Ever wondered how outlet stores offer such huge discounts on brand-name products?
Most shoppers love outlet stores for their bargain prices, but from a business perspective, they serve a much bigger purpose. These stores help brands sell extra inventory, discontinued items, and factory seconds without hurting their main retail business.
Maybe you’re a retailer looking to clear out excess stock, or you want to start a business that focuses on selling discounted products. If you understand how it works, opening an outlet store can be a smart and profitable venture.
This blog will show you the ins and outs of how to open an outlet store and help you find success.
What makes an outlet store different from a retail store?
At first glance, an outlet store might seem like just another retail shop, but there are some main differences –
- Pricing: Outlet stores offer consistent discounts, usually between 25% to 70% off retail prices, while regular retail stores only run sales occasionally.
- Inventory: Instead of selling the latest collections, outlet stores focus on excess stock, discontinued items, and slightly imperfect products in great condition.
- Customer Experience: Traditional retail stores focus on a polished, high-end shopping experience, while outlet stores attract bargain hunters looking for the best deal rather than a luxury experience.
In short, outlet stores help brands sell more products while giving customers a chance to shop for high-quality goods at lower prices—a win-win situation.
1. Developing a Business Plan
Starting an outlet store is an exciting opportunity, but like any business, success doesn’t happen by chance. A well-thought-out business plan is your roadmap to success—it helps you understand the market, define your niche, and set clear goals.
Without it, you might end up with too much inventory, the wrong products, or pricing that doesn’t attract customers.
Market Research
The first step to creating a business plan is to understand the market, which means you need to figure out who your customers are, what they’re looking for, and how you can position yourself to stand out.
Ask questions like “Who are my potential customers?“, “What type of products are they interested in?“, and “Where do they currently shop?” to help you determine if there’s enough demand for an outlet store in your chosen location (or online).
You also need to study your competition to figure out how to differentiate your store. With this research, you may be able to offer a better return policy, faster shipping, or a unique selection of hard-to-find brands.
The goal is to carve out your own space in the outlet market.
Define Your Niche
Once you understand the market and competition, it’s time to narrow down what your outlet store will specialize in.
Ask yourself: “What do I know best?“, “What’s in demand in my target market?“, “What’s easy to source and sell?“. After choosing a niche, find out what’s trending and what your customers want, for example –
- If you’re targeting budget-conscious shoppers, focus on big discounts on everyday essentials.
- If you want to attract brand-conscious buyers, carry designer outlet items at a fraction of retail price.
- If your audience is eco-conscious, focus on sustainable and second-hand items.
Set Goals and Objectives
To set clear goals and measure progress, you need to figure out a clear timeline. Here’s a short list to figure out your roadmap –
- Short-term goals (0-6 Months) include launching your store, generating x number of sales, building an audience on social media, and testing different pricing plans.
- Long-term goals (6 Months to 2 Years) will push you to think bigger like expanding your inventory, opening new branches, and building relationships with manufacturers.
You also need to establish key performance indicators (KPIs). Some useful KPIs for an outlet store include Sales Volume, Customer Retention Rate, Profit Margins, Inventory Turnout Rate, and Website Traffic.
2. Securing Financing
Opening an outlet store is an exciting venture, but before you can welcome customers, you need to secure financing. Let’s break down some key financial considerations.
Estimating Startup Costs
First things first—how much money do you need to get started? Here are some main expenses to consider –
- Leasing a space – Rent varies based on location and size, so research your area thoroughly.
- Renovations & setup – You might need to update the interior, install shelving, or improve lighting.
- Inventory – This will likely be your biggest upfront cost. Factor in bulk purchases, seasonal stock, and storage.
- Staffing – Salaries, training, and benefits add up quickly, even if you start small.
- Marketing – Signage, social media ads, grand opening promotions—getting the word out takes investment.
Exploring Funding Options
Once you know your startup costs, the next step is finding the right way to finance them. If you have savings, you can invest your own money, but this comes with the risk of depleting personal funds.
