Outlet Malls Bucked the Shift to Online. Until Now.

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From The Wall Street Journal:

Outlet stores had long been immune to pressures weighing on traditional malls, including the shift to online shopping that has sapped customers from physical stores.

Shoppers often were willing to trek miles to outlet centers, located far away because brands didn’t want their reduced-priced goods to be too close to their full-priced stores. For that reason, outlet merchandise, typically last season’s goods sold at steep discounts, hasn’t been widely available online. Until now.

Simon Property Group Inc., one of the largest mall owners, in conjunction with Rue Gilt Groupe, which operates flash-sale websites, has launched shoppremiumoutlets.com, where brands from Vince to Under Armour offer their outlet goods for sale online. It is one of the first curated websites to feature merchandise from outlet stores.

Simon Chief Executive David Simon said he isn’t worried the website will siphon shoppers away from his company’s outlet malls, which include Woodbury Commons Premium Outlets, a sprawling complex in Central Valley, N.Y., with 250 stores ranging from Gucci to Nike that does more than $1.4 billion in annual sales.

“When you can’t make that trip to Woodbury, knowing you can get outlet pricing online makes sense,” he said. “We think the two will feed off each other to generate higher sales.”

Outlet stores were long a source of growth for retailers, which have been hard hit by the shift to online shopping and competition from startups. Shoppers flocked to these centers for bargains they couldn’t traditionally get at malls, but now outlets are showing the same signs of stress as traditional stores.

. . . .

“The proposition of driving (typically) much further distances to get to an outlet center seems that much less attractive,” Paul Lejuez, a Citi analyst, wrote in a recent research note.

. . . .

Outlet retailers are among the last to venture online, in part because some of these chains are high-end and don’t want consumers to be able to easily search the internet for discounts that could tarnish their brand.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)