Brands and Discount Stores: An Unbeatable Combination for Strategic Growth

Brands and Discount Stores: An Unbeatable Combination for Strategic Growth
By: Emily Sanchez | August 28, 2023 | Reading Time: 6 minutes

The conventional belief is that high-end brands and discount stores are opposites. High-end brands are synonymous with luxury, exclusivity, and premium pricing, while discount retailers are associated with affordability, accessibility, and mass-market appeal. However, a closer look reveals a strategic and symbiotic relationship between these seemingly contradictory forces. 

The discount retail market has shown impressive, steady growth with substantial gains forecasted.  According to VMR  Research, in 2022, the market size was valued at an astounding USD 510.09 Billion. However, this figure is just a glimpse of the sector’s remarkable potential. Anticipated growth indicates that the market is poised to expand even further, with an estimated value of USD 834.74 Billion by the year 2030. This growth is driven by a robust Compound Annual Growth Rate (CAGR) of 5.35% from 2023 to 2030.

How Discount Stores Boost High-End Brand Success

There are many reasons in addition to the high growth rate why high-end brands find it advantageous to sell their products through discount stores.  Some of the benefits this arrangement offers to both parties include:

Access to a Wider Consumer Base

A primary incentive for high-end brands to collaborate with discount retailers is unparalleled access to a vast, diverse consumer base. Discount retailers reach swaths of the population who typically do not shop at luxury boutiques. By partnering with discount retailers, luxury brands can tap into these untapped markets and connect with customers they may have otherwise missed.

consumer based

Boosting Brand Exposure and Awareness:

Discount stores are often located in high-traffic areas and have a strong online presence. These factors contribute to increased brand visibility and exposure for high-end brands that choose to partner with them. Consumers who may not have encountered the luxury brand elsewhere are now introduced to it through the discount store’s platform. This heightened exposure can create a ripple effect, sparking interest among potential customers who may later consider purchasing from the brand’s flagship stores or official channels.

Brand Visibility and Awareness

Liquidation of Excess Inventory:

Seasonal fluctuations, overproduction, or changing consumer preferences can leave high-end brands with surplus inventory. Discount stores provide a valuable channel for inventory liquidation without damaging the brand’s reputation by directly engaging in heavy markdowns. The discounted pricing offered through these stores allows luxury brands to clear inventory discreetly while still maintaining the perception of exclusivity in their primary sales channels.

Market Testing and Consumer Insights

Collaborating with discount stores also allows high-end brands to gather crucial consumer insights and conduct market testing. These stores serve as testing grounds for new product lines, allowing luxury brands to evaluate demand and gather feedback before making more significant investments. The data obtained from discount retail sales can shape future strategies and help high-end brands refine their offerings to better meet consumer preferences.

Capturing Aspirational Consumers

Many consumers aspire to own products from high-end brands, but the premium pricing may be beyond their current means. By offering a limited selection of products at discounted prices through discount stores, luxury brands can cater to this aspirational segment, fostering brand loyalty and creating future customers as their economic circumstances improve.

Counteracting Counterfeits and Gray Market Sales

Luxury brands often face challenges with counterfeit products and unauthorized gray market sales. By partnering with reputable discount stores, they can divert potential customers away from fake or unauthorized channels. Customers can feel more confident that they are purchasing genuine products from trusted stores, thus preserving the brand’s image and authenticity.

Mutual Growth and Synergy

The collaboration between high-end brands and discount stores is not a one-sided affair. For discount stores, having luxury products in their inventory elevates their image, attracts new customers seeking premium products at discounted prices, and differentiates them from other bargain-only stores. This mutually beneficial relationship allows both parties to leverage each other’s strengths for growth and expansion.

excess inventory

Strategic Partnerships and Co-Branding

Collaborating with discount stores can present opportunities for high-end brands to form strategic partnerships and engage in co-branding initiatives. For instance, exclusive collections explicitly designed for the discount retailer can drive excitement and attract new customers. Such collaborations can create a buzz around the brand and help it stand out in a competitive marketplace.

Generating Cash Flow and Reaching Budget-Conscious Consumers

Collaborating with discount stores can be a strategic move for high-end brands looking to generate immediate cash flow. When the economic climate is uncertain or when facing financial challenges, selling products at lower price points through discount stores allows high-end brands to maintain operations and invest in research, development, and marketing efforts.

