The off-price store

BUSINESS BITS
Mishell M. Malabaguio

“Fashion should not be expensive but affordable.” This thought occurred to Jonas Ang, who has been selling clothes wholesale since 2002, when he felt the need for his own retail store. His business has been providing various retail stores in and out of Metro Manila factory overruns and shelf-pull merchandise.

Ang has always been a stickler for quality—he refuses to sell clothes that are damaged or carry fake designer or custom labels. With the market flooded by such goods, however, he saw the need to put up a retail outlet that would only sell quality but affordable branded clothes.

That was why in 2003, with P3 million in capital, he started The Off-Price Store, located on Escrivá Drive at the Ortigas Center in Pasig City. Since then, The Off-Price Store has grown to eight outlets, five of which are franchised.

Each outlet has its own identity depending on its location and market. The Malate, Manila branch, for instance, is a boutique, while the Ortigas branch has a warehouse look and feel. This way, Off-Price is able to hit markets A to C, even if pricing is uniform in all of the stores.

The Off-Price Store started franchising in 2007, with the franchise fee ranging from P500,000 to P650,000 depending on the store size and location. Based on their studies, an Off-Price franchisee could recover his investment in 1.5 years.

Ang explains that the franchisee is allowed to add items to their merchandise; however, this should not exceed 5 percent of the total merchandise being sold, and the pricing and quality of such merchandise should be approved by Off-Price itself.

The factories from where Ang sources the clothes have the consent of the specific brands to sell their overruns; thus, he says he doesn’t need to get any license or permit from these clothing brands.

The only agreement he has with the factories, he says, is that all the goods he gets from them should be damage-free and that they should offer him the lowest price in the market. “I could make such arrangements with them because a lot of them are my friends,” he explains.

Among the brands he sells are Crocs US, Replay, Buffalo David Bitton and Seven7 Jeans. Off-Price also has in-house brands such as Vanilla and Low Label. Based on Off-Price’s studies, the average price purchase of people per clothing item is P450.

Therefore, Ang makes sure that their prices are close to that amount, or that the items are 60 percent to 80 percent lower than the original price. He also conducts comparative shopping to ensure that Off-Price is really offering the most affordable quality branded items in the market.

“Because I’ve been in the industry for a long time, I know what’s fake and what’s original, and if the item has any damage,” he says. “I also let my franchisees know why a certain item is priced lower than ours; if there is any such item, most, probably it’s damaged.”

To sell affordably priced goods, Ang keeps his overhead costs minimal. For one, he does not locate stores in malls to avoid high rental costs. He also maintains a strong and active customer database, and monitors customer preferences.

Despite the store’s low prices, it still gives discounts and promos to its customers, such as 10-percent discount on first purchase and a so-called valued customer card. Ang says: “Our profit is not that thick per item, but we aim for economies of scale.” They have built a strong customer base and give first-rate customer service.

“Having well-trained staff is really crucial for us because we’re relying on word of mouth,” he says. Ang says that at present, Off-Price has an average of 100 customers per store daily.