Why Are Outlets Located in Remote Areas: Key Factors and Implications
Outlet stores have become a significant part of modern retailing, offering discounted products from leading brands. However, one common observation is the prevalence of outlet stores in remote areas, far from the city centers. This poses a question—why do outlet stores tend to locate in such locations? Let's explore the primary reasons behind this phenomenon and uncover the implications of their remote locations.
Land Price as a Dominant Factor
The primary reason for the remote locations of outlet stores is the price of land. Large retail units in city centers would be immensely expensive due to limited available land and high land values. These locations often result in the demolition of existing smaller retail units to make space for large outlets, which would not be cost-effective or feasible. Instead, opting for the outskirts significantly reduces the cost, allowing retailers to provide a sprawling store structure with ample space for various facilities.
For instance, if a large outlet store were to be built in the heart of a city, it would require extensive demolition work to clear space, which is not only costly but also time-consuming. On the outskirts, not only do retailers gain more space, but they also provide room for delivery lorries and customer parking. This makes the logistics of running the store much more efficient, reducing operational costs and improving the customer experience through better in-store facilities.
Another factor contributing to the preference for remote locations is the availability of large tracts of land and the reduced competition from other retail stores. In contrast, prime locations within cities already have a high number of retail establishments, making it challenging to find enough space and making the overall venture more expensive.
Urban Expansion and Transportation Factors in the U.S.
In the United States, where there is a significant reliance on personal vehicles, the availability of land in remote areas has further influenced the location of outlet stores. The large spaces required by these stores necessitate a substantial amount of land, which is typically more affordable at the outskirts of urban areas. The need for accessibility also plays a crucial role, as traffic congestion in city centers can be high during peak hours, making it challenging to serve customers effectively. The fact that many U.S. consumers own cars and use them regularly means that travel to outlets in more remote locations is not a significant disadvantage compared to the benefits gained from the lower land costs and ample space.
Furthermore, the expansion of urban areas has led to the development of new residential communities and shopping centers at the outskirts. This has created a demand for retailers to locate in areas where there is a concentration of potential customers. Outlets can then leverage this population to provide a significant customer base, while maintaining lower overhead costs in terms of land and infrastructure.
A notable case in point is the phenomenon of shopping malls and outlet centers that have been built in the suburbs. These locations often have easy access to major highways and transportation routes, making them convenient for both business and leisure trips. The establishment of retail chains in these areas also reflects an understanding that remote locations can be highly profitable when combined with effective marketing and advertising strategies.
Impact on Local Businesses and Market Dynamics
The localization of outlet stores in remote areas also has implications for local businesses. The presence of an outlet store in a city center or a densely populated area can lead to a significant loss of business for nearby smaller retailers who might not be able to compete with the discounts offered by the outlet. This can result in economic impacts for local communities, as well as changes in retail dynamics. For instance, the proliferation of large retailers through chain stores and outlet centers has been linked to a reduction in the diversity and number of local independent shops, which may face challenges in maintaining their market presence.
There is a historical precedent in Walmart's case. In certain regions, the establishment of Walmart was regulated due to the potential for the chain to dominate the local retail market. Lax regulation of outlet stores and other large retail chains can lead to similar dynamics, where local businesses struggle to compete due to the sheer scale and reach of these outlets. This underlines the importance of a balanced regulatory framework that ensures the coexistence of local and larger retail players.
On the other hand, the remote locations of outlets can also create new business opportunities for nearby local businesses. For example, a community of small businesses might thrive in the vicinity of an outlet store, providing complementary services, catering to the needs of the customers who shop at the outlet, or even benefiting from an increased foot traffic. However, this demand is contingent on careful planning and the ability to adapt to the changing retail landscape.
Keywords: outlet stores, retail location, high street, urban development, land price, transportation, local businesses, city center, shopping mall, remote areas, marketing strategies, competition, retail dynamics, land availability, cost of establishment
Conclusion: The preference of outlet stores for remote locations is predominantly driven by economic factors, including the cost of land and the need for ample space. Remote locations offer significant advantages in terms of logistics and accessibility, while posing challenges for local businesses. Understanding these factors is crucial for both retailers and policymakers in shaping the future of retail in urban and peripheral areas.