Is It Difficult To Implement The "Outlets" Business Model In China?

For now outlet In terms of domestic development——

1. Number of stores opened. At present, there are more than 500 large outlets in the world, 300 in the United States and more than 100 in Europe, but only more than 10 in China;

2. Store size. U.S.A The outlets of Outlets are large in scale, covering many middle and high-end clothing brands. However, the outlets of Outlets in China are mainly for middle and low-end brands, and there are few high-end luxury brands;

3. Development form. The outlets in Europe and the United States are not simply "tail distribution channels", but essentially a means of "channel price discrimination". They attract "price sensitive brand followers" with a price reduction of 2-5%. Part of the sales are off season tail goods, but still part of the sales are seasonal products, accounting for more than 40% of the total sales of some businesses; However, China's development has not reached this level, and even many Chinese outlets have become "second dealers", buying from other stores and selling at lower prices.

I did not have a particularly thorough analysis of the history of the development of Outlets abroad, so I can only discuss it from a conceptual perspective. For the time being, we regard outlets as the realization channel of "brand channel price discrimination sales strategy".

Then we can see that the period of rapid development of outlets in the United States was from the 1970s to the 1990s, which was the period of development and maturity of new American brands. Mature brands are marked by the cultural concept and lifestyle concept they promote, loyal consumer groups, clear recognition of their value, and premium ability based on cultural identity.

The domestic "brand" has not yet developed to this stage. There are two kinds of domestic brands. One is low-end mass brands, which have high recognition but can not make premium. For example, ESprit and Li Ning ; One is the fake middle and high-end brands whose clothing is heavily dependent on the pricing ability of the business premises. For example, a large number of fake middle and high-end brands have little brand recognition, and they rely entirely on the premium ability of high-end venues.

If these two brands are placed in Outlets, because there is no clear price standard line in consumers' minds, it will not create the feeling of "cheap and affordable". There is no way to talk about the differentiated competitive advantage of Outlets.

In other words, the premise for establishing an effective outlets format is that a large number of brands can form a stable price baseline in the minds of consumers. Then price discrimination can be realized through differentiated channels.

In China, foreign popular brands led by Nike have opened a large number of factory stores, which is actually a small single outlets, because Nike has formed a stable brand premium ability and price benchmark.

However, for many domestic brands, either consumers' awareness is not clear (so they need to open in Hang Lung Xinguang, depending on the place premium), or they often discount themselves, and consumers simply do not know how much to sell. What's more, if we can't form a high psychological awareness, we can rely on money pooling to form sales ability, so natural consumers will not have loyalty.

In general, overseas outlets mainly realize channel price discrimination by reducing the price of middle and high-end brands with their own pricing ability to the middle level, while domestic middle and high-end brands have no such ability at all.

However, foreign brands with real premium ability are still in the stage of channel development and brand promotion in China, and have not yet "anchored" the benchmark price. It is impossible to discount at this time, otherwise consumers will be confused and hurt the potential value of the brand. Therefore, the time to vigorously develop outlets in China is not really ripe.

Q&A:

Q: Is the "Outlets" model difficult to implement in China?

　　A：

　　 Background:

Shopping malls and outlets are both forms of retail business, and are also imported from the United States. Their emergence and development have gone through a century of commercial changes. Their development is inseparable from the development of the whole society. Commerce, industry, urbanization, cultural background and other factors play a very important role. In short, they are American. To take an inappropriate example, just like the Soviet model, we cannot copy it. Be flexible.

{page_break}

　　 Concept introduction:

At the beginning, Outlets should be called Factory Outlet Store, which means smooth goods center or factory direct sales. These stores are usually set up near the factory or simply in the factory warehouse to deal with the factory's tail goods.

Later, many factories set up such direct sales centers together and gradually developed into a new type of Shopping Mall. At this time, their business form has changed substantially.

First, suppliers have developed from a single commodity factory in the past to a specialized supply channel involving commodity factories, brand owners, brand agents, brand wholesalers and even large department stores.

Secondly, the functions are more complete and leisure shopping is integrated. Finally, we began to pay attention to the shopping environment and close to the city. Therefore, this kind of direct marketing center has gradually developed into a large or super large shopping center. A new retail format -- Outlets was formed. Outlets' main consumer groups are 18-35 years old consumers with rising purchasing power.

　　 Why do Outlets have such differences in characteristics between China and the United States

In the United States, young groups with rising purchasing power are more likely to have their own means of transportation - cars. In China, consumers of the same age group have difficulty owning a car. It has been said that this is related to its automobile industry. Therefore, Outlets in the United States can be located in suburban areas with well-developed transportation.

However, China's shopping malls, hypermarkets, outlets, specialty stores, large supermarkets, etc. can only nest in the center of the city and rely on the urban public transport system to bring people, and the traffic congestion during peak hours is unbearable. Another reason is that the rent in the central city is relatively expensive and the ability to rent is poor, while the rent in the suburbs is low and the ability to rent is strong.

There are many famous brands abroad, but few in China. It is easier for overseas Outlets to carry out brand combination than domestic Outlets. There is no advantage in China.

In terms of size, the Mall in China is generally located in the city center, and the commercial size is generally less than 10W, so the capacity to attract tourists is insufficient. The volume determines the combination mode and proportion of all business types in mall. The size also determines the comfort of consumption. I have said more than once in Zhihu about other real estate issues - the narrow, closed and centralized business environment has passed, and the era of open space is coming, because it can give consumers a better consumption experience.

Price: This is a direct result of the supply of goods. Domestic outlets supply ① private brands, generally some larger or chain stores do this; ② Buy out business directly from agents; ③ Buying out the management right from the manufacturer is costly and risky; ④ The management and operation party has no actual control over the brand that is independently entered through the open investment invitation of the rental shop, which has many disadvantages.

The channel supply of goods source is difficult, so the brand goods described by the title are uneven. The other is tax. Therefore, in terms of price, the advantages of domestic outlets are weak. To put it bluntly, more outlets are not true. Therefore, the purchasing power of many well managed domestic outlets is also considerable.

The problem of parking lots has always been a concern of domestic commercial real estate. Many short-sighted developers don't care what they can do in the later period, they only care about the size of the saleable business area. The parking lot was compressed and compressed. Traffic jams and scarce parking spaces will drain consumers.

The management and operation can not be mastered by going abroad for investigation, taking notes and photos. The domestic team has a long way to go in this regard.

　 Features of Outlets in the true sense:

The appearance of Outlets commercial format must require brand manufacturers to reach a certain scale of operation, and must require a considerable number of out of season or off shelf goods in the market. Only in this way can a special sales place be urgently needed to digest these goods.

Only when consumers have a deep understanding and recognition ability of commodities and their brands can Outlets business have a living space. Because only when consumers' sense of rational consumption is gradually improved and strengthened, they have a wide understanding and recognition of "brand", and the consensus of most consumers is that "cheap but not fake", people will urgently need the emergence of Outlets shopping centers that "sell famous brands, trust, high-quality and low-cost".

　 Summary:

Outlets is not difficult to do in China, just because our overall environment cannot meet the requirements of this type of business. In the future, with the continuous maturity of business and all aspects, Outlets will also rise in China.