Today’s consumer is more driven by deals and discounts than ever before. This is why we see retailers like TJX experiencing unprecedented growth, while the rest of retail struggles to get foot traffic through the door.
Off-price retailing isn’t a no brainer however. Retailers that have both full-price stores and discount outlets face challenges in today’s retail environment.
- Maintaining a healthy balance of protecting the prestige of their mainline brand while still realizing the value that can be attained in the discount market. Shoppers are drawn to outlets by the promise of “all of the brand, at half the price." If that brand becomes perennially discounted at the outlet, retailers not only erode full price sales but also run the risk of permanently damaging the inherent value of their brand.
- Dealing with product catalog differences between mainline and outlet. Long gone are the days of outlets serving as clearing houses for last season’s duds and irregular full line merchandise. In an effort to combat the possibility for brand dilution and minimize cannibalization, almost all retailers maintain an entirely different SKU set between their Full Price and Outlet offerings. Managing this additional product catalog can stifle opportunities for outlets to market and merchandise.
As a result of the above factors and other logistical challenges, outlets have traditionally been hidden from exposure to online shoppers, except in those cases where the outlet has become entirely its own entity, complete with dedicated e-commerce machinery (see J.Crew Factory, Gap Factory, etc.). With aforementioned exceptions, by not exposing their outlets digitally, retailers are missing opportunities to connect with today’s predominately digital / mobile customers.
Retailers should think about the about the following opportunities to better leverage their outlet stores digitally while considering unique requirements of outlet retailing:
- VIP Experience: Keep your top shoppers coming back again and again. Leverage relationships with store associates to better serve these high-value repeat shoppers. Make your outlet creative and engaging for new customers so they become return visitors. Extend the VIP experience online to these customers so they maintain that unique connection in between outlet visits
- Flash Sale Opportunities: Consider creating limited engagement opportunities that allow customers to shop outlet online during a limited window. The excitement generated by Flash Sales keeps customers engaged with the brand and likely to visit the store more often throughout the year.
- Dynamic Catalogs: For retailers concerned with exposing too much about outlet products online, consider creating dynamic catalog experiences for each location. Expose only a subset of inventory and avoid extensive product details that you don’t want shared online (like price). A dynamic local catalog gets customers excited about the assortment in their local store, convincing them to come into the store without losing control of your proprietary information and pricing models.
As always, is important to keep in mind consumer behaviors and expectations. They will expect you to deliver responsive experiences that allow them to seamlessly travel between desktop and mobile, their couch and the outlet parking lot.
If you’re ready to start exploring digital opportunities for your outlet stores, Radius8 can help you drive more sales and foot traffic to your outlets.