Originally conceived as a way to off-load discontinued, overstocked and defective merchandise, outlet stores and outlet malls have become a key retail channel over the past decade as consumers chase big discounts on name-brand items. But a growing number of investors believe the future of outlet shopping doesn’t involve cluttered big box stores on the outskirts of town—it’s online.
Many well-known shopping websites now have a prominently displayed “outlet” section, and there’s a growing number of online shopping clubs—sites that offer member discounts on everything from designer clothes to spa treatments—attracting the attention of early investors. European venture capital companies have sunk US$377 million into the sector in recent years, according to the Financial Times. That includes a US$220-million investment in France’s Vente-Privee three years ago and, in April, a US$135-million funding deal with U.S. buying club site Groupon. “This is no fad and the VC industry believes there is enough momentum still left to warrant further investment in the space,” wrote Mark McQueen, CEO of Toronto’s Wellington Financial, in a recent blog post. Consumers, it seems, just can’t resist a deal—particularly when there’s no need to drive a half-hour each way to get it.