October 15, 2010

No More Bargains??


The outlet concept took off in the 1970s, when VF (VFC), the world's biggest apparel maker, began letting shoppers rummage through cardboard boxes of its excess hosiery at its mills, says Linda Humphers, editor-in-chief of Value Retail News. About the same time, Nordstrom opened the first Rack in the basement of its Seattle flagship store to get rid of its leftover shoes. Outlet malls proliferated in the early 1990s. By 2008, the U.S. had almost 13,000 stores in outlet centers, and everyone from Anne Klein (JNY) to Kenneth Cole (KCP) to Elie Tahari had hopped on the trend.
This past week, I bought an amazing silk jacket (albeit missing a few buttons, which I will have to get replaced) from Oscar de la Renta for about 94% off of the manufacturer's suggested retail price. I found this bargain at a Neiman Marcus Last Call store in Austin, TX. These kinds of deals, however, will become increasingly rare, according to an article I just read today from Bloomberg Businessweek.

Entitled "Why Luxury Goods Are Scarce at Outlet Malls," the article examines in brief the conundrum facing discount retailers today - how to fill stores with discounted products worth buying when there are so many "off-price" retailers and retail outlets (including websites such as Bluefly and Gilt) to compete for the same remainders, luxury stores are cutting back on stock in general, and many outlet stores have cheaper merchandise specifically made for them instead of selling the same quality and designs that are offered at regular retail.
Not long ago, the upscale outlet was a secret weapon for fashionistas seeking leftover Dolce & Gabbana dresses at 75 percent off. Over 30 years ago, almost all the clothes at upscale outlets came from the main locations of tony retailers like Nordstrom (JWN). Now as little as 10 percent is made up of designer goods actually sold at upscale retail stores...At Saks' Off 5th stores, 10 percent to 20 percent of the merchandise is clearance from Saks' full-priced stores, about 20 percent is Off 5th store-label goods, and most of the rest is made for the chain by vendors, says spokeswoman Julia Bentley.
Takes away a bit of the magic, doesn't it? Knowing that 80 or 90% of the merchandise at these stores weren't actually marked down so much as just priced a little lower than the "suggested" retail price. Then what will happen to our outlet malls, discount stores, and sample sales? How will the American consumer face the new retail landscape....

All I know is that I'm not returning that Oscar jacket!

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