Outlet Store Design

The growth of outlet merchandise as a sales category has led some retailers to create more store-within-a-store experiences and build independent, standalone stores.

Clearance Centers

Furniture retailers have always incorporated discount, closeout or clearance areas in their stores to offer shoppers damaged or returned goods at steeply discounted prices.

The category attracts bargain-hunters who may visit these areas on a regular basis just to see if any new deals are worthwhile. Many of these shoppers find that the hunt for a good deal is much more exciting if the transaction happens at a warehouse area located at the back of a store. And, over time, the demand for clearance goods and an increased supply of discontinued items encouraged retailers to create separate clearance spaces adjacent to their main warehouses. These areas generally displayed clearance items on an exposed concrete floor to keep that warehouse-feel but have added unique branding, graphics and colors as differentiators. Bold colors like red, orange, and yellow helped communicate the idea of bargain or discount.

Bargain Annex, Bargain Barn & Other Examples

A number of retailers that merchandise their stores at good, better and best price points are selling ‘good’ products in their outlet spaces.

Many furniture retailers are devoting additional resources to create larger and more effective outlet areas within their stores.

Tepperman’s: Tepperman’s, for example, built out a branded area they call the “Bargain Annex.” The name implies that it is an addition to the company’s main store. Branded yellow and blue, it screams discount! Approximately 20 percent of the store is allocated to this area separated from the rest of the store.

Boulevard Home: Boulevard Home developed a discount area known as the “Bargain Barn” colored in bright red with rough wood and other barn motifs. They also created a recognizable “Crazy Tony” farmer cartoon character to help sell the concept. Like Tepperman’s, Boulevard Home’s Bargain Barn has its own separate space occupying six to eight percent of each of their stores.

Kloss Furniture: Kloss Furniture’s “Outlet Center” is branded a signature yellow and red, ‘warning’ customers to not miss the deals represented in this area. However, unlike the other retailers, they don’t enclose the space. It’s kept open to the rest of the store, visible, even from the front entrance of the store. This way the floor space it occupies can expand and contract more easily, depending upon the amount of outlet product available. As Kloss Furniture continues to open new stores, the space allocated to their Outlet Centers grows larger.

Furniture Mall of Texas: Furniture Mall of Texas incorporates a new discount area across the back of their store. Named “The Outlet.” It has oversized presence and visibility, in large part due to the use of a signature orange color. This retailer has allocated over 7,000 square feet to this space that’s open to the rest of the store, separated by just a low wall.

Other Outlet Store Formats

Although the aforementioned companies are having success placing clearance centers within their stores, other retailers have moved towards outlet concepts pioneered by the fashion industry. Recognizable brands such as Saks Off Fifth, J. Crew Factory and Old Navy Outlet are examples. This concept has spread to the furniture industry with the introduction of Restoration Hardware and Crate & Barrel outlets. As used by these two brands, the term ‘outlet’ takes on an unconventional meaning. Instead of damaged or returned items, better quality goods are on display; typically last year’s styles are being offered at lower price points.

A number of retailers who merchandise their stores at better and best furniture price points are selling “good” products in their outlet spaces. Let’s imagine that a retailer named XYZ Furniture sells primarily “better” and “best” quality merchandise at one location. They also operate an Ashley Furniture store. The Ashley store satisfies customers seeking furnishings at the “good” end of the quality spectrum. But if XYZ Furniture didn’t operate an Ashley Furniture store, they might launch an outlet store instead to satisfy those customers searching for “good” merchandise that would otherwise be missed.

Standalone outlet stores, often with separate entrances and signage, are becoming increasingly popular.

Store Design Features

Outlet stores require separate marketing and branding strategies as well as clearly designated spaces. As was mentioned previously, standalone outlet stores, often with separate entrances and signage, are becoming increasingly popular. It has become typical for furniture retailers to allocate 15-20 percent of their floor space to the outlet areas within their stores. One of my retail clients, for example, is opening a new store in St. Louis that will reserve over 15,000 square feet for an outlet area, to compete more effectively with their competition at a lower price point. They also have plans to build a dedicated pick-up area to serve outlet customers. Some outlet areas within furniture stores have separate service and checkout areas.

Immediacy & Availability

Implicit in outlet store concepts are the following ideas: “available now,” “take as-is,” and “pick up today.” Current supply chain issues make this messaging powerful, especially when coupled with a lower pricing strategy to drive entry-level, price-sensitive customers into stores. And, If customers can’t find what they want in the outlet, then retailers have the option to more easily upgrade them to other home furnishings options.

Mathis Brothers has gone so far as to develop freestanding 12,000 to 15,000 square foot outlet stores. They’ve found that these stores are more successful when not attached to their regular stores. They’ve also created unique branding for these stores using a bright orange palette and simple pricing signage.

Product Categories

Outlets have evolved to carry all of the same merchandise categories that populate retailers’ regular stores, from bedrooms and living rooms, to mattresses, dining rooms and more. Some retailers have hired buyers who are tasked with just buying merchandise for their outlet areas or dedicated outlet stores.

Although many retailers find that destination outlet departments work best, others prefer to mix “clearance” items into their general store product areas. Instead of putting all discounted mattresses in their outlet store, for example, Mathis Brothers displays some of last year’s bed models in vertical racks within their regular stores’ mattress departments. A mattress in this rack, originally featured at $3,000, may cost closer to $1,500. They’ve found that some customers are more likely to buy discounted items set apart in this way than from a clearly delineated outlet space or from a freestanding outlet store.

Merchandising & Display Tips

Here are some characteristics of successful outlet and clearance centers:

• Outlet spaces tends to be stacked high with less room for maneuvering through the space. Successful outlet spaces are more densely packed than in regular stores.
• Warehouse racks are popular for stacking sofas.
• Carpeted platforms are useful for stacking case goods behind beds.
• Vertical racks are an easy way to display multiple mattresses.
• There are more individual pieces and fewer accessorized groupings.
• Discounted accessories, lamps and pillows are often grouped together on their own shelving displays in outlet centers.

Despite the packed nature of outlet spaces, it is important to make them easy to shop. Platforms and other stacked merchandise displays are worth using. Spaces need to be dynamic, interesting, and exciting so customers feel like they are finding a bargain or something unique. Creating this kind of energy in your space is what makes discount shopping fun.

Instead of putting all discounted mattresses in their Outlet, for example, Mathis Brothers displays last year’s bed models in vertical racks within their existing mattress departments.”