Bank loans are another option, offering structured financing, but they typically require good credit and collateral. If you prefer external backing, investors can provide funding in exchange for equity or a share of profits.
Crowdfunding platforms like Kickstarter or GoFundMe also allow you to raise money from the public, which can be a great way to generate interest in your store while securing capital.
Creating a Financial Plan
Once you’ve secured financing, you need a plan to manage it, which includes –
- Budgeting – Outline how much you’ll spend on rent, payroll, inventory, and other essentials.
- Financial projections – Estimate your revenue and expenses for the first year. When will you break even?
- Contingency funds – Set aside some emergency cash for unexpected costs.
3. Choosing the Right Location
Picking the perfect location for your outlet store is one of the most important decisions you’ll make. A great location can drive sales, while a bad one can make business tough.
Let’s look at how to find the right location for your outlet store.
Factors to Consider
When choosing a location, think about foot traffic—are there enough potential customers passing by? Areas near malls, shopping centers, or busy streets often work well. Accessibility is another major factor.
Parking availability is also crucial, especially if your store is in a suburban area. Lastly, look for nearby businesses that complement yours.
Understanding Zoning Laws and Regulations
Before signing a lease, make sure your store complies with local zoning laws. Some areas may have restrictions on retail businesses, operating hours, or signage.
Check with the local government or zoning office to ensure there are no surprises later. You should also review any required permits or licenses to operate legally.
Negotiating Lease Agreements
Once you’ve found the perfect spot, it’s time to negotiate the lease. Pay attention to the rental cost, lease duration, and any hidden fees, such as maintenance charges or property taxes.
It’s also smart to clarify responsibilities—who covers repairs and maintenance? If possible, consult a real estate attorney or lease expert before signing anything.
4. Establishing Relationships with Suppliers
A successful outlet store needs a steady supply of quality products at the right price. That’s why building strong relationships with reliable suppliers is crucial.
Identifying Reliable Suppliers
The first step is finding suppliers that offer quality products suitable for an outlet store. Look for wholesalers, manufacturers, or liquidation companies that specialize in discounted or surplus inventory.
Research their reputation, read reviews, and, if possible, request samples before committing.
Negotiating Terms
Once you’ve found potential suppliers, it’s time to discuss terms that work for both sides. Here are some tips to help you cover all bases –
- Discuss pricing structures to ensure you get competitive wholesale rates.
- Negotiate flexible payment terms, such as net 30 or 60, to manage cash flow effectively.
- Set clear expectations for delivery schedules to avoid inventory shortages.
- Understand return policies—some suppliers may not accept returns on discounted goods.
5. Setting Up Your Store
Once you’ve secured financing, found the right location, and stocked up on inventory, it’s time to set up your store. Here’s what you need to focus on.
Store Layout and Design
Arrange products strategically, placing high-demand and discounted items where they catch attention. Wide aisles and clear signage help customers move through the store effortlessly, while well-lit displays enhance the shopping experience.
Keep checkout areas accessible and ensure promotional items are placed in high-traffic zones to maximize impulse purchases.
Inventory Management
Use inventory tracking software to monitor stock levels, sales trends, and reorder points in real-time. Regularly review which items are selling fast and adjust orders accordingly to avoid overstocking or running out of popular products.
Pricing Strategies
Use a mix of pricing models, such as bulk discounts, clearance sales, and limited-time promotions, to attract bargain hunters. Clearly display original vs. outlet prices to highlight savings and make shoppers feel they’re getting a great deal.
Competitive pricing, combined with occasional special offers, will keep customers returning.
6. Hiring and Training Staff
Your employees play a huge role in the success of your outlet store. Here’s how to hire the right people, train them, and create a positive work environment.
Recruiting the Right Team
Start by identifying the key roles you need—cashiers, sales associates, stock managers, and possibly a store supervisor. Look for candidates with retail experience, strong customer service skills, and a positive attitude.
Job postings, employee referrals, and local job fairs are great ways to find reliable staff.
