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What does the future hold for The Outnet?

For bargain hunters in the UK looking for designer labels such as Alexander Wang, Isabel Marant or Missoni at discounts of up to 70%, there is only one place to shop online: The Outnet. Launched in 2009, Net-a-Porter Group’s luxury off-price ecommerce site has grown into a £100m-turnover business.

The Outnet autumn 15 womenswear

The Outnet autumn 15 womenswear

The Outnet autumn 15 womenswear

However, The Outnet faces an uncertain future. Its well-respected president, Stephanie Phair, stepped down in November 2015, a month after Net-a-Porter Group formally merged with Italian rival Yoox Group. Her role has been split between The Outnet’s vice-president of global buying, Shira Suveyke, and global sales and marketing director Andres Sosa, who are now its co-presidents.

Meanwhile, a decision to integrate The Outnet’s buying efforts with that of new stablemate has led to speculation that a full merger may be on the cards, although both parties have stated this is not the plan. Yoox Net-a-Porter Group has not said much about the move or what this could mean for either business, except that it will “improve product sourcing conditions”. And this comes at a time of wider changes in the UK outlet sector, as retailers review how they clear unwanted stock in stores and online.

The Outnet and have what seems on the face of it to be similar propositions. buys overstocked or unsold previous-season items from designers such as Dolce & Gabbana, Diesel, Gucci, Armani and Cavalli, and sells them online at a reduced price. Pre-merger, Yoox Group’s multi-brand division, comprising, Shoescribe and The Corner, had revenues of £382m in the year to December 31 2014. It break down figures for

Unique position

But the jury is out on whether they will merge. One observer close to the situation thinks it unlikely.

“The Outnet has earned an excellent position for itself as a retailer of last season’s high-quality fashion and it shares many customers with Net-a-Porter,” he tells Drapers. “It was never a cheap discounter or competitor with Yoox. Its average order value is far higher.”

Yoox Group’s average order value in 2014 was €202 (£148), while Net-a-Porter Group’s was £391. This was dragged up by’s average of £506. No further breakdown is available.

In June 2015, then chairman of Net-a-Porter Group Natalie Massenet said The Outnet, Net-a-Porter and Mr Porter would “each continue as standalone brands alongside the Yoox brands”. This was reiterated when Yoox Net-a-Porter Group published nine-month results in November.

However, multichannel consultant Kristine Kirby believes a merger of and The Outnet would make sense: “I think they’ll become one massive player across Europe. They’ll get a lot more in terms of efficiencies that way, and a much better customer experience.” She points out that, outside the UK, is better known than The Outnet.

“Stephanie Phair did a fantastic job, but people aren’t buying on The Outnet for the name of the platform – it’s for the brands they sell. It’s not like Net-a-Porter, which has become a lifestyle in its own right. I can’t see why they’d keep separate sites: Yoox has a lot of pull across Europe.” autumn 15 menswear (Photo credit: Mark Rabadan) autumn 15 menswear (Photo credit: Mark Rabadan) autumn 15 menswear (Photo credit: Mark Rabadan)

In the UK, where there is growing competition in the luxury off-price space online, a merged The Outnet and could become a real power player. However, it would not be without its challenges.

Out-of-town luxury and premium outlet centres, such as Value Retail’s Bicester Village and the McArthurGlen-owned portfolio of Designer Outlets, are booming. Since the beginning of 2015, McArthurGlen has enjoyed double-digit growth in footfall and spend, and last September it was given the green light to expand its centre in Ashford, Kent. McArthurGlen group leasing director Adrian Nelson argues that designer outlet retailing is increasingly part of a multichannel sales approach. “More and more brands are interested in expanding their outlet presence to complement their full-price and internet sales,” he explains.

Meanwhile, more retailers are looking online as a way to clear stock. In August last year, N Brown closed 18 clearance stores across the UK after a store review concluded that disposing of unwanted stock through outlet stores was “inefficient and outdated”. Excess inventory is now sold through its online channels, saving the business an estimated £3m a year.

A spokeswoman for N Brown tells Drapers: “Our old model of stock clearance became outdated. With more consumers bargain hunting online, bricks-and-mortar was no longer a cost-effective approach. Customers wanted an online solution to pick a bargain.”

Toby Parkes, head of women’s young fashion brand Jane Norman, which launched its clearance site last month, thinks we may see a shift away from bricks-and-mortar outlets to online in 2016. “It is quite possible, given the strength of The Outnet and recent news that online is moving sales from bricks-and-mortar, as Black Friday Sales proved.”

In parallel, flash Sale sites such as SecretSales, Vente Privee and BrandAlley are rising in popularity. SecretSales for example, which launched in 2007, had a turnover of £37.5m in 2014 and has around 4 million members. “The Outnet does a good job of dressing up the fact the product is discount and past season, which is a plus, but the option is there to go to SecretSales and put a bit more of a veil in front of it,” points out Kirby.

Merging The Outnet and could create a power player with the clout to beat away competition from flash Sales and other off-price sites, and compete with bricks-and-mortar outlet centres. A single, merged site would have a larger range – giving it more editorial opportunities – and a better overall view of customers, leading to a much improved user experience. But Yoox Net-a-Porter Group seems determined not to combine the two.

If the group sticks to its guns, The Outnet will instead face the challenge of building its brand recognition in the UK and Europe. Suveyke and Sosa will have to re-examine its marketing efforts, seek new and innovative ways to reach customers – such as its in-app personal assistant service, launched in December – and make sure its products are constantly differentiated from’s. To do this, it will have to do the best deals with the top designers – holding true to its motto of being the “most fashionable fashion outlet”.

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