Two major retail outlet stores – Nordstrom Rack and Saks Off 5th have recently announced plans to increase the number of stores in North America, highlighting the booming demand for designer labels at affordable prices. Both store concepts are known for their deep discounts on fashionable, often designer apparel and accessories, bringing upscale garb to the closets of women all over America.

Nordstrom Rack expects to open 82 stores over the next few years to reach 230 stores by 2016, while Off 5th will open approximately 70 stores over the next five years – 45 in the US and 25 in Canada. Furthermore, Nordstrom also just launched therack.com, finally bringing its popular outlet store to life online.

Adding more stores to the current retail landscape will appeal to many shoppers, primarily women and will likely increase competition among other discount stores, namely TJ Maxx and Marshalls. According to Mintel’s Dollar and Discount Store Retailing – US report, some 61% of discount store shoppers have purchased clothing at a discount store in the past 12 months, while 43% have purchased footwear and 39% have purchased accessories – three core categories among these retail outlet stores. Among female discount store shoppers aged 18-34 these percentages are significantly higher: 73% have purchased clothing, 58% purchased footwear and 56% have purchased accessories.

While young women are likely the primary target for retail outlet stores, men should not be ignored.  More than one-quarter of men aged 18-34 who have shopped at a discount store in the past 12 months say that during that time period they have recently started shopping at this type of store. Some 70% of men in this age group have purchased clothing at a discount store and more than half have purchased footwear at a discount store.

Given that many consumers make these types of discount stores and outlet malls “destination shopping”, even traveling to different cities in order to shop there, adding more locations (and in Nordstrom Rack’s case, a shoppable website) to expand the reach to new and existing shoppers should be a boon to these retailers. Ensuring that product mix is updated regularly will foster the “treasure hunt” aspect of these stores and encourage greater shopping frequency.

Ali Lipson is a Senior Analyst with Mintel specializing in Retail and Apparel. With over 10 years of experience, Ali is an expert at identifying and analyzing retail and consumer trends and providing actionable insights to clients.

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