People who work in both real estate and retail depend on sales for their livelihood. In real estate, however, consumers who are looking for a home are probably about to make the biggest purchase of their lives. They want the best and they want value. Real estate prices span the same extremes as the social structure of society. The majority of the home buying population isn't made up of that small percentage of very wealthy people. Likewise, the majority of the retail customers are not shopping at luxury stores.
The economy has decimated sales for luxury retailers. Many have resorted to extreme measures to remain viable. A story in the August 10, 2013 edition of the Christian Science Monitor addressed the fact that many designer brands are opening stores in outlet malls. The number of high end stores and designers that are moving to outlets is growing quickly because the market for luxury retail is shrinking. Outlet stores that sell designer brands are selling them at huge discounts.
Nordstrom Rack has been around for a while, and even the luxury New York City retailer Saks Fifth Avenue has an outlet called Saks OFF FIFTH. Hudson's Bay, the company that now owns Lord & Taylor, is in the process of purchasing Saks Fifth Avenue. Nieman Marcus introduced Nieman Marcus Last Call in 2010. Last Call offers even cheaper prices than the Nieman outlet stores.
Saks has more outlet stores than it does full service stores. There are 67 outlet stores spread out across 26 states, but only 41 of the company's full service stores remain. Additionally, it plans to open 25 outlets in Canada.
Retailers are realizing that outlet or discount stores are driving sales, and if they want to remain viable or sell anything, they must keep pace with what consumers demand. Since outlet stores bring in $17 billion in sales, it isn't surprising that luxury brands would want a piece of this market. The most popular tourist destination for foreigners visiting the United States is factory outlets or outlet malls.
So, what can real estate agents and brokers learn from these trends in retail? Is your business setup to offer multiple marketing services or level of service based on price? Are your agents focused on areas of the market that are selling or are they focused on the highest priced listings in your market area? After all real estate is a transactional business. Just like retail your real estate business needs the proper inventory and the right location. Ask yourself, what can I learn from these retailers and am I positioned correctly.