PITTSBURGH — Off-price retailing owes a nod to the basement below Filene’s, a Boston department store that figured out a way in the early 1900s to get rid of excess inventory at a discount in a stripped-down space below the fancy sales floors upstairs.
And it’s a strategy an increasing number of retailers are buying into as they hunt for sales growth. Rather than fear that discounted dresses and jackets will taint a hard-won classy image, stores are embracing the connection.
Earlier this year, Macy’s revealed plans to expand its growing Bloomingdale’s Outlet chain in Manhattan, putting the 14 locations for the 4-year-old chain in the midst of the same urban market served by the flagship Bloomingdale’s department store.
Macy’s executives also revealed they’re piloting an off-price concept for Macy’s.
“One of the things we’ve found with the Bloomingdale’s Outlet business — initially we were nervous about putting one of the Bloomingdale’s Outlets too close to a Bloomingdale’s store,” said Karen M. Hoguet, Macy’s chief financial officer, told analysts on a February conference call.
“What we found is it served as an entry point for the customer. And instead of taking business away from the base Bloomingdale’s store, we actually brought new customers who learned and got comfortable with Bloomingdale’s from the outlet experience.”
Americans are inveterate bargain-hunters and the Great Recession did nothing to alleviate that. Britt Beemer, chairman and chief executive of retail consulting firm America’s Research Group in Charleston, South Carolina, said consumers tend to think they’ll “save money” at Target or Walmart but they’ll “spend money” at the mall, he said.
In 2000, about 38 percent of customers stopped in a traditional mall once a month, but that share started falling after Sept. 11, 2001. Now only 20 percent of Americans may make it there monthly, Beemer said. “What you’re seeing today is there is a certain consumer group that never goes to a mall,” he said.
The outlet route also has proved useful. In its most recent fiscal year, Nordstrom sales at its full-line stores open at least a year — an industry benchmark known as same-store sales — slipped 0.5 percent. Same-store sales at its Rack stores rose 3.8 percent over the same period.
