Saks brings the outlet to your living room
The days of driving hours to an outlet mall could soon be a thing of the past for many Americans, as they can now shop at many off-price stores from the comfort of their living room.
More and more major outlet stores are going online—and it could create new headwinds for the nation's biggest department and discount stores just in time for the holidays.
Saks Fifth Avenue is the latest luxury retailer to take its outlet online. It launched Saksoff5th.com this fall, joining Nordstrom Rack, Neiman Marcus Last Call and even TJ Maxx and Century 21, both of which advertise designer merchandise at low prices online.
"We didn't want to miss another holiday season," said Robert Wallstrom, president of Off Fifth at Saks Fifth Avenue, which launched the site in just six months.
"What we are seeing from customers is that everyone wants a deal," he said. "When the economy is good, they want one, and when the economy is challenged, they need one. The customer at Off Fifth wants great merchandise, but they also want a great deal."
Off Fifth buys most of its apparel and accessories directly from vendors that are on trend for the season.
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Backed with the Saks brand, which implies luxury, the site is shaping up to be another go-to place for shoppers looking for better value. That could come at a cost to retailers such as Macy's, J.C. Penney and Kohl's.
The outlets of high-end retailers appear to be wooing consumers away from traditional department stores. Wallstrom said that is where he's seeing the No. 1 crossover.
Liz Dunn, consumer sector senior analyst at Macquarie Capital, is following the trend.
"The perception is pretty strong that [outlets] offer a better value," Dunn said. "I think that off-price channels will continue to gain market share."
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As Nordstrom Rack and Off Fifth grow their online assortments, this could become even more true, according to Dunn.
Still, she said, there will always be consumers too impatient to search through a clutter of sales. Outlet websites don't always have a full range of sizes in each style; even if they do, shoppers perceive that department stores will have a larger selection and that merchandise will be organized better and more attractively.
So rather than putting a nail in the coffin of traditional department stores, outlet websites could be a bigger threat to the number of shoppers traveling to the malls—and outlets.
Dunn expressed concern that we're reaching a tipping point in the availability of goods outside malls that is dragging down store traffic.
Online offerings have been putting pressure on store traffic for a while. Analytics firm ShopperTrak expects consumers to visit fewer stores this holiday season, with traffic estimated to fall 1.4 percent even as sales are forecast to rise.
—By CNBC's Stephanie Landsman. Follow her on Twitter @StephLandsman.