Revenue Generation

Discount Stores with High-End Brands

Here are some discount stores known for occasionally carrying high-end brands:

  • TJ Maxx and Marshalls: These are sister companies owned by TJX Companies. They offer a wide range of designer and premium brands across various categories, including fashion, accessories, home decor, and more. Shoppers can find significant discounts on luxury items compared to their original retail prices.
  • Nordstrom Rack: As the off-price division of Nordstrom, Nordstrom Rack carries a diverse selection of designer clothing, shoes, accessories, and home goods. They offer significant discounts on premium brands found at their full-priced Nordstrom stores.
  • Saks Off 5th: Owned by the Saks Fifth Avenue luxury department store, Saks Off 5th offers designer and premium brands at discounted prices. It’s a go-to destination for fashion-forward shoppers seeking high-quality items at reduced rates.
  • Neiman Marcus Last Call: As the outlet division of Neiman Marcus, Last Call offers discounted luxury and premium brands across multiple categories, including apparel, shoes, handbags, and more.
  • Century 21: This New York-based department store is known for offering high-end designer brands at discounted prices. It has a diverse selection of fashion, accessories, beauty, and home goods.
  • Bloomingdale’s Outlet: Bloomingdale’s, a well-known upscale department store, has outlet locations where shoppers can find premium brands at discounted rates.
  • Off-White™ Outlet: Some luxury brands, like Off-White™, have opened their outlet stores or online outlets where they offer discounted products from previous collections.
  • Burlington: Known for its wide range of discounted products, Burlington occasionally carries high-end brands in clothing, accessories, and home goods.
  • Ross Dress for Less: While not exclusively focused on high-end brands, Ross occasionally carries some luxury items at discounted prices.
  • Gilt: An online retailer specializing in flash sales of high-end fashion and luxury goods.
  • HauteLook: Another online retailer offering time-limited sales events on designer brands.

Common Types Of Discount Stores

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Which high-end brands sell at discount stores?

We have already explored the various reasons why high-end and luxury brands continue to sell inventory through discount stores. This trend shows no signs of slowing down, and it underscores the importance of a well-thought-out strategy when leveraging discount channels.

For luxury brands, finding the right balance between catering to value-conscious consumers and upholding their premium brand image is crucial. By maintaining a clear distinction between their regular boutiques and outlet locations and executing a strategic approach, selling discounted products becomes a highly viable means to achieve their business objectives.

It’s one thing to understand the benefits of high-end brands selling at discount stores, but it’s another thing to see these high-end and exclusive brands on the shelves at discount stores. Here is the list of some luxury brands that have been spotted at discount retailers:

Ralph LaurenMichael KorsCalvin Klein
Tommy HilfigerCoachKate Spade New York
BurberryGucciPrada
VersaceJimmy ChooArmani
FendiMarc JacobsAlexander McQueen
ValentinoDolce & GabbanaBalenciaga
GivenchySaint Laurent (Yves Saint Laurent)Hugo Boss
Bottega VenetaTory BurchSalvatore Ferragamo
Christian LouboutinStella McCartneyMissoni
MoschinoLanvinBalmain
Vivienne WestwoodMiu MiuDiane von Furstenberg
Vera WangOscar de la RentaAlberta Ferretti
Paul SmithHelmut LangKenzo
Thom BrownePhilipp PleinRag & Bone
CélineChloéLoewe
Emilio PucciErmenegildo ZegnaMoncler

Frequently Asked Questions

What are the advantages of high-end brands collaborating with discount stores?

High-end brands partnering with discount stores can unlock numerous benefits. These collaborations bridge the gap between luxury and savings, providing shoppers with designer goods at more affordable prices. By leveraging the strategic allure of discount outlets like Saks, Gilt, and Nordstrom Rack, brands can elevate their exposure, expand their market share, and boost their revenue without compromising on quality.

How do discount stores offer luxury brands at reduced prices?

Discount stores like TJ Maxx, Nordstrom Rack, and Saks Off 5th curate selections of high-end brands’ products, often through closeout deals, clearances, and unique partnerships.

Are luxury brands sacrificing their exclusivity by selling through discount stores?

No, luxury brands strategically collaborate with discount stores to expand their reach while maintaining exclusivity through limited offerings and separate retail channels.

Why are high-end brands partnering with discount stores?

High-end brands partner with discount stores to access a wider consumer base, boost brand exposure, liquidate overstock inventory, gather consumer insights, and more. It’s a strategic move that offers benefits for both parties.

Do discount stores only carry low-end brands?

No, many discount stores like TJ Maxx, Marshalls, Nordstrom Rack, and Saks Off 5th are known for carrying high-end and designer brands at discounted prices.

Conclusion

The presence of luxury brands in discount retail spaces reflects the constantly shifting dynamics of the retail industry. While selling discounted products may seem counterintuitive for prestigious brands, this strategy has proven effective for accessing wider audiences and adapting to changing consumer behaviors.

In the ever-evolving retail landscape, Overstock Trader’s services prove invaluable. This platform provides a helping hand to distribution channels in need of new product sources. By leveraging its extensive network and LinkedIn group, Overstock Trader opens doors that may have been previously inaccessible.