Factory outlets suffer as consumers turn to online shopping

It’s a known fact now that physical retailers have been bearing the brunt of discounting strategies of online players. Now, even discounted factory outlets are seeing their customers move away owing to a wide branded selection at steep discounts offered by the ecommerce companies.

Megamart from Arvind Brands, known as discount store earlier, has now rebranded its stores to get rid of the 'discount format' image, while Bangalore-based discount-led garment chain Coupon was sold to Future group's discount format Brand Factory. Other discount chains such as The Loot and The Grab Store have pulled down shutters on stores that were once popular among the customers.

Discounted factory outlets that sprung up about a decade ago, succeeded in attracting a large number of new customers before the ecommerce boom happened. These outlets were then mainly used by companies offering discounts on merchandise two-three seasons old for those who could not afford branded wear.

Other reasons that led to the set-back of such factory outlets were lack of quality shopping environment and non-availability of product sizes. As per a Crisil report, as online shopping increases in the country, brick-and-mortar retailers are expected to see their growth rate moderate to 13-15 percent over the next two-three years from an annual average growth rate of 24 percent seen over the past five years.