- Facebook/The Limited
Outlet stores are taking over malls.
The Limited is the latest brand to convert several mall stores to outlets, Racked reports.
These stores, several of which have already opened, are called Backroom at The Limited.
Unlike Limited Outlet stores, which are typically located at outdoor outlet malls, these stores will be located inside full-price shopping malls.
The Limited did not immediately respond to Business Insider’s request for comment.
A number of other retailers are also launching or expanding their off-price brands.
J. Crew, for example, launched its off-price Mercantile brand this past summer.
At the time, former retail executive Doug Stephens, who runs the blog The Retail Prophet, explained how it was a grave mistake.
“One only has to look as far as brands like Coach or Michael Kors to see the dangerous opiate that off-price distribution can become,” Stephens told Business Insider. “The volume outlet malls promise is compelling but the collateral damage to the brand – particularly among loyal full-price customers – is often next to irreparable.”
When customers get used to finding discounts on a certain brand’s products, it begins to erode that brand’s premium positioning. In other words, customers aren’t willing to pay full price anymore.
And J. Crew hasn’t just launched a lower-priced brand – it’s also running excessive promotions in full-price stores, practically rendering itself a discount retailer. (Interestingly, a cursory look through The Limited’s Facebook page also shows a recent history of incessant discounting).
This is happening with some of America’s most-loved department stores, too.
Nordstrom’s rapid expansion of its off-price store Rack has pushed it further away from being an aspirational store. Rack now has more stores than Nordstrom, and the company plans to open another 300 Rack stores by 2020.
Macy’s has been opening off-price Backstage stores, which sells apparel discounted up to 80% of its original price. The chain is also adding Backstage collections to its full-prices stores as sales continue to plummet.
“We are seeing continued weakness in consumer spending levels for apparel and related categories,”Terry J. Lundgren, the chairman and CEO of Macy’s, said in a statement.
Meanwhile, malls are struggling as it is to survive, and when anchor department stores – like Macy’s or JCPenney – shutter, it makes it even more difficult for a mall to stay open.