What is an off-price retail store?

We all know that clothes shopping, as therapeutic as it can be, has the potential to wreak havoc on your finances. But, what if there was a way to shop for local, international and designer labels for up to 80% off?

Moneybags journalist, Danielle Van Wyk, explores the newest trend to hit the South African fashion market, Off-price retailing, and how this can change your shopping experience for the better.

What is Off-price retail?

‘Quality shopping on a budget’ is how 32 clothing, the only off-price retailer in South Africa, describes this model.

According to the brand, it is the selling of merchandise at considerable discounts by benefitting from other retailers’ forecasting errors, manufacturers’ overruns and cancelled orders.

“Imperfections in the retail industry is what makes the off-price model possible. When a major label miscalculates consumer preferences and over-produces a product, it is a window of opportunity for us to purchase these items at a huge discount,” says 32 Clothing.

The difference between Off-price retail and retail stores

Off-price retail offers a wider selection of items than your average retailer, from local to designer. The consumer is given the opportunity to shop from exclusive stores such as H&M, Zara, Adidas and New Balance, to name a few. They are also more up to date with seasonal trends as their buying is governed by current opportunity.

“A typical factory store/outlet will be brand specific (i.e. a Nike outlet) and tend to stock past-season goods. Off-price retail stores are able to sell multiple brands and a much wider assortment, and our stock can be both current and past season,” highlights owner and founder of 32 Clothing, David Fine.

Off-price retailers have the upper hand in personally catering to their customer with limited stock, giving their customers the gift of exclusivity in knowing that the chances of someone else having what you have is slim.

“The concept is a treasure hunt, with most of the items on the floor being one-of-a-kind in design, style and size. So it really is first come first served,” says 32 Clothing.

The return policy of 32 clothing as opposed to your average retailer, like Woolworths for example, also differs.

“We do not facilitate refunds, only exchanges and all exchanges should be done within 14 days from the day of purchase just as long as the relevant receipt is submitted and your garment is still tagged,” says Aurelle Franks, PR for 32 Clothing.

If you aren’t comfortable with this policy you’d have to shop at while Woolworths, for example, which offers consumers the option of a full refund, replacement or exchange, provided you have the original tax invoice, and items are returned in a saleable condition within 60 days of purchase.

Pricing is also a major difference between this model and traditional retailers, as off-price, like the name suggests, is designed to provide the consumer with the same quality item for cheaper.

Competition

As 32 Clothing is the first off price retailer in the country it doesn’t have any other off-price competitors (yet). Instead it has an even bigger battle as this means it’s still in direct competition with trusted full-price retailers.

“Both department stores and speciality stores are our competitors as we are all competing for the same customers. In terms of value retailers, whilst we may compete with the likes of Mr Price for customers, we believe our value proposition is unparalleled in South Africa,” says Fine.

Mr Price was given the opportunity to comment but declined to do so.

Pricing

Off-price stores depend on lean cost structures partnered with efficient distribution systems to maximise the level of productivity, while maintaining the lowest feasible prices for the consumer.

In the full-price industry fashion trends are a key driver, whereas the off-price retail sector is void of this luxury. This is why companies like 32 Clothing are under pressure to choose the right products, because their operation margins on each item is so small.

“The total discount off original prices varies, depending on the deals that our suppliers are prepared to offer and the availability of clearance parcels around the world,” reveals Fine.

Still, 32 Clothing boasts a value model that is designed to consistently provide discounts of up to 80 % off of the original retail price.

What is the quality of stock?

In both off-price and factory retail outlets there is an element of factory seconds. But in off-price, the percentage is kept to a minimum.

“Approximately five percent of our merchandise can be regarded as seconds, however, we make a huge effort in communicating this to our customers by placing specific labels on these products,” states Fine.

What is the availability of stock?

32 Clothing has what is known as an opportunistic strategy as they purchase goods every week from North Africa to Europe.

“We have an international buying office that works with vendors across the world. Our approach is opportunistic and focused on finding value in on-trend merchandise that suits the SA market,” says Fine.

The company also benefits from buying seasonally in the Northern hemisphere, which allows them to stay current.

How does the sizing work?

Like with any other retailer, 32 Clothing identified the constant challenge to keep the store balanced with regards to sizes, and the management of their inventory systems,  as they cater for all sizes across men’s, women’s and kid’s clothing items.

Because of the international buying, the sizing structures may differ but the items are bought with the South African market and body in mind.

Is Off-price retail a sustainable form of shopping?

“Absolutely! There are over 15 000 ‘off-price’ stores in the world, and the continued success of the model and the growth in the market share is proof that the supply chain is consistent and that value-conscious consumers are loyal and motivated to find their fashion treasures,” said Fine.

Being the first of its kind in South Africa, there will be an adjustment period, Fine believes that off-price will revolutionise the South African bargain shopping industry while still  delivering great value to the consumer.

“The shopping experience is very different to what South African consumers have typically been exposed to, but we believe that like their international peers, South African consumers will embrace the new model and be receptive to our value proposition,” remarked Fine.

Where are the 32 Clothing stores located?

32 Clothing has stores in Westgate, Southgate, Pretoria CBD and will open another store at Carnival mall in Brakpan soon.

“We have chosen to spread the stores out geographically in order to provide a convenient shopping location for any potential customers. We are hoping to have a store in the northern suburbs [Johannesburg] come 2016,” concluded Fine.