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(Live Mint, 2015) The emergence of factory outlets and online

retail have allowed brands an extension of methods in luring


customers. Currently, The size of Indias retail industry is estimated
at Rs12 trillion in sales. Out of which, Rs 55,000 crore comes from
sales of branded products. And 45% of such products are sold during
discount sales or through factory outlets, which offer a 15-40%
discount through the year. These factory outlets are primarily used
to sell unsold merchandise and to expand their reach and make their
products more accessible to customers. and as the quantum of this
ratio goes up so will this concept, as explained by Pumas decision to
open maintain a ratio of 25 retail outlets to 2 factory outlets

(Retail dive, 2015) Shoppers regard price of a good as a factor in a


purchase, it states that foreign shoppers are wary of the quality of
goods from outlets other than Brand retail outlets and hence prefer
to purchase goods irrespective of the price, and as such regard
quality and the latest trends as the number one priority. In the last
decade these shift have also been apparent among the locals as
factors such as an over-stored industry, extreme weather and
persistent traffic headwinds in the locations where these outlets are
located have impacted the sales and this segment is moving
towards online retailers who too employ a two-way distribution
channel

(GopalKrishnan, 2013) Despite several challenges, today the


Indian retail sector is growing rapidly and many international brands
are thriving in the Indian market by finding solutions around these
challenges. Changes are seen in the footwear retail scenario, scope
for further change and growth is certainly rapid in the footwear and
accessories industry in India. The Indian footwear is poised for
growth.

(Customer Retention Strategies for Online Retailers, 2015)


There are various factors that influence customer intention to
continue purchasing from organized retail store. Both dedication-
based relationship, maintenance and constraint based relationship
maintenance had a significant influence on customer continuous
intention. Organized retailers should take steps towards improving
convenience and enjoyment for customers in making purchases as
well as provide various loyalty incentives to encourage purchase
from the store.

(BuzzFeed) Factory Outlets are making their way from the side of
interstate highways into good old-fashioned shopping malls. It is a
good way to drum up business in less desirable and struggling malls.
Express factory outlet chains are able to get more traffic and
business to the stores by converting them to an factory outlet. The
article also says that factory outlets generally trick the customer
into thinking that they're getting last seasons product where in
reality they're getting a cheaper version of the same product. They
also cut down pricing by minor tweaks such as slow shipping and
adjusting the packaging. Broadly,Americans are hungry for labels at
a discounts which is leading to the success of factory outlets and
rapid rise of the off price chains. Turning regular stores into factory
outlets attracts lower-income and discount hunting customers which
helps in generating more revenue to maintain the store for longer
periods and also preserving its overall brand status.

(Bloomberg, 2016) High end department stores are moving into a


slump, high end retailers such as Neiman Marcus and
Bloomingdales, outlet stores may outnumber traditional locations.
Saks and Nordstrom have already started doing it and 60% of the
Saks locations are outlets now and plans to open more discount
stress in two years. Nordstrom meanwhile has 127 Rack outlets
and plans to open more by the end of the year. This strategy is a
simple way to attract bargain-hunters who cant afford the full-line
stuff, but they still desire the brand.. Price differentiation is a proven
business strategy, the people who are willing to pay higher price
cannot switch to cheaper options. The outlets physically separate
buyers and also let the flagship store to sell the goods without
slashing the prices and condition affluent customers to wait for
discounts. The discount stores are more profitable than the retail
hubs and expense to maintain them are relatively lower which
increases the revenue.

(Economic Times, 2015; Nber, 2015) The article highlights the


changing scenario of the retail market as brands such as Arvind and
Brand factory are considering shutting down operations due to the
emergence of E-commerce. While the boom in factory outlets was
poised a decade ago, with brands opening up large scale outlets
with the aim of selling old stock, comprising around 5-10% of their
stocks. Ideally some brands such as Nike and Adidas specifically
manufacture 50-60% of their goods for this model, in India it is used
just as means to eliminate leftover stock. Moreover, analysts predict
the growth rate of brand to be just moderate around 13-15% which
is a severe drop from the 24% witnessed over the past 5 years.

(Nber, 2015) A paper by Yi Quan discusses the impact the opening


of a factory store has on the the demand of the retailers other
channels. It is possible that a factory store may damage a retailer's
brand image lead customers away from its higher quality core
channels. Alternatively, the opening of a factory store may have
positive effects as it may attract new buyers and serve as a form of
brand advertising. However, an experiment conducted in the study
shows that introduction of the factory store led to substantial
positive spillovers to the core channels that lasted for multiple
years. Customers purchase more items from the higher priced,
higher quality channels after the factory store is opened. These
positive spillovers represent approximately 17% of all of the
incremental sales that result from the factory store opening (the
other 83% are contributed by sales in the factory store itself).

(Emerald Insight, 2015)The paper compares customers'


perceptions of factory outlet stores[FOS] versus traditional
department stores[TDS],and their purchasing preferences, related to
demographic profiles. According to this research four key factors
exert critical influences on customers' perceptions: in-store
customer service, brand images, physical features and price and
promotions than TDS, which in turn have competitive advantages in
terms of the other three factors. Gender, education and income also
affect store choice, but age has no discernible effect on perception
of the two types of outlets

(Customer Retention Strategies for Online Retailers, 2015)


The work provides brands are able to attain profit maximization
through consumer spending. Few tips mentioned include;
Comparison of prices to check if youre actually getting the discount.
Recognition that the product purchased looks new and undamaged,
and the changes in the quality of materials used, informative
dialogue between consumer and store on distinction between
made-for-outlet merchandise and regular retail merchandise, and
enquiry about return policies as many regular stores refuse returns,
factory outlets primarily display this.

Works Cited
(2015). Retrieved from Live Mint:
http://www.livemint.com/Companies/nCQEpgxJ5LqaQKYr4FRVJM/Factory-
outlets-help-retailers-raise-brand-awareness-sell-m.html
(2015). Retrieved from Retail dive: http://www.retaildive.com/news/report-
outlet-mall-traffic-rises-to-two-year-high/424955/
(2015). Retrieved from Emerald Insight:
http://www.emeraldinsight.com/doi/abs/10.1108/02634500810847165
(2016). Retrieved from Bloomberg:
http://www.bloomberg.com/news/articles/2013-07-16/why-outlet-stores-
are-the-hottest-thing-in-high-end-retail
(2015). Retrieved from Consumer.ftc:
https://www.consumer.ftc.gov/blog/outlet-shopping-getting-your-moneys-
worth
(2015). Retrieved from Economic Times:
http://economictimes.indiatimes.com/industry/services/retail/factory-
outlets-are-finding-the-going-tough-with-shoppers-hooked-to-online-
shopping-due-to-higher-discounts/articleshow/49097409.cms
(2015). Retrieved from Nber: http://www.nber.org/papers/w19176.pdf
GopalKrishnan, R. (2013). Footwear Retailing .
Customer Retention Strategies for Online Retailers. (2015). The ICFAI
University journal of marketing management VOL VII no.2 .
(n.d.). Retrieved from BuzzFeed: https://www.buzzfeed.com/sapna/outlet-
stores-are-making-their-way-into-regular-malls