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Brendon O’Reilly, Managing Director of Fashion House Group. Credit: Fashion House Group

Outlet Retailing’s Strong Emerge

“Outlets benefit due to their out-of-town locations. As a consumer, you are able to park outside and quickly walk to your store of choice in a relaxed, open environment.”

By Brendon O’Reilly

The impacts of the Covid-19 pandemic on retail markets worldwide have been well documented. Retailers have been forced into accelerating e-commerce strategies while managing the logistics of Covid-19-safe shopping in-store. However, while many segments of the retail market are still grappling with how to operate in a post-Covid-19 world, the outlook for outlet retailing is positive.

Over the past year, consumer shopping patterns have witnessed many changes. In a pandemic-impacted world, the customer either wants their apparel delivered or they want to visit the store in person. In the short-term, that is not good news for city center shopping centers, which struggle to meet social distancing requirements. Outlets, however, benefit due to their out-of-town locations. As a consumer, you are able to park outside and quickly walk to your store of choice in a relaxed, open environment.

Brand and value have always been the major selling points for outlet retailing, but those benefits have been accentuated over the past year. As the world locked down, we all either decided to get fit and invest in our health at home, or we went the other way and over-indulged. Either way, the demand for suitable sporting equipment and apparel to either fuel those lifestyles or meet our changing body shapes resulted in a boom for leisure and sportswear. What exactly are consumers looking for when shopping for such items? Brand and value are paramount, which leads them directly to outlet centers.

Changing consumer behavior is not the only thing that has reinforced a strong outlook for the outlet market. We are seeing huge demand from tenants for outlet space in Europe to help distribute and liquidate their stock. Outlet strategies are now an established part of distribution models for big clothing brands, acting as a safety net in mitigating the impacts of another crisis. However, the core benefit for these brands remains the ability to liquidate products efficiently and profitably – in an environment in which other brands are doing the same.

The other area in which we are witnessing an evolution in the big brand outlet model is the stock they choose to sell at outlets. Where formerly, brands would use outlets as destinations for old-season stock, we are now seeing brands producing stock specifically for outlets as a way of introducing consumers to their brands at a lower price point.

Many advocates for online retailing will point to the massive growth in e-commerce numbers over the past year to suggest that physical retailing is on the wane. However, I do not buy into that philosophy one bit. First, we are already beginning to see governments worldwide starting to clamp down on online retailers through the introduction of measures, such as the big tech tax. Second, the convenience of online retailing and, in particular, fast fashion online, is leading to a huge, impending environmental disaster as people order increasing volumes of clothes only to be returned and sent to waste. Therefore, I am confident that the real-world benefit of outlet retailing will always have a key role to play in a brand’s distribution strategy.

That is not to say that we cannot and should not keep looking to improve the outlet experience for consumers by, for example, adopting new technologies, such as Click & Collect. However, our focus in outlet retailing should always remain true to brand and value. That is what consumers want, and that is what we are best placed to provide.