Outlet Stores : Is it a benefit?

Who doesn’t love items on discount? 

Nowadays, there are malls dedicated for these ‘discount stores’ called outlets or outlet malls. The general idea is that there are stores with same items from the same brand, but at a cheaper, discounted price. Upside to having outlet stores is that a brand can increase their sales. Their products become more ‘accessible’ and affordable to the consumers who otherwise could not afford it.

However, the reason why these outlet stores exist is due to the fact that the prices are just relatively high for a certain brand, for example, Coach. Now that the same products are available for same price, the consumers with higher income sees less value in their products when they see consumers with lower income, such as teenagers, using the same products.

Les Wexner, CEO of Limited Brands, says “the outlet business is easy money, [but] discounting yourself is the beginning of the end…it’s hard to have a dual identity. Outlet doesn’t build a brand.” I couldn’t agree more with his statement.  The reason why this is so true relates to my previous argument. Coach was initially launched as a mid-luxury brand. And as with any sort of luxury brand, most consumers purchase luxury brand items to get social validation from peers, and also to portray that they are from a different social status. Making those items at a lower price defeats its entire purpose. At the end of the day, loyal Coach customers will continue purchasing the products but ultimately, Coach depreciates its name value and place in the luxury brand industry by increasing their outlet stores.

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