Buyer Be-Aware: From Outlets Malls to The Real Deal, the Evolution of Off-Price Shopping
Do you remember your first “outlet” experience?
Why did you choose to go?
Be aware – the reasons you used to go to factory outlet stores may or may not make sense in today’s market.
Outlet store history
Outlets (or factory stores) have been around since the 1930s. The primary purpose was to sell “slightly” damaged or excess goods at a discounted price. The stores were often located close to the factories where they manufactured the merchandise.
In the mid-1970s, the first multi-store outlet center opened in Pennsylvania and quickly started expanding throughout the US.
The outlet mall model began expanding into Canada by the late 1980s and now has established itself worldwide.
Today, there are over 500 outlet malls across the United States alone. Outlet “bus trips” have even gained popularity as a form of tourism.
The phrases “factory store” and “outlet” are used synonymously, but are different.
A factory store will typically sell a single brand of merchandise and is owned by the manufacturer of that brand.
An outlet is often run by a retailer. The retailer may sell more than one brand.
Today’s average consumer probably doesn’t see a difference, so for simplicity’s sake we’ll refer to them both as outlets.
Today’s outlet store realities
So why do you go to outlets?
Initially it was to find bargains in bins of inventory overruns or on racks of slightly damaged goods offered at a discount.
Fashion apparel brands in the outlet sector range from everyday names, like the Gap, Carters, and Hanes brands to luxury designers like Burberry, Gucci, and Prada, all offering great deals on their products.
Think these are the same goods as found at the full price store, just cheaper?
That’s not always the case.
Over time, outlets developed their own share of the market that they needed to supply goods for. Yet, there may not have been enough damaged or leftover merchandise from the full price store to fully supply the outlet.
Demand is high, supplies are low. What do you do?
You make more.
Today, many outlet brands produce the majority of their merchandise specifically to be sold in the outlet stores.
This begs a question.
How are the outlet brands able to do this and still offer lower prices?
A number of factors contribute to a brand’s ability to offer low prices:
• Simpler store environments
• Fewer in-store amenities
• Simpler websites
• No free shipping
• Fewer or simpler website assets
The next two images are from the J.Crew’s main corporate website home page (top) and the J.Crew factory store home page (bottom).
Which photo shoot do you think cost more?
To find the biggest way outlet stores offer look-alike merchandise at lower prices, look at the products themselves.
Brands can save money and still produce a visually similar product by using:
• Plastic trim instead of leather
• Non-functioning buttonholes
• Less stitching
• Lighter weight fabric
If these things are not important to you, then why not get the same look for less?
But wait, there’s more
Shoppers can benefit even further from the expanded and unique discounts offered at outlets.
Advanced technologies such as predictive pricing and rich customer data help ensure that what the retailers are offering (in terms of prices and promotions) are what the shoppers are looking for, when they’re looking for it.
These promos play a big role in the psychological satisfaction of the shopper. They make sure you feel like you’re getting a deal.
Look at the copy on J.Crew Factory product pages.
20% off with a special code!
Savings of 77%!
Other retailers like Loft get in on the game too:
Deals are going FAST!!
How can you resist?
Forewarned is forearmed
Remember, the retailer is making a profit – no matter how many stacked deals, promos, and coupons they offer.
Outlet stores may no longer be the place to find overruns or slightly damaged goods, but don’t let that stop you from visiting.
Outlet shopping trips can still be a fun and rewarding way of refreshing your wardrobe while saving you some money!