16 Oct

The factory outlet concept spreads in Dubai

Dubai: The concept of a stand-alone “factory outlet” is coming up right to Dubai’s city centre. The first ‘brands4u’ store — set across 20,000 square feet — opens Tuesday at Reef Mall in Deira and next to the Salahuddin Metro Station. Being designated a factory outlet, the store will sell off-season branded merchandise at 40-70 per cent off all year round.

The factory outlet concept has come of age in the UAE, with Dubai featuring two dedicated shopping destinations — Dubai Outlet Mall, on the Dubai-Al Ain highway, and The Outlet Village in Jebel Ali.

“Now, more mall operators in the UAE are willing to house stand-alone factory outlets even though they themselves are not branded as such,” said Vijay Samyani, managing director of brands4u.

“Following the launch at Reef Mall, we are working on similar stand-alone stores in some of the other emirates. The second one could open in Abu Dhabi before the end of the year itself.

“It’s not the case that the entire mall must operate on a “outlet” status. Any shopping destination that has access to a sizeable traffic is enough to get an outlet concept going. Also, we are quite hopeful that Reef Mall can bring about further changes.”

If so, the spread of a factory store concept is a sign of the times. At a time when the broader retail sector has taken a growth hit, retailers and brands need careful management of their unsold inventory.

“As per local regulations, there are limits on the number of in-store sales promotions a retailer can run in a year,” said Samyani.

“What we do is take on those off-season merchandise directly from the retailer and sell them through our own store. We have the flexibility to set the discounted prices on these stocks.”

The first store cost Dh15 million to set up, including for the stocks on display. If the retailer manages to maintain a certain frequency in clearing the stocks, it could make for a smooth operation.

This is where the choice of Reef Mall is vital. The immediate neighbourhood and proximity to the Metro station can draw in optimum traffic to the store. The retailer is also stocking up on merchandise that plays well to the needs of value-conscious shoppers.

“Apparel will be the biggest mover, making up a likely 40 per cent, and followed by fragrances and accessories,” said Samyani. “Even at the off-season — it could be one or more seasons old — their pricing still leaves us with a decent margin.

“We’ve had brand principals who do not have an exposure here asking us to retail some of their merchandise. But on any brand that has representation here, we will prefer to go through the designated retailer.”

Samyani’s holding company, Concept, also organises the Big Brands Carnival, which offers an off-season clearance platform for a certain number of days each year. The concept was launched in Dubai and has since been taken to other cities.

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