Saks Fifth Avenue and other department stores are focusing on outlets. Photo: Getty Images

The worst of the recessionary times could be over for apparel retailers, but in its aftermath, they are turning to lower-priced outlet-format stores for expansion.

The Colliers International 2010 Retail Trends report claims that department stores are slowing down the roll out of regular-priced stores -- or stopping altogether -- to concentrate on the more wallet-friendly outlet stores.

For example:

  • Bloomingdale's has four outlet stores planned for 2010 and is expected to further boost outlet openings in 2011.
  • Nordstrom plans to add at least 16 new Nordstrom Rack stores this year and is actively seeking both urban and suburban sites.
  • Neiman Marcus opened three new Last Call outlet stores in 2009 and is expected to put most of its expansion emphasis behind this concept over the next couple of years.
  • Saks Fifth Avenue, which opened a number of Off 5th stores over the last half of 2009, is planning one new Off 5th store in the Dallas market and as many as four more stores over the course of 2010.
  • Lord & Taylor is getting into the mix, with a 15,000-square-foot outlet store slated for the Jersey Gardens Outlet Mall in Elizabeth, NJ.
"All is related to the economy and the price point," Garrick Brown, Colliers's national retail research director and co-author of the report, tells StyleList. "The aspirational customer is still feeling the pinch," Brown says, and will continue to do so.

"There will be a long and slow recovery at retail that is tied to the unemployment numbers. It will take five or six years before we're back to 6 percent unemployment rates, so this frugality will stick around."

Hence, the investment by luxury retailers into more cost-conscious formats like outlets. "Saks is closing stores and shifting expansion to its off-price outlets. Nordstrom Rack has 20 new stores in the works this year," Brown says. "Normally, there are four or five traditional store openings in a year -- more than one Rack store is a surprise."

The good news for consumers is that this new frugality allows fast-fashion retailers like H&M, Topshop, Zara, and Forever 21 to grow, expanding into more markets closer to us.

Specifically:

  • H&M is aggressively expanding and pursuing urban street-front retail and mall sites. It is currently on track to add about 240 new stores worldwide this year.
  • Topshop has one confirmed new store in New York slated for a 2010 opening, and as many as 15 stores throughout the United States are planned over the next four years.
  • Zara has plans for as many as 10 new U.S. stores in 2010.
  • "Tween apparel chain Forever 21 has taken over a space on the West Coast and turned it into a tween department store," Brown adds.

Interestingly, the brands that were on fire prior to the market's crash are having some of the hardest times figuring out where they fit in the new economy.

"Abercrombie & Fitch is in a terrible dilemma," Brown tells StyleList. "How can it keep the quality while discounting price points? It could destroy the brand by lowering price points. Its same-store sales have suffered for 18 months."

Urban-wear labels like Ecko have seen a slowdown in demand as well, but, Brown clarifies, it's less about the style than the prices.

"Citi Trends, a retailer out of Georgia, is selling the same product without the label or brand names. The customer likes the look, but maybe not the labels and their prices so much," he concludes

Still, Brown proclaims, "The worst is over for apparel." Instead, the book, video, and regional grocery chains will be in the hot seat this year.

Meanwhile, read about online outlet site TheOutnet.