Discount outlet expands as savvy shoppers expect savings Reply

By Daniella Doughan     

Discount stores: the popularity of factory outlets is here to stay.

Discount stores: the popularity of factory outlets is here to stay.

Homebush Direct Factory Outlets (DFO) is currently undergoing a $100 million renovation, with the first group of a new range of stores already open for business. The launch of stores like Armani Exchange, Diane von Furstenberg and Levi’s highlights the fact that Australians are eager to buy international brands at competitive prices.

Direct factory outlets include branded stores, usually clothing and footwear, selling items from last season, along with samples and seconds at reduced prices. The final renovation and expansion at Homebush will be completed by mid-2014 with the goal to become Sydney’s first combined retail and homemaker centre.

The growth and overhaul of this popular shopping centre makes sense – retail spending in Australia is increasing, with the latest February sales data from the Australian Bureau of Statistics showing spending is 4.6 per cent higher than a year ago.

Pjay Sao, the store manager of Sketchers footwear, believes customers are drawn to DFO because of the opportunity to nab a good deal.

“People are willing to travel here to get a bargain. I’ve had customers from country NSW and Newcastle. No-one wants to pay full price anymore, and the savings you make are worth the trip and the time spent rummaging through samples and seconds.”

Dr Gary Mortimer, a lecturer at the Queensland University of Technology’s business school, believes there are two things going on in the market at the moment.

“Retailers in shopping centres constantly have to be in promotion mode, so half yearly and Boxing Day sales have now expanded to four events a year because of pre-sales.”

This was particularly evident last year, when both Myer and David Jones began their year-end sales before Boxing Day and ran them all the way through January. “The second thing is that fashion consumers have become conscious that they don’t want to pay full prices because they don’t have to,” he says.

The factory-like appearance and setting of DFO, with industrial ceilings and cement floors, both reduces overheads and creates an atmosphere of low-cost, high-value shopping. Colonial First State Global Asset Management owns the Homebush centre and after making a $100 million investment, it is clearly optimistic about its future. Megan Atkins, retail marketing manager at Colonial, says, “People choose DFO because of the variety of high-end brands that are available at much lower prices.”

Professor Ian Phau, of Curtin University Business School, is not surprised at the large investment into DFO, but warns about online competition.

“Everything to do with an outlet retail environment is an investment. Outlet shopping will end up as another mode of shopping. Unless there are regulatory changes in curbing online shopping in Australia, I see this to be the biggest obstacle to outlet shopping.”

Bank officer Dianna Mitchell, 27, shops at DFO Homebush every three to six months. “The prices here are way cheaper. Online shopping also has good bargains but I’m scared of scammers and sometimes the product you get doesn’t match what you saw online.”

However, it is difficult to ignore the appeal of online shopping. The National Bank’s latest Online Retail Sales index shows that online sales have grown 27 per cent to total $13 billion for the 12 months to January 2013. At the moment, online sales as a percentage of total retail spending stand at 5.8 per cent.

With free and often same-day shipping, online shopping has advantages that will continue to challenge traditional bricks-and-mortar stores. Still, the popularity of factory outlet shopping is here to stay, with the Homebush expansion confirming Dr Mortimer’s view that “DFO will continue to prosper because the Australian consumer is seeking good brands, great fashion, and good prices”.

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