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Outlet Store Traffic Hits Two-Year High

Retailers wondering where their consumers have gone might find them at the outlets.

The overly-promotional world of retail has kept consumers set on getting a deal and many are heading to outlet stores over malls to spend their money. According to a Cowen and Company research report out Monday, outlet store visits by U.S. consumers are up 400 basis points since March and the traffic is still outpacing malls.

Trips to outlet stores have largely been lead by millennials, and further weakness in the dollar against other major currencies has been bullish for traffic, too.

More specifically, men are doing most of that outlet shopping.

Outlet visits by millennial men age 18 to 34 increased 658 basis points and 535 basis points in July, bringing visitation to a new 44 percent peak. For men age 35 to 54, visitation was up 1,087 basis points last month.

“We think the increase in visitation to outlets by men is being driven by athleisure on promotion, especially as Nike, in part, continues to clear N. America surplus through its factory channel,” the report noted.

Nike, Under Armour and Adidas have been the biggest drivers of overall outlet traffic and men have been frequenting all three for their athletic and lifestyle offerings.

Visitation among women age 18 to 34 fell 177 basis points to 32 percent of women in July, and among the older age group (35-54), outlet visitation fell 59 basis points to 19 percent.

“With outlet apparel offerings potentially more weighted towards clearance than ‘made for product,’ a challenging environment for handbags and watches, and competition from highly promotional ‘full-price’ stores, better values and treasure hunt could perhaps be found closer to home,” Cowen said.

Cold weather goods from fall 2015 that were packed away could reignite interest once they start to hit outlet stores this fall, however.

Because fewer tourists have been coming into the country, there are fewer tourists to spend at stores and retailers have been blaming that fact for falls in sales, and outlets have taken a hit too.

Weak foreign spending continues to drag outlet formats for Coach, Michael Kors and Kate Spade, and Cowen said the handbag space will remain under pressure because of lagging tourist exposure.

“While the overall sequential monthly improvement in visitation among the total population since March is encouraging, we believe this will be more than offset by weak tourism trends,” the report noted.