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Sell a second product line at a lower price point through a separate channel instead of discounting your mainline inventory.
$120
jacket marked down to
$40
at an outlet learns that the brand overprices
$70
outlet-specific jacket at
50%
off sticker
Under Armour announced during its Q2 earnings that it will increase the share of full-price product sold through its outlet stores, according to Retail Dive. The company did not disclose the exact percentage mix, but the strategic shift marks a reversal from the traditional outlet model where brands dump clearance inventory at steep discounts. Under Armour is treating outlets as a deliberate channel, not a markdown graveyard.
The mechanics are straightforward. Under Armour will design and manufacture product specifically for outlet stores at full price, rather than filling racks with unsold mainline stock. This means outlet shoppers will see items that never touched a full-price retail shelf, priced at what the brand considers fair value for that tier. The outlet becomes a parallel distribution line with its own margin structure, not a margin-eroding afterthought.
This works because it separates brand perception from inventory management. When a brand floods outlets with discounted mainline product, it trains customers to wait for sales and erodes the perceived value of the core line. A shopper who sees a $120 jacket marked down to $40 at an outlet learns that the brand overprices. A shopper who sees a $70 outlet-specific jacket at $70 learns that Under Armour makes product at multiple price points. The outlet becomes a value tier, not a distress signal.
The mechanism also protects margin. Under Armour can engineer outlet product with lower input costs and tighter specifications, then sell it at a price that clears the cost-plus-margin hurdle without requiring a 50% off sticker. The brand controls the entire cycle from design to sell-through, rather than reacting to overstock. This matters especially for athletic apparel, where seasonal mis-forecasts used to mean dumping $90 running tights for $25 just to move units before the next season.
For a small physical-product brand, the play is to create a second SKU set at a lower price point and sell it through a distinct channel without ever discounting the mainline. If you sell a $45 candle on your website, do not mark it down to $22 at a pop-up or wholesale partner. Instead, create a $28 candle with a different scent profile, simpler packaging, and lower input cost, and sell that at the pop-up at $28. The customer gets a lower entry price without learning that your $45 candle is overpriced. You control margin on both lines.
The execution is simple. Design the second tier with clear differentiation so customers understand it is a different product, not a discount. Use different packaging, a different scent or color or size, and a different name if needed. Manufacture it with cheaper inputs where you can cut cost without cutting perceived quality. Sell it through a channel your mainline does not touch, or label it clearly as a value line if you sell both in the same place. Never put the mainline on sale. The customer should never see your $45 product next to a $22 sticker.
The cost is minimal. You are already sourcing and manufacturing. Adding a second SKU set means slightly higher complexity but lower per-unit cost if you spec it correctly. If your $45 candle costs $12 to make and you sell it at 3.75x margin, your $28 candle might cost $8 to make and sell at 3.5x margin. You protect the brand, move volume at the lower tier, and never train the customer to wait for a sale. The outlet is not a markdown channel. It is a value channel you control from the start.
Create one lower-cost SKU and sell it at a pop-up or wholesale partner at full price, never discount your main product.
For the operator
Build a value tier with distinct packaging and lower input cost, then route it through a separate retail or DTC channel at stable margin.
For the house
Source from brands offering tiered product lines at fixed price points, avoiding suppliers who flood the market with seasonal closeouts and train buyers to wait.
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