Makers of high-end apparel and accessories should provide a shopping experience in such outlets that is comparable with their full-price stores, Value Retail Chairman Scott Malkin said in an interview last week in Paris.
“The notion of what’s acceptable as an experience is shifting” as consumers travel more and the Internet makes it easier to compare prices and services, Malkin said. “We’ve reached a tipping point.”
The shift comes as luxury brands such as Kering SA-owned Gucci prioritize refurbishing their full-price stores amid slowing sales. Revenue from discounted personal luxury goods, also known as off-price sales, surged 26 percent to 16 billion euros ($22 billion) last year on a constant currency basis, consultant Bain & Co. estimates.
Some companies don’t see why they should pay as much as 18 percent of sales to use Value Retail’s shopping centers in Europe, Malkin said. Growth in Europe will come from improving the shopping experience, not opening more outlets, he said.
“The brands don’t treat the outlet stores with respect,” said Malkin. “Many of them say, ‘just sell it and charge us as little as possible and send us the money.’”