In recent times, outlet stores and malls have become a focal point for luxury brands, marking a shift in their traditional stance. While some luxury giants like Louis Vuitton, Hermès, and Chanel have chosen to steer clear of outlet ventures altogether, others, such as Prada and Gucci, maintain a discreet presence in this arena.
The relationship between luxury brands and outlets has been complex. Brands like Coach and Ralph Lauren once heavily relied on outlets for sales but later scaled back due to concerns over brand image deterioration stemming from excessive discounting.
However, amid shifts in consumer behavior prompted by the pandemic, surging inflation rates, and disruptions in the supply chain, luxury brands, both established and emerging, are reevaluating the role of outlets within the luxury distribution network.
A Growing Trend Since 2021, outlet sales for luxury goods have surged by 35%, rising from $37 billion to $50 billion. This surge positions outlets as the fastest-growing segment within the personal luxury goods market, which is valued at $387 billion (€362 billion) according to Bain & Company.
It’s important to note that while outlets have experienced substantial growth, they still represent a smaller fraction of the market compared to dominant channels such as monobrand boutiques and online sales, which together account for 56% of the market. However, outlets have outpaced these channels in growth, reflecting a changing consumer landscape.
Notably, the luxury travel retail channel, which faced significant challenges due to the pandemic, saw a decline from $18 billion to $15 billion between 2019 and the present. This decline underscores the resilience of outlet malls amidst broader market fluctuations.
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