Factory outlets back in vogue for retailers

BANGALORE: Factory outlets, that were relegated to city fringes, have now become central to retailers��� strategy, as they look to sell excess stock and woo the price-conscious buyers. Retailers have been quick to hop on to the trend of multiplying factory outlets, even as they have truncated their high-street expansion plans.

United Colors of Benetton, which is aggressively rolling out stores, is adding about 10-12 factory outlets this fiscal. ���We have only 15 factory outlets and it is a reality that we need more to flush out unsold inventory. With retail seeing lower store footfalls, this segment could get a fillip among brands,��� said managing director Sanjeev Mohanty.

Prestige Estates, which runs the upscale Forum mall in Bangalore, is launching its value mall, which will house factory outlets, in city suburb Whitefield in June 2009. The group plans to replicate the experience of Marathahalli, Bangalore���s factory outlet district, in the comfort of a mall, said Prestige chairman Irfan Razak.
This mall will see marquee names like Tommy Hilfiger and Puma open their third factory outlets in the country. Hilfiger already has two factory outlets in Gangtok, Sikkim and Hyderabad, while Puma has two in Bangalore.

���International business practice calls for the opening of one factory outlet for every 5-6 stores. It is also a means of reaching out to the consumer who may have not walked into our full-priced stores,��� said Tommy Hilfiger India CEO Shailesh Chaturvedi.

Against end-of-season sales, factory outlets serve to liquidate seconds, unsold merchandise or even surplus stock ��� that brands don���t want to discount within their stores ��� on a year-long basis. Factory outlets, selling at 30-40% discount, are typically located in the outskirts of metros.

The present buying sentiment may see factory outlets register a better churn than before, as consumers are looking for the same brands and quality, but have lesser money to shell out, according to Technopak associate vice-president (retail & consumer goods) Baqar Naqvi.

While Arvind���s value retail venture Megamart was focused on retailing only on its own brands earlier, the large format stores now caters to over 200 other brands, including those of Madura Garments and Levi���s. ���Several brands depend on us, as our store ambience is better than their exclusive factory outlets. Much of this stems from the need for brands to plan their merchandise nearly 6-7 months in advance. Since the current economic scenario has seen expansion plans of brands being revised and non-profitable stores folded up, many have opted for discounted avenues to liquidate stock,��� said Arvind Brands & Retail CEO J Suresh.

Primus Retail CEO Balaji Bhat, however, feels that since factory outlets are a function of the full-priced stores, the cautious expansion of stores this fiscal will see the factory outlets expansion slowing down. Primus is the master franchisee for Levi���s, Nike and Adidas.