Now Trending: Department Store's New Outlet Malls

Back in April I read this article about the over-saturation of outlet malls in the U.S.  Historically, outlet malls were cheap real estate space compared to the traditional mall retail space.  As this graph below shows though this is no longer the case.

Now at this point, you are probably asking yourself how does this relate to internet marketing?  The answer is simple.  With the rising retail space cost and growing popularity of online shopping major department stores are now planting their outlet stores on the World Wide Web in addition to their traditional physical outlet store fronts.  In the near future, I would have to imagine the popularity (and profitability) of the online storefront will take center stage for major department stores such as Nordstrom's and Neiman Marcus. 

To me this is a very interesting trend.  The outlet malls have existed for decades but the major department stores never participated in this arena.  I would assume because they wanted to maintain their 'exclusivity' feel.  It has become apparent though that with the growing outlet rental space cost, this WWW retail space has become a revenue area that is too large for the department stores to ignore.  They are no longer above selling their products in this area and as a-matter-of-fact they have decided to jump into the pool head first by creating physical outlet store fronts as well as online outlet store fronts. 

Nordstrom's Rack and Neiman Marcus Last Call are the stores major outlets now.  

     

From what I can tell both companies are selling exactly the products that are sold in their flagship stores.  It will be interesting to listen to future quarterly conference calls to hear what percentage of revenues these store fronts are generating for these two companies.  If these are the exact products I think these stores are going to a major advantage over a number of retail clothing companies such as J.Crew.  The reason is because while J.Crew also has physical and online outlet store fronts they are offering lesser grade products made specifically for the outlet environment.  To me this is alright if you are willing to sacrifice quality but I personally believe that lessens quality of the product in the flagship stores and hurts the brands perception from it's customers.  

This latest trend seen in the online marketing world is just another example of the power of the online shopping experience and online marketing!