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More Luxury Customers at Outlet Malls

The recession is taking a toll on the business models of premium and luxury retailers. Faced with sales declines at their full-price stores, the retailers are lavishing more dollars and devotion on their outlets which are performing better than their traditional stores. Will this work, or will it backfire on the brands? [More…]

The recession is taking a toll on the business models of premium and luxury retailers.

According to the Los Angeles Times, faced with sales declines at their full-price stores, Neiman Marcus, Saks Fifth Avenue and Nordstrom are lavishing more dollars and devotion on their outlets which are performing better than their traditional stores.

According to Robert Wallstrom, president of Off 5th, Saks Inc.’s outlet division, “These days, customers are saying they want a brand, customer service and a deal.”

Outlets may just be the lifeboat needed by some of the brands to get through the current downturn, with the mix of the “real steal” deals to get the footfalls and the “just a little off the top” to get the margin. The current outlet stores are good enough to avoid severe damage to the brand.

However, a critical question does remain unanswered: once the consumer becomes used to shopping at a certain price level, might some brands struggle to move back up the curve?

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