July 30, 2012
Outlet Stores to Give Full Price Retailers the Bronx Cheer
A retail estate developer reportedly plans to build the first factory outlet mall in the Bronx, also marking the first such retail complex in New York City.
The one million-square-foot property acquired by The Lightstone Group at the Whitestone Multiplex Cinemas site in the Castle Hill section of the Bronx is about 11 miles from midtown Manhattan. Lightstone, which manages outlet malls in Washington, Orlando, FL, and San Antonio would not comment on the rumored outlet mall until plans are finalized. Locals may also object to the development, given the traffic it may bring to three nearby roadways: Interstate 95, the Bruckner Expressway and the Cross Bronx Expressway.
But Marlene Cintron, president of the Bronx Overall Economic Development Corp., told Crain’s NY that Lightstone "purchased the property with the purpose of turning it into a Woodbury Commons-type outlet mall" and Bronx officials had been briefed on the plan.
The outlet mall would join a surge of retail development reshaping the borough. Prestige Properties is building a $300 million suburban-style shopping center, the Mall at Bay Plaza, near Co-op City featuring Macy’s as one of its anchors. A new Target is also opening near the Lightstone site. Ms. Cintron told The New York Times, "The Bronx is finally being recognized as a retail haven."
The potential opening comes as outlet malls have been opening closer and closer to urban centers over the last two decades. When they first came on the scene in the eighties, most opened at least 50 miles from regional malls or near tourist areas like Vegas or Orlando to minimize the competitive threat to full-priced mainstream and luxury department stores at regional malls. Neiman’s, Nordstrom and Saks all have concepts aimed at outlet shoppers, and even Macy’s has recently opened up a few stores near outlet centers.
The Times article particularly explored how the opening would affect the popular Woodbury Common Premium Outlets, which sits 48 miles north of Midtown Manhattan and draws more than 12 million shoppers a year. Several locals and tourists indicated they were more than willing to take the shorter jaunt to the Bronx.
"Love J-Lo, very fashionable," Tammy Bevcar, an operations manager in her 40s from Toronto, told the Times. "I would definitely go."
- In the Bronx, Plans for an Outlet Mall Offering High Fashion at a Discount – The New York Times
- Bronx site could become city’s first outlet mall – Crain’s New York
- Bigger is Better for Outlet Malls – National Real Estate Investor
- Is it more difficult to build than announce an outlet center? – Factory Outlet Insiders
- Macy’s to Open in an Outlet Mall Across the Street from Six Flags – Chicago.racked.com
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Discussion Questions
Discussion Questions: What are the pros and cons of factory outlet centers opening closer to urban centers? Is the blurring of off-price and full-price shopping channels healthy in the long run for retail?
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Consumers are looking for bargains. Outlet centers sometimes offer them. There are enough ways to differentiate the products sold at outlet malls from the ones in full-price shopping channels that this should not have a negative impact on retail.
Retailers cannot remain stagnant if they want to remain in business. Outlet stores are one way to adapt. If positioned properly, they can get consumers to trade up to the higher-priced stores.
Of course this changes the landscape somewhat, but at the end of the day, if your a brick and mortar, do you want to compete with something you can see or the internet that you can’t?
Outlet centers have not been what the original outlet center concept was for some time. They have simply become a price channel. In some cases one can get the same merchandiser that full price stores carry at lower prices. In many other cases, they are bringing in special product of lower quality to simply sell in these off price channels. Neither alternative is good for long-term retail.
The fact that they are moving closer to urban centers only confirms what outlet centers have evolved into.
Outlet malls used to be where overstocks, end-of-season, etc. merchandise was sold. Today, much of the merchandise found at theses malls was created specifically for the outlet class of trade.
While they are still competition for the consumer dollar, they are not selling the same merchandise and shoppers know that. Yes they are going to have an impact, but by bringing more people into the area, they may actually help the existing retail rather than put them out of business.
I recently visited the Woodbury Commons Outlet Mall. The depth of product and the low prices of the merchandise at the retailers I visited were incredible, but for the most part service was non-existent. Obviously, the people who get on buses with empty suitcase to scarf up the bargains don’t give a hoot if an associate assists them in the fitting room. They’re happy to do the work themselves for the discount. But, make no mistake — retailers pay for the service they render either in margin or payroll cost.
Discounting on the surface seems like a win-win for everyone involved. The customer gets high-end brands dirt cheap and the retailer doesn’t have to deal with hiring, training, and paying those pesky associates. On the surface it appears that the brand is gaining share, but in the long run, is this the best strategy for the typical luxury brand?
What makes these people get on the bus with empty suitcases to begin with? The prospect of scoring a high end brand for a bargain! But, what does it do for the customer who pays full retail for the same product? The customer who makes the product aspirational to begin with? It makes them feel used and foolish in most cases. One thing I know about people who can afford to pay full retail for luxury items; they don’t like to feel used and foolish!
So while discount malls can be a good place for luxury retailers to sell off excess inventory or last season’s losers, they better be careful not to dilute their brands to the point that they run off the full retail customers who make their brands aspirational in the first place.
Pros: Consumer has a choice. The tax base will expand as property tax will be collected from the mall operator. Con: Current retailers now have to worry about more than the internet. Current retailers may lose employees to outlet stores, which may have better pay packages as they are often national companies.
