A huge warehouse selling surplus, second and out-dated stocks is what you see in a factory outlet. Factory outlets sell excess or previous stocks at reduced prices. Retailers today are utilising the concept of factory outlets via franchise route. To know
The old merchandise in retail stores gives way to new merchandise at the end of every season. Offloading the out-dated goods from retail stores, making an inroad for new merchandise, retailers are increasingly opting for factory outlets. Franchising these factory outlets is however, serving the two way purpose of these retailers: one the old merchandise is sold off at discounted prices, second high benefits generated through franchising these outlets.
Emergence of factory outlets
Selling off the damaged or outdated products has always been a nerve-wrecking task for a retailer. However, the retailers can liquefy their obsolete products on discounts to those consumers who want to get branded stuff at reasonable rates. And to get benefited from it, some smart entrepreneurs have started franchising their factory outlets. This article gives an insight of how franchising a factory outlet can be a profitable idea.
Elaborating on the concept of factory outlets NP Singh, Director, Samsonite says, “Factory outlets keep only the liquidated products. These products are not in regular line and through the concept of factory outlets; we flush them out off the system to create space for the latest products.”
Franchising has further added to the concept of factory outlet.. Through franchise route, franchisor not just makes profit for himself but also provide an opportunity to the aspiring entrepreneurs to join hands and gain a fair share of the pie.
EBOs / MBOs versus factory outlets
Opening of a franchised factory outlet is not that easy as opening an Exclusive Brand Outlet or a Multi Brand Outlet. This is because of the following reasons:
Who can take up the franchise of a factory outlet?
The eligibility criteria for selecting a franchisee for a factory outlet are quite similar to that of a normal outlet. The investment is almost same as required in opening an EBO. For instance, Samsonite requires an investment of Rs 15 lakh for taking up the franchise of a factory outlet. As per Singh, “We look for people from any background, as the location is an important thing, and necessary for the success of the factory outlets.”
Steps to success
Besides the location, there are other factors that contribute towards the successful operations of a franchised factory outlet. These include competition, stocks update and pilferage.
In nutshell, the idea of franchising the factory outlets is the best way to flush out the unwanted stock, while at the same time upgrade the profit margin.