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Growth Trends: Outlets vs. Malls

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Posted on May 20, 2014 in Blog By Was Group

The past decade has seen growth levels in traditional mall development stagnate, while the development of outlet shopping centers has significantly increased. What has caused the shift in the market, and how can savvy entrepreneurs best position themselves for success in this market?

Shifts in Consumer Disposable Income

There have been two distinct trends which have caused outlets to be more appealing to shoppers. The first comes from the increasing distance between consumers who are focused on ‘quality at any cost’ and consumers that are looking for the best prices. Retailers advertise sales all the time, and big box stores offer goods at very low prices. Middle-of-the-road shops have a shrinking audience, as people tend towards one extreme or the other. Either they want it cheap so they go to an outlet shopping center, or they’re willing to pay top dollar for the best products.

The second significant trend has been the effect on consumer spending of the recession of the past six years. Reduced disposable income and the tightening of purse strings that comes with fear of future hardships have pushed shoppers toward the deals. Outlet shopping centers are where the deals are waiting.

Shifts in the Image of the Outlet

Outlets are also experiencing an image renaissance. An outlet used to be a place where those who couldn’t afford the real thing would shop. But today, outlets, and buying at a discount in general, are considered to be the savvy option. Who pays full price? “Smart shoppers” are shoppers who find a deal and take advantage of it. This shift in image has clearly benefitted outlet shopping centers.

Where Will the Money Go?

Developers and investors are forced to pay attention to these trends. A brand new mall with brand name shops and big department stores is not the shopping magnate it used to be. Today, an outlet shopping center is simply more likely to draw shoppers. And big name businesses are now willing to allow one of their own outlets to be much closer to their main shops than used to be acceptable. Retailers who want to take advantage of every dollar that a consumer is willing to spend are better off giving consumers the chance to shop at an outlet. 

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