Luxury Retailers Feel the Economic Squeeze & Find Relief at Outlet Stores

In my previous post, I discussed three midpriced retailers eyeing the luxury market as a way to boost revenue and profits. How will luxury retailers react? Maybe luxury retailers won't even notice since they have their eye on another prize. As mentioned in today' WSJ.com article, "Luxury Retailers Pin Hopes on Outlets", luxury retailers are also looking for alternative channels to increase their bottom line. Perhaps they have found relief with outlet stores?

Profit Margins

Although outlet stores might sound promising at first glance, luxury retailers do need to be careful. Sales might increase with new business, but they need to monitor profit margins as outlet store profit margins tend to be less than that of luxury retailers.

Full-priced stores

What about full-priced stores? Luxury retailers also need to be careful that their outlet stores do not cannibalize their full-priced stores.