Jazzy factory outlets beckon the rich

Jazzy factory outlets beckon the rich
The Times of India

Bangalore: If you are passing through Marathahalli on a weekend, there’s a good chance you’ll spot somebody stepping down from a Mercedes Benz to shop at one of those numerous factory outlets on that road.

Mohit Karmakar (name changed) is an IT engineer with a six-figure salary who could easily afford a Rs 1,299-branded shirt. But he would rather drive 15 km to Marathahalli on a Sunday to pick up the same shirt at a 20-25 per cent discount. It doesn’t bother him that the shirt is part of last season’s collection.

Factory outlets no longer attract just the wallet-constrained riding a two-wheeler. They are emerging as a powerful shopping category, serving just about everybody. They are jazzing up, providing an ambience and service level that may not be what you see in a high-street store, but far better than the warehouse dumps they used to be.

“Earlier, factory outlets were a solution for leftovers. Now, it is a clear strategy to get people to experience the brand and eventually get them to graduate to the first quality (full price) product,” says Shumone Jaya Chatterjee, managing director of Levi Strauss India. There are many well-to-do who find Rs 2,500 for a pair of jeans or Rs 1,500 for a shirt too exorbitant. Factory outlets are expected to help transform that mindset.

This brand strategy is the reason why such outlets are upgrading, with airconditioning, trial rooms, interiors done as per the brand colours and visuals, products stocked neatly, no-stocking of defective products (only last season’s surpluses), wider range of products and allowing exchange.

Arvind Brands’ Megamart factory outlet chain was among the early ones to transform itself. Ashok Ranka, proprietor of Penny Wise, which runs a chain of franchise factory outlets for brands like Scullers, Dockers, Adidas and Nike, says his upgradations have helped raise the average bill amount to about Rs 1,200, up from Rs 450 four years ago. “Footfalls often go up to 1,000 a day on a weekend now,” he says.
Even in upgradation, the best is yet to come. Several malls, with the focus on factory outlets, are in the works.

In Bangalore, the Sigma Group is setting one up on the outer ring road near Marathahalli; the Prestige Group’s The Forum is doing a similar project in Whitefield. Both are expected to be ready in 2007.

Suresh Singaravelu, chief executive of The Forum, says the rapidly growing number of international brands coming into India has sharply increased the need for factory outlets, “and many of them want to be present in experiential locations like malls.”

The factory outlet concept is also spreading to a wider range of product categories. Luggage major Samsonite has one in Marathahalli. Ranka says he is trying to get music and cosmetic companies to set up such outlets.

For the brands, there is already some indication that their factory outlet strategy is paying off. Chatterjee of Levi’s says his Bangalore outlet’s product mix comprised 80 per cent close-outs and 20 per cent first quality garments two years ago, a proportion that is now 50:50. In other words, an increasing number of customers visiting factory outlets end up picking full price products.