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How Outlet Malls Fool Shoppers

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Alternet is running an excerpt from Ellen Rupel Shell's fascinating new book, Cheap: the High Cost of Discount Culture. The piece handily illustrates Shell's argument that outlet malls are for suckers.

A few choice points, summarized for your convenience:

  • Manufacturers' suggested retail prices are a joke, often wholly fabricated to give consumers the impression that they are getting bargains.
  • Outlet malls are based in the middle of nowhere not only because the real estate is cheaper but as part of their marketing strategy. When consumers have to drive an hour or two to shop, shopping becomes a day-long venture, a veritable investment. Those who make the trek will thus feel compelled to spend more to make up for their "sunk costs" in time, energy, and gas.
  • Instead of following the old-school mall approach of trying to make consumers comfortable in order to keep them inside, outlet malls do the opposite: they go for discomfort and turnover. Shell writes that, "On average, shoppers spend nearly 80 percent more money at a bare bones outlet mall than they would at a fully loaded regional mall."
  • Many stores-Coach, the Gap, Brooks Brothers, Ann Taylor, Donna Karan—produce lower-quality merchandise specifically for their outlets.

    How Outlet Malls Have Convinced Shoppers into Thinking They're Getting a Sweet Deal [Cheap: the High Cost of Discount Culture]

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Old Navy products were actually first sold at the Gap Outlet. We had one near us.... I bought ON branded stuff there in 199...2? 1993?

Thing is, though, if you're focused on doing a thing properly then you really can find very good deals on some higher-end merchandise at an outlet mall. Just not necessarily better ones than you'd be able to find using other methods, like online shopping.

(As someone who has a very, very hard-to-fit shoe size, though, and ankle/knee troubles that require good shoes, I have learned to love finding shoes at outlet malls. Good, long-lasting ones like Clarks or Rockport.)

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Strangely, I like the merchandise that Banana Republic makes for their outlets better than what they make for their mall stores.

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@Etoiles: The first Old Navy-branded product I have came from the Reading, PA Gap outlet in 1994. Great quality t-shirt. I still have it.

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I got a winter jacket that claimed a retail price of 280 dollars, for 20 bucks at a Lucky Brand outlet. (i was only there because my wife loves their jeans and they are wayyyy cheaper there than in the store).

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J.Crew factory clothing is sized inconsistently and sewn poorly. Part of my love for JC comes from their high quality standards. I have jeans from them that I have been wearing regularly for almost 10 years with litle signs of wear. With JC you're much better off buying items in their Final Sale online the few times they run Extra 20 and Free Shipping at the same time. I have sooo many $10 bathing suits because of that

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I totally agree that I have noticed lower quality merchandise at the outlet versus the regular store (Guess is guilty of this IMO). I have been very please with the quality at the Banana republic outlet, though I only bought stuff on clearance as the regular outlet prices weren't much of a bargain.

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I've only ever been to one outlet mall in my life. It was Katy Mills mall in Katy, Texas. It was far, that is true, and we really did spend the whole day there.. but what teenage girl doesn't spend the whole day at the mall with her friends?


The one thing I can't agree with is that mall wasn't shabby or uncomfortable at all. The only thing that made me a little uncomfortable was how crowded it was. But I don't like crowds.


Granted, this was like the first year it opened. But I had been there years since and it seemed to have all the normal comforts of a regular mall.

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Most outlet stores I have been to are just like this article states. They are lipstick on a pig.

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We used to do our outlet shopping on the way back from vacation. Jynco Jeans for $20, purchased 7 year ago for high school. I still wear them. Granted I've walked all over the baggie end of the legs, but I'm very impressed they pants have not disintegrated in the wash yet.


Basically, the point here is that stupid shoppers are more likely to get suckered at a discount outlet. Not that discount outlets are bad.

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I dunno. The outlet mall I grew up near, Potomac Mills, was ten sorts of awesome in terms of finding amazing deals on things. But it's an indoor mall and fairly close to where a lot of people live.

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"On average, shoppers spend nearly 80 percent more money at a bare bones outlet mall than they would at a fully loaded regional mall."

Well, duh. If stuff costs less at the outlet mall, of course you're gonna spend more money. I spend more at the outlet mall because I get the same stuff for about 1/3rd the price of the regular mall.

I think my last purchase was 4 pairs of khaki/dress shorts at the Van Heusen outlet store for ... I think it was $47. One pair of the same shorts would cost $36 at the regular mall.

