In China's retail landscape, outlet malls are emerging as a major force, offering significant discounts on global brands and innovative shopping experiences.

This model is attracting middle-income consumers eager to balance quality and affordability.

Joyce Wan, a 28-year-old manager in the fashion industry, has been shopping at outlet malls on the outskirts of Shanghai, focusing primarily on athletic apparel and luxury brands.

"Outlets with better discounts offer the same quality for less money," Wan said. "I can afford expensive, high-quality items, but I'm not willing to pay more than what they're worth."

Wan occasionally visits luxury brand stores in high-end malls in Shanghai for the in-store experience and ambience.

"I still make some purchases at those retail stores," she added.

Eyeing this trend, popular light luxury brands like Coach, Swarovski and Michael Kors remain staples in outlet malls, while newer entrants such as Ralph Lauren, Lululemon and Arc'teryx cater to the evolving tastes of middle-income customers.

Chen Yabo, head of the China Outlets Association, said, "Outlets in China have become a key retail channel, distinct from their earlier role as inventory clearance hubs."

They attract consumers with value-for-money offerings and a comfortable shopping environment, Chen added.

"Middle-income families in China are increasingly cautious and rational buyers, focusing on value and practicality — traits that align with what outlets offer," Chen said.

This trend is also reflected globally. According to the 23rd edition of the Bain & Company Luxury Study, produced in collaboration with Fondazione Altagamma, "the outlet channel is outperforming, driven by rising demand for value-for-money purchases and growing popularity as a preferred market entry point".

According to the 2023-24 white paper on the country's outlets industry by the China department store association, the outlets sector in China grew 9.5 percent year-on-year in 2023, reaching 230 billion yuan ($31.5 billion) in sales.

By 2025, the market is projected to hit 260 billion yuan, driven by digital transformation and expansion into lower-tier cities.

Sales figures also underline the format's success.