It’s America, this is called competition.
Why shouldn’t outlet centers be in urban areas? Perhaps the original siting in remote areas really was “to minimize the competitive threat to full-priced mainstream and luxury department stores at regional malls,” or maybe it was the fact — or just the image — of low-overhead, but that phase seems to have ended long ago. (Indeed, maybe the question really should be why aren’t they ALL near urban centers … after all, that’s where people live).
As for the channel blurring, yesterday I was going thru some newspapers from the early 1960s, and was surprised — and bemused — to see ads for furs from both Sears and Ward’s. What a nice simple world it must have been then, of aspirational shopping and clearly defined progress. Today, muskrat from Ward’s, in a few years fox from Capwell’s, and finally, full-length mink from George Benioff … most people never made it that far, of course, and maybe everyone didn’t really aspire quite as neatly as I’m imagining, but the contrast to today couldn’t be much clearer.
As many have already pointed out, no one is able to define with any certainty exactly what an “outlet” store is, though low price is one thing most would agree with. Putting retail-branded low price stores a 20 or 30 minute subway ride away (about the same by chauffeured limousine, by the way) from the fashion avenues of midtown Manhattan will just increase the emphasis retailers must place on price at the expense of customer service, shopping experience, ambiance, etc.
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Consumers are looking for bargains. Outlet centers sometimes offer them. There are enough ways to differentiate the products sold at outlet malls from the ones in full-price shopping channels that this should not have a negative impact on retail.
Retailers cannot remain stagnant if they want to remain in business. Outlet stores are one way to adapt. If positioned properly, they can get consumers to trade up to the higher-priced stores.
Of course this changes the landscape somewhat, but at the end of the day, if your a brick and mortar, do you want to compete with something you can see or the internet that you can’t?
Outlet centers have not been what the original outlet center concept was for some time. They have simply become a price channel. In some cases one can get the same merchandiser that full price stores carry at lower prices. In many other cases, they are bringing in special product of lower quality to simply sell in these off price channels. Neither alternative is good for long-term retail.
The fact that they are moving closer to urban centers only confirms what outlet centers have evolved into.
Outlet malls used to be where overstocks, end-of-season, etc. merchandise was sold. Today, much of the merchandise found at theses malls was created specifically for the outlet class of trade.
While they are still competition for the consumer dollar, they are not selling the same merchandise and shoppers know that. Yes they are going to have an impact, but by bringing more people into the area, they may actually help the existing retail rather than put them out of business.
I recently visited the Woodbury Commons Outlet Mall. The depth of product and the low prices of the merchandise at the retailers I visited were incredible, but for the most part service was non-existent. Obviously, the people who get on buses with empty suitcase to scarf up the bargains don’t give a hoot if an associate assists them in the fitting room. They’re happy to do the work themselves for the discount. But, make no mistake — retailers pay for the service they render either in margin or payroll cost.
Discounting on the surface seems like a win-win for everyone involved. The customer gets high-end brands dirt cheap and the retailer doesn’t have to deal with hiring, training, and paying those pesky associates. On the surface it appears that the brand is gaining share, but in the long run, is this the best strategy for the typical luxury brand?
What makes these people get on the bus with empty suitcases to begin with? The prospect of scoring a high end brand for a bargain! But, what does it do for the customer who pays full retail for the same product? The customer who makes the product aspirational to begin with? It makes them feel used and foolish in most cases. One thing I know about people who can afford to pay full retail for luxury items; they don’t like to feel used and foolish!
So while discount malls can be a good place for luxury retailers to sell off excess inventory or last season’s losers, they better be careful not to dilute their brands to the point that they run off the full retail customers who make their brands aspirational in the first place.
Pros: Consumer has a choice. The tax base will expand as property tax will be collected from the mall operator. Con: Current retailers now have to worry about more than the internet. Current retailers may lose employees to outlet stores, which may have better pay packages as they are often national companies.
It’s America, this is called competition.
Why shouldn’t outlet centers be in urban areas? Perhaps the original siting in remote areas really was “to minimize the competitive threat to full-priced mainstream and luxury department stores at regional malls,” or maybe it was the fact — or just the image — of low-overhead, but that phase seems to have ended long ago. (Indeed, maybe the question really should be why aren’t they ALL near urban centers … after all, that’s where people live).
As for the channel blurring, yesterday I was going thru some newspapers from the early 1960s, and was surprised — and bemused — to see ads for furs from both Sears and Ward’s. What a nice simple world it must have been then, of aspirational shopping and clearly defined progress. Today, muskrat from Ward’s, in a few years fox from Capwell’s, and finally, full-length mink from George Benioff … most people never made it that far, of course, and maybe everyone didn’t really aspire quite as neatly as I’m imagining, but the contrast to today couldn’t be much clearer.
As many have already pointed out, no one is able to define with any certainty exactly what an “outlet” store is, though low price is one thing most would agree with. Putting retail-branded low price stores a 20 or 30 minute subway ride away (about the same by chauffeured limousine, by the way) from the fashion avenues of midtown Manhattan will just increase the emphasis retailers must place on price at the expense of customer service, shopping experience, ambiance, etc.