An independent off-price retailer is one that engages in selling of goods at a less than standard whole sale prices. The retailers’ work independently and often runs the business as an entrepreneur or as part of a larger organization. Their main area of expertise lies in selling at lower prices than other retailers.
An independent retailer starts off the business from the ground up. The off price retailers buy goods at reduced whole sale prices. Unlike to other department store, they don’t ask for promotional allowances, return privileges and extended payment terms. This may cause some difficulty in obtaining merchandise. From the time of business planning to the opening, the independent off-price retailer does it all. The off –price retailers buys the manufacturer’s overstocked goods at low prices. They also acquire goods from bankrupt stores, irregular products and unsold end- of- season production. However, their first preference is the first quality current products since the purchasers for off price retailers are usually those who acquire goods that is often available, easily get on deal, changes in products styles and switching off brands more time and again.
The trend of independent off price retailers has grown over the years. One of the good examples is of factory outlets. A factory outlet is owned by a manufacturer i.e. it carries only one line of merchandise of its own. Every season, from 5 to 10 % of a manufacturer’s production is not sold out through different distribution channels as it usually includes closeouts (for products that are discontinued), factory seconds and cancelled orders. With the help of factory outlets, the manufacturer standardize where their additional outputs is sold and where they expect higher revenue margins then they would have achieved by disposing of goods to the independent wholesalers and retailers.
The off price retailers sell mostly clothing and other accessories from key famous label brands at discounts. The companies have the benefit of overruns, cancelled orders and forecasting mistakes made by the full price retail sector. When a designer creates more clothing than it sells through specialty retailers, department stores and when a specific store can’t shift all of the products in a particular line, the surplus inventory is sold at 20 – 60 % discounts to the off –price retailers.
Many of the off price retailers establish an exclusive supply relationship with manufacturers to ensure a more definite connection of branded products within their stores. The off price retailers have an opportunistic buyers who are willing to buy the cancelled orders, miscalculations and overproductions usually at discount prices. The department stores have the alternative of returning back the merchandise however, the off price retailers purchase are made final. This represents that they have got no limit to how low clearance prices could be. Most of the merchandise sold at off price retailers is seasonal which gets released at the time when full priced merchandise is sold at department stores. The off price retailers usually have a speedy turnaround time such as two weeks from the point when the shipment is being ordered to the time when the products are displayed on the floor.