Following Macy's Lead, Kohl's Will Open an Outlet Store

Kohl's announced last week that it will be opening its first outlet store, selling returned merchandise at 70% to 90% off. The move is the latest by a large department store to compete with deal-hungry shoppers and the rise of off-price retailers; it shows how the off-price trend is now affecting chains once thought to be reasonably-priced alternatives themselves.

Fortune reports that the 30,000 square-foot store will open in Cherry Hill, NJ (near Philadelphia) in June.

Kohl's isn't the only store making the shift: Macy's, the standard-bearer for massive, full-price department stores, announced earlier this month that it will open four NYC-area "off-price stores" under the name Macy's Backstage.

Outlets No Longer Just for Luxury Leftovers

Outlets were once reserved only for luxury stores looking to offload out-of-season, overstocked, and slightly damaged inventory. Nordstrom Rack, Saks Fith Avenue OFF 5th, and Neiman Marcus Last Call are a few of the successful luxury retailer outlets that have existed for years.

But since the recession, shoppers have shied away from designer goods at retail prices, instead seeking out deals wherever they can. While department stores like Macy's, Kohl's, Sears, and JCPenney have seen sales plummet and stores close, discounters like TJ Maxx and Marshalls (both owned by TJX) have challenged or even increased their numbers of locations and overtaken those upmarket rivals in sales. (Similarly, Dollar General has seen explosive growth while much of the retail sector suffered.)

At the same time, outlets themselves have changed. Instead of selling merchandise passed along from the main store, most merchandise in outlets is now produced specifically to be sold at the outlet chain (at lower cost and lower quality, usually).

But the Kohl's outlet will be more like an original outlet, at least to start: It will sell inventory that has been returned by customers, at steep discounts. What's surprising, and telling, is that an already affordable retailer is looking to go even further down market.

Readers, what are your favorite outlet spots? Let us know in the comments below!