Training Programs
Once you’ve hired your team, invest in proper training. Employees should know your products, store policies, and how to handle customer inquiries.
Provide hands-on training for using the cash register, managing inventory, and dealing with returns or discounts.
Creating a Positive Work Environment
Happy employees lead to better customer experiences. Foster a positive workplace by recognizing hard work, offering incentives, and encouraging teamwork.
Clear communication and fair scheduling can also help reduce stress and turnover.
7. Marketing and Promotion
Once your outlet store is set up, the next step is getting customers through the door. A strong marketing and promotion strategy will help you attract shoppers, build brand awareness, and drive sales.
Here’s how to make it happen.
Developing a Marketing Strategy
A solid marketing plan should combine both traditional and digital strategies. Here are some options you can choose from –
- Flyers, local newspaper ads, and radio spots can work well for local outreach.
- Leverage social media ads, email marketing, and Google My Business for broader visibility.
- Offer loyalty programs or referral incentives to encourage repeat customers.
Building an Online Presence
To build an online presence, start by creating a website with store details, promotions, and product highlights.
Social media platforms like Instagram, Facebook, and TikTok can help engage potential customers through product showcases, behind-the-scenes content, and special deals.
Also, you can create an ecommerce website to attract new customers outside of your location and rake in more business.
Hosting Events and Promotions
Special events and promotions can generate buzz and bring in new customers. Consider hosting a grand opening event, flash sales, or holiday discounts to attract shoppers.
Loyalty programs and exclusive VIP sales can encourage repeat business.
8. Legal and Regulatory Requirements
From business registration to tax compliance and safety regulations, handling these requirements early will help you avoid costly mistakes. Here’s what you need to know.
Business Registration and Licensing
The first step is registering your business with the appropriate local, state, or federal authorities. Choose a business structure—such as a sole proprietorship, LLC, or corporation—that best suits your needs.
Depending on your location and industry, you may also need retail business licenses, permits, or resale certificates.
Understanding Tax Obligations
Taxes can get complicated, so it’s important to understand your obligations from the start. Below are some things you need to do before opening your doors –
- Familiarize yourself with local, state, and federal tax requirements.
- Register for a tax identification number and collect sales tax if required.
- Keep track of tax filing deadlines and consider consulting an accountant to ensure compliance.
Health and Safety Regulations
Follow local health and safety regulations, including fire codes, sanitation standards, and workplace safety rules. If you have employees, make sure they are trained in safety procedures and that your store meets accessibility requirements.
9. Expanding with Ecommerce
With today’s digital world thriving, having an online presence is just as important as a physical storefront. Here’s how to do it successfully.
Integrating Online Sales
Expanding your outlet store online can significantly boost sales. Platforms like EasyCommerce, a powerful ecommerce solution for WordPress, make it simple to set up an online store that seamlessly integrates with your business.
Unlike other ecommerce platforms, EasyCommerce is designed specifically for retailers who want a smooth, hassle-free experience without high fees or complicated setups.
Managing Online and Offline Inventory
When running both an outlet store and an online shop, managing your inventory is of the highest priority. Using a system that updates stock levels in real-time across both platforms prevents overselling and stock shortages.
With EasyCommerce’s real-time inventory tracking—which includes an intuitive dashboard section that lists which products are low in stock, and ensures that your product availability is always up to date.
Why Choose EasyCommerce?
Compared to other ecommerce platforms that come with high transaction fees and complex setups, EasyCommerce is built for WordPress users who want a reliable, cost-effective, scalable and easy-to-use solution.
EasyCommerce comes with smooth customization options, intuitive setup options, and real-time inventory sync, which makes it the best choice for outlet store owners looking to expand their physical store online.
Wrapping Up
Opening an outlet store is an exciting journey, but success comes from careful planning and execution. Take the time to evaluate your business model, understand your target audience, and implement efficient systems for both in-store and online operations.
If you’re ready to grow your outlet store beyond its physical location, EasyCommerce is the smart choice. It offers everything you need to build, manage, and scale your online store without the headaches of traditional ecommerce platforms.