A Shop Within A Shop
Many brands rent areas of a department store (known as a concession) to get the exposure and foot traffic, but still maintain control of merchandising and markdowns. This can boost the visibility of a brand and increase points of sell, which in the face of declining traffic getting the foot traffic is critical. Though many brands may overlook their biggest traffic centers: their outlets. I suspect for many brands with outlet and full price stores, traffic at the top outlet center dwarf all but the largest full price stores (10x the annual traffic of a B, or D door).
What is the feasibility of opening a concession inside an outlet, a shop within a shop? I’m talking a complete full-price, current season, concession, advertised as such. Traditionally, there was a wall between the full price stores and outlets and selling and the same product in both was forbidden. Now, with outlets becoming a greater portion of sales and even a strategic part of the branding, with made-for-outlet merchandise, the outlet channel serves less of a liquidation function, but more of an important point of sale.
However, there the stigma of the Outlet shopper remains: discount-driven, low-spending, apathetic to fashion. These stereotypes overlook the rising prominence of premium upscale outlet centers – the ones with the tourists from coveted regions Japan, China, Russia, Brazil, the ones where it is not uncommon to see $1000 purchases. Demographically, the top clientele of the top outlets are no different from a mid-tier full price door.
How well could a full-price corner perform in an outlet? From a sales data perspective, quite well:
The graph shows two metrics: the number of transactions in $10 increments, and the average selling price (ASP) within those transactions (ex: $500 transaction with 4 units = $125 ASP). When we overlay the two locations, we can see nearly the entire spectrum of transaction value distribution fits within the outlet’s. The ASP’s overlap until around the $130-$139 transaction basket, then the full price store is able to sell more expensive items. However, if the outlet prices weren’t artificially depressed, who knows what the price threshold is. Sometimes, the appearance of a good deal (80% off!) can make a $300 shirt look good.