Walls Come Down Around Retail Outlet Stores

Walls between outlet stores and full price stores are coming down. Chains are beginning to put outlet stores near their mainline stores and are considering putting full price stores in outlet malls.

Retail stores are desperate for growth, and outlet stores offer a rare bright spot in the market. Saks Fifth Avenue and Neiman Marcus are two stores following this strategy in major markets like New York, Dallas, Houston and New Orleans. Retailers believe there is low risk due to the notion that there is little crossover between outlet customers and mainline customers. Between 2004 and 2013, distance between outlet stores and full-priced stores decreased from 100 miles to 30 miles. With more outlet malls opening in metropolitan areas, outlet centers are becoming more accessible.

Outlet centers are also becoming popular, but some retailers believe moving the two types of stores closer could delude the brand by “cutting off [their] own water.” Having stores too close together can create cannibalism between the two brands. Since Coach has opened more outlet stores, their full price sales per square feet have fallen 27 percent since 2012. The growth in the outlet sector is also a contributing factor to the increased pressure on retailers’ sales and profits. Despite objections, retailers are moving forward with the plan to open more outlet stores close to their full-priced stores.

 

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Nick Banks

Nick created Front Street Commercial Real Estate Group in 2002 and spent the first eight years developing and acquiring office and retail projects in South Florida as well as North Central Florida. In 2010 the focus of the firm was shifted to primarily serve third party clients and perform brokerage, property management and mortgage banking functions. Nick has personally developed and acquired nearly 200,000 square feet of office and retail properties in markets throughout Florida. Prior to founding Front Street, Nick was the Director of Finance and Dispositions for Stiles Corporation in Fort Lauderdale where he financed and sold over $500 million in commercial real estate. Before joining Stiles, Nick was an Associate Director at GE Capital Real Estate where he sourced over $200 million in financing throughout Florida. Nick is a graduate of the University of Florida with a degree in Finance and a concentration in Real Estate. He serves as a board member and current vice-chair for the United Way of North Central Florida where he also chairs the Development Committee. Nick is actively involved with the Gainesville Area Chamber of Commerce where he serves as a board member and committee member for the Council for Economic Outreach. He is also a recent graduate of Leadership Gainesville which is a year long leadership program hosted by the Chamber. He is a member of Grace United Methodist Church where he has served as finance chair and as a member of the leadership council. Nick serves as an advisory board member of the University of Florida Bergstrom Center for Real Estate Studies. Nick was recently named chair of the Gainesville committee for the North Florida chapter of Urban Land Institute (ULI). He is a licensed real estate broker in the State of Florida and is a long time member of the International Council of Shopping Centers.

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