Feedback Here

fbook  tweeter  linkin YouTube
Global contents also translated in Chinese

Outlet malls sees resurgence in the age of inflation and value-conscious consumers

Outlet malls sees resurgence in the age of inflation and value conscious


The world of luxury fashion has long held a complex relationship with outlet stores and malls. While some high-end brands like Louis Vuitton, Hermès, Chanel remain fiercely independent, others have embraced the outlet model with varying degrees of success. Coach and Ralph Lauren serve as cautionary tales, their over-reliance on outlet discounts tarnishing their brand image.

However, the tides are turning. The pandemic, coupled with growing inflation and supply chain disruptions, has forced a re-evaluation. Luxury brands, both established and emerging, are finding a renewed purpose for outlets within the luxury retail landscape.

Outlet sales surge, bright spot in luxury retail

Bain & Company data shows since 2021, luxury outlet sales have skyrocketed 35 per cent, reaching a staggering $50 billion. This meteoric rise makes it the fastest-growing segment within the $387 billion global personal luxury goods market.

While outlets still represent a smaller slice of the pie compared to dominant channels like monobrand stores and online sales (13 per cent vs. 56 per cent combined), their growth trajectory is undeniable. Notably, monobrand/online channels, though significant, grew at a slower pace (27).However, outlet malls have emerged as a solution, allowing budget-conscious consumers to access coveted brands at discounted prices.

Meanwhile, outlet mall traffic has grown steadily, rising 11 per cent year-on-year in March 2023 reveals Notably, this outpaces the growth observed in traditional indoor malls (10 per cent) and open-air shopping centers (10 per cent). Interestingly, outlet malls attract a broader audience, including "Promising Families" - young couples with rising incomes - according to 

A Bank of America survey highlights Gen Z's (aged 18-26) growing budget consciousness due to inflation. This generation prioritizes value without compromising on quality, making outlet malls a compelling destination for acquiring coveted brands at discounted prices.

The driving force behind this resurgence lies in changing consumer behavior. Today's shoppers crave the thrill of a luxury purchase, but with a healthy dose of financial prudence. Inflation has pushed prices upwards by 15 per cent since 2021, prompting a strategic shift. The Wall Street Journal even suggests luxury goods have witnessed price hikes far exceeding average inflation rates.

While outlet malls traditionally attracted lower-income shoppers compared to traditional malls, identifies a new demographic driving the trend: ‘Promising Families’. These young couples, on the cusp of higher earning potential, are strategically utilizing outlets to access quality brands at a discount.

 Adapting to the evolving retail landscape

"Coming out of Covid, the customer shops completely different than they did before," observes Stephen Yalof, CEO of Tanger Outlets, a leading player in the premium outlet mall space. Yalof recognizes the need for a holistic shopping experience. He acknowledges the drawbacks of traditional outlet locations and the importance of catering to the entire family.

Tanger's solution, Introducing experiential amenities typically found in open-air shopping centers, like restaurants and cafes. Their newly opened Nashville outlet in the US boasts of a Shake Shack, a brewery, and a coffee shop, alongside the usual shopping options. This strategy goes beyond mere discounts, creating a destination experience that attracts a wider audience.

The jury is still out on whether this is a permanent trend. However, data suggests a clear opportunity for luxury brands to reach new customers and boost sales through strategic outlet partnerships. As the retail landscape continues to evolve, outlet malls could become a more prominent fixture in the luxury fashion ecosystem, offering a unique blend of affordability and brand aspiration.



VF Logo