
Over the past 4 years, sales at the 205 outlet centers in North America have increased by $7.7 billion to reach $27.6 billion – that represents 28% growth.
Furthermore 5.4 million square feet of GLA from the development of new outlet centers and the expansion of existing centers was added in 2013. Additionally, 11 phase 1 outlet centers, 8 of which will open in the U.S. and the remaining 3 in Canada, are planned for 2014.
Outlet centers are evolving to become a distinct and thriving business segment autonomous from traditional malls that are offering upscale shopping experiences with discounted prices – something that resonates with savvy, price-conscious shoppers.
In fact, retailers, luxury brands and department stores are developing distinct strategies around outlet locations which are designed to drive business, reach new customers, increase revenue, profitability, and ultimately add to the bottom line.
Express in the Fast Lane
In the past, Express, a specialty apparel retailer operating 630 store locations, has always turned away from outlet locations.
But, after recognizing the opportunity of the growing outlet business, the retailer has decided to capitalize on the trend by launching a new outlet initiative.
Representing a new format for the retailer, outlet stores are intended to support the retailer’s growth strategy of becoming more accessible to the twenty-something, fashion-conscious, yet price-sensitive customer.
Commencing the new strategy on April 18, Express opened its first outlet store at a Tanger outlet mall near Washington, D.C. – and has plans to open an additional 30 locations this year in markets such as Chicago, Dallas, Detroit, Las Vegas and New York.
The Bottom Line
Outlet centers are one area of retail real estate that is growing, and is growing fast. The boom in the outlet industry is due in part to its value proposition of brand names and even luxury products at a lower price. And now, the savvy retailers, some of which have traditionally avoided outlet malls, are actively seeking out opportunities to open outlet stores as part of strategic growth plans.
But, if you have your eye on using outlet centers as an avenue for growth, you need a plan. You need to know how many stores to open and where to open them. Because even though this is a thriving industry, if you don’t have a plan and execute it well, you probably won’t find the success you’re looking for.
The good news is that we’re experts at planning and quantifying the potential your brand has when launching new real estate initiatives and prioritizing new markets for expansion. Give us a call and we can help you every step of the way.