Although many retailers are shuttering stores as more consumers head online to shop, the outlet store remains a destination for the value-centric consumer. In fact, average outlet center sales reached $546 per square foot in 2015, compared to $532 per square foot in 2013, according to data from the International Council of Shopping Centers (ICSC). Within that same time period, the total global leasable area these centers hold jumped from 79 million to 83.5 million square feet.
Tanger Outlets has reaped the benefits of this boom. The outlet mall operator has an aggressive growth plan that coincides with the vertical’s projected one-million-square-foot expansion by 2018.
In pursuit of its own expansion goals, the mall operator has:
Achieved an occupancy rate in excess of 95% for the 35th consecutive year, which is consistent with the North American industry average;
Opened four new properties in 2015, in Savannah, Ga., Mashantucket, Conn., Grand Rapids, Mich. and Southaven, Miss.; and
Is set to open two more outlets in 2016 in Columbus, Ohio and Daytona Beach, Fla.
Steve Tanger, CEO of Tanger Outlets, indicated that the company is on track to open “one to two new centers every year for the next few years.
“Outlets have become a key channel for most established brands alongside their flagship, department store and e-Commerce distribution channels,” Tanger added in an interview with Retail TouchPoints. “Just as every other channel has evolved to become a more engaging and entertaining destination for guests to spend time — so too has the outlet center.”
While outlet stores have their roots in selling off excess inventory, more retailers want to offer them as alternatives to the typical brick-and-mortar experience.
“Consumers today invest more in experiences, so we’re seeing brick-and-mortar benefitting from this trend,” Tanger said. “Increasingly, we are seeing shoppers come out to our centers not only for great products at low prices, but also to seek an enjoyable shopping experience with friends and family. E-Commerce sites simply cannot offer the same shopping experience that a physical retail location can.”
Outlet stores may wind up taking up some of the consumer time, and the real estate space, formerly occupied by shopping malls, which have experienced declining traffic over the past decade. While malls traditionally have been home to the most popular brands in retail, outlet stores also boast a wide assortment of brands. With the majority of merchandise in these stores being offered at discount prices, consumers have yet another reason to make outlets a preferred shopping location.
As more consumers seek out brand name products at a greater value, Tanger remains “optimistic” about the growth prospects of the company, as well as the rest of the outlet vertical.
“Value has always been a priority for shoppers and with the weight of the economy on their minds today, value-conscious consumers are continuing to drive growth in the off-price sector,” Tanger concluded. “We anticipate that this trend will continue to benefit outlets and off-price retailers because of the value proposition that we are able to offer our customers.”