Outlets & pure players. The race for bargains
With the rise of online private sales, traditional outlet centres offering discounts to clear inventory are facing new rivals for command of their domain. Are retailers favouring online or offline channels to sell overstock? What is the most profitable channel? Global Retail News investigates this new shifting territory.
Described as the “poor side of retail” or the “fifth wheel on the coach” for many years, the outlet sector was represented by outlet centres. Retailers considered that their outlet stores had to be hidden away, often synonymous with discomfort or poverty. Tenants and suppliers of outlets were primarily in the fashion sector, where unsold items accounted for up to 20% of total volumes every season. Retailers selected locations as far as possible from their “full price” stores, in order not to tarnish a brand image and appeal. Luxury brands like Louis Vuitton destroyed unsold inventory rather than reduce sales prices. Destruction costs were included in their business planning to protect a maximum margin.
This destocking sector has now changed completely. The majority of retailers appreciate that an overstock represents a huge and valuable business. Beyond the traditional anchor tenants such as Nike and Adidas, outlet centres now house unexpected newcomers, such as Black & Decker (outlet stores in the U.S.A.), Bialetti (an Italian brand of coffee machines with outlet locations in Italy and France), L'Oréal, Lindt and even Haribo. In addition, an array of online newcomers such as Vente-Privée and Net-A-Porter is shaking up traditional outlet operators, with ephemeral online sales which meet demand from customers and brands eager to sell overstock. "The online private sales are a residual valve for our end of season stock”, said Stephane Coudassot-Berducou, Leftover Director at Fast Retailing…