The concept of “Factory Outlets” was a brilliant one. For better or for worse, they are dying a rapid death thanks to the internet and the rise of “Flash Sales” in particular.
Originally, factory outlets were designed to sell 2nd-grade products directly to the public. The first known outlet store was Dexter Shoes. Founder Harold Alfond knew that not every shoe made at his factory was suitable to sell to distributors so he attached a store directly to his factory and opened it to the public in the 1960s. Since then, outlet malls and other retail settings offer companies a venue to sell last year’s lines, overstocked items, and (to a lesser extent) production mishap merchandise. It became big business in the 80s and 90s.
Now, it may be dying.
The rise of online retailers makes it challenging to operate brick and mortar businesses. Outlet stores and their lower margins are feeling the pressure from the internet. For the last couple of years, the growing trend towards using flash sales and daily deals to get rid of overstocked merchandise is cheaper and more effective than outlet stores. Many companies that have traditionally done will with outlet stores such as Nordstrom and Gap are starting to shift much of their merchandise into the growing online flash sale segment.
The infographic below by Monetate examines the growth of this industry and offers tips on how consumers can take better advantage of them. Click to enlarge.