Almost everybody in Western and Southern Europe and the
United States knows them probably: the factory outlets (or fashion outlets) where
eager shoppers can get their favourite brands of clothing, shoewear and other
gear, against an attractive discount.
Nike, Adidas, Levi’s, Hugo Boss, Calvin Klein, O’Neill
and Ralph Lauren are only a few of the brands that are presents at such factory
outlets and all these brands do their best to attract customers, by selling
articles that are just not up-to-date anymore at discounts of 35% or more.
It seems like a win-win situation: the brands can sell
their obsolete articles and slightly outdated collections to eager customers,
instead of having to take those back to the factory and destroy them. And the
customers get a great bargain and have the chance to buy clothes of expensive
brands for prices that fit well within their budget. There are even rumours
that some of the brands and store chains at such fashion outlets put
collections together of slightly lesser quality, but at a much lower price, in
order to attract customers.
But not everybody is happy… especially not when one owns
a fashion store in a regular shopping centre, close to such a factory (fashion)
outlet.
Such factory outlets are often large shopping malls
with a nearly complete assortment of fashion, shoewear, sportswear, furniture
and small household appliances, for sale in more than 100 or 200 stores. They
mostly include a number of food and hospitality units and they are generally situated
at locations just outside the centre of nearby towns and cities: in general near
highways and local auto routes, making them very easy to reach and leave again.
And where the shopping centres in the heart of normal cities
are seldomly worth a special visit due to their dullness and monotony (i.e. the
Blokkerization
that I described in this older article), having the same few store chains
over and over again, such specialized factory outlets attract visitors – both from
close by and far away – like lemonade attracts wasps in the summer.
Due to their smart location, their extensive collection
of famous brands all combined in one small area, their bargain prices and their
general attractivity towards the customers, they draw a lot of attention away
from the shops in the shopping centres in the hearts of nearby cities and
towns.
And where the residents of these nearby towns and
cities do regularly visit the fashion outlets in their region, instead of
visiting ‘their own’ shopping centres, the opposite does hardly happen at all: tourists
from outside the region who make a special trip in order to visit such a
fashion outlet virtually never go to the centre of the cities close to this
fashion outlet (unless such cities have some attractions of their own). The
consequence is that there is absolutely no win-win situation here for the shops
and store chains in the heart of the cities involved.
On top of that: the stores in the centres of the nearby
cities and towns often sell the same brands and nearly the same collections,
but they are not able to sell these brands at the same bargain prices as the
factory outlets do. They are mostly “forced” to sell the latest collections of
these brands at the normal sales prices. This means that there is a substantial
difference in prices between the regular shopping centres and the fashion
outlets.
This particular circumstance is hard to explain to the traditional
customers of the regular shops in the common shopping malls: why is a typical
Levi’s or Calvin Klein jeans for sale for over €75 in the regular shop and can
almost the same jeans be bought for only €45 in the Levi’s or Calvin Klein fashion
outlet store?! And why is that Lacoste polo shirt 30% cheaper in the fashion
outlet store than in the regular fashion store?! The differences in quality between the outlet
fashion and the regular shop fashion – if any – are very hard to discover for
Joe Sixpack when he visits the fashion outlet, so he doesn’t bother and buys
his stuff for the lowest price... in the outlet store.
This proves to be a double whammy for the storeowners
in the regular shopping centres and non-outlet shopping malls. These must buy
the latest collections of the famous brands at much higher purchase prices, in
order to not lag behind and keep attracting customers to their regular stores,
situated in often dull and monotonous shopping centres. At the same time, they
are under crossfire from the same famous brands, as these brands sell nearly similar
gear at much lower prices in their own brand stores in the fashion outlets.
You could justifiably state that with their fashion
outlet stores these famous brands are cannibalizing on their regular,
independent retail sellers; these retail sellers can’t and won’t charge the
same prices as the outlet stores do, except during the ever longer sales
periods. On top of that they can’t offer the same shopping experience and the
same collection of famous brands in a limited area as the fashion outlets can.
I really can’t tell exactly why these famous brands are
cannibalizing on their existing distribution channels, but I presume that these
brands are trying to integrate their total hierarchic structure, in order to
save costs and earn even more money on their products.
The fashion, shoewear
and other gear of these famous brands are produced at absolute bottom prices in
Eastern Europe or the Far East and these are subsequently distributed through
their own network of brand stores and fashion outlets, thus minimizing the
profits for third parties involved and maximizing their own profits. The
independent retail distributors of these famous brands, with their unbranded
stores and their collection containing other (competing) brands, feel probably like a
hassle on the road to total integration of production and distribution, through
brand stores, fashion outlets and flagship stores.
This makes the motives of the famous brands at least
understandable, even though I don’t sympathize with them.
Many city councils and municipalities, however, had only
€uro-signs
in their eyes and showed no restraint at all when it came to the development of
new shopping centres and shopping malls within their boundaries. Consequently,
they grossly
neglected the unhealthy development of their existing shopping centres and
malls and focused exclusively on the new shopping centres-to-be. This led to
the soaring shop vacancy, as well as the dullness and monotony of the existing
shopping centres in the hearts of the cities, towns and neighbourhoods.
For many cities and municipalities nowadays, the
development of a large fashion outlet feels like the holy grail of shopping, of
which they hope that it puts their city finally on the map, where older and
more common shopping malls failed to do so. That such fashion outlets blow the
competition in the older shopping centres away in the process, does not bother
them at all.
This is the reason that there is currently a
high-rising conflict between the owners of established shops in the centre of
the Dutch city Assen and the council of this city, which plans to
establish a new fashion outlet at the outskirts of Assen. Even though the city
council of Assen reassures the regular shop owners that the Fashion Outlet
Centre will “only” lead to a 5% loss of sales in the regular shopping centres,
the shop owners know better and fear the worst (i.e. a loss in sales of at
least 10 to 20%).
Personally, I sympathize with the regular shop owners
in the city centres.
In the times that the shopping malls were developed and
that they purchased their shops, they were often lured with stories about greatly
developing, beautifully maintained and enduringly interesting shopping centres lying
in the hearts of lively neighbourhoods, with extraordinary shops that would
attract thousands of tourists from outside their cities and neighbourhoods. And
with stories of enduring sales and profit growth.
Instead, they became the victims of the economic
crisis, but also of flawed town planning and extremely poor shopping mall
management, soaring parking fees and a soaring number of vacant shops, that
drag down the shopping mall as a whole.
And as icing on the bitter cake, their customers are
lured away by the tinsel and unspoken promises of the fashion outlets with
their famous brand stores, their never-ending sales periods and their somewhat cheesy,
but nevertheless attractive appearance.
No, it is not easy at all to be a successful,
independent retailer in the 21st Century...
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