Outlet malls aren't fooling anyone.

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I've managed to get good deals on clothing at the outlet malls; it's honestly how my parents used to get my school clothing before the start of every school year versus department store pricing that was then so-so.


I totally get the "out in the middle of nowhere" scenario, it if wasn't for the fact my best friend was getting married in Hermann, MO 3 months ago I wouldn't have ventured into an outlet mall period.

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@Laura Northrup: 90% of my closet comes from BR and about 80% of that is outlet. Lately I've noticed a HUGE difference in not only the quality but the style of clothing between the mall and outlet. I'm very underwhelmed now when I go into the outlet.

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@Laura Northrup: Agreed. A lot of regular Banana Republic things I find myself thinking "WTF would I wear this?", but the outlet has lots of casual, yet work appropriate stuff. I did notice that their price tags say "Based on a $99.00 style" and are marked down to like $49.00 (and then 30% off!).

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@Etoiles: Whenever I'm in the area I check out Nordstrom Rack and usually find a lot of great stuff that I had already been eyeing in the full line store (my sister scored Jimmy Choos at 80% off just last weekend). The problem is a lot of the stuff is also made specifically for the outlet. The issue isn't necessarily how much you pay, but what you're buying. You're led to believe this is the quality you'd see in the stores, but in actuality it's something thrown together with a made up original price. You see the new price and think you're getting a deal until you get it home and it's coming apart or severely fading after only one wash.

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I happen to live in the middle of nowhere, but yet near an outlet. So I don't have the hour drive problem. It is convenient though rather than driving to the nearest city mall. But a couple of things I noticed.

1. Polo outlet has the exact same prices as the Polo store. No discount (As the OP said.)

2. Outlets, just like mall stores have sales out of season, like buying winter clothes in early spring, and summer clothes in the fall.

3. Year round clothes that never go on sale (e.g. socks, belts, etc.) never go on sale at the outlet either.

The TANGER or is it TANGAR? outlets mail out coupons to the locals that can generate pretty good deals despite their non-discounts.

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There are good and bad deals to be had at outlet malls. I for one love the Fossil outlet store because all the watches fossil manufactures are there, like Diesel, DKNY, etc. and you can pick up some really neat stuff, but maybe not what's in the case at the regular store that month.

I've gotten burned by the Old Navy outlet, and the Gap outlet before, so I'm wary of buying clothes, but the Dickies outlet in Potomac Mills had great deals on some things and I've found the quality to be just as good and the fit actually a little better than in their regular stores.

It's a mixed bag for sure, but I'd advise extra scrutiny at an outlet vs. a regular store.

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@Etoiles: I'm with you on the shoes. I'm a size 14, and the outlet malls beat anyplace else in terms of selection.

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I've noticed that the style of shirts I buy at Casual Male have an identical counterpart at their outlets that are sold under a different brand name for less, but in reality seem to be the same shirts. Even the logos of the two brands are similar, just different words.

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@OminousG: Wow, there is a Consumerist reader that wears JNCOs in 2009!!??!

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This brings up some pretty interesting points. Have to agree about the "all-day" shopping thing - our outlet malls are located in the sticks and my shopaholic friends do make an all-day thing of it. Sometimes they'll even get a motel room and stay the night in the area and do more shopping the next morning.
Me, I'm a Target sort of girl. Too lazy and too fashion-retarded to bother looking for stylish clothes when jeans and a t-shirt will do.

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Sometimes it's what you do to look the part without spending your savings to look the part. It doesn't really bother me that the Banana Republic outlet might not be nearly as amazing as the "real" Banana Republic. There will never be an occasion in which I can spend $130 for a pair of pants. But I still have to dress well for work, so here we are.

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@merist: Their coupons are available online...

[www.tangeroutlet.com]

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Hey you know what else fools shoppers?


This dumb book!


If the bullet points are any indication, she's just repackaging old information to center around outlet malls.

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@merist: Yes, there seems to be a trend of full-priced stores opening in outlets. In an outlet not too far from me there is a Bath and Body Works that is not an outlet, rather a full-priced store. Seems sneaky to me.

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@Ichiro51:


Of course, they even have that obnoxious gold crown on the butt too. They are perhaps the most comfortable jeans I've ever owned.


I have a few shirts too, but seeing how I am an adult and have a job now, they are limited to when its time to work in the yard.


But on casual days, I'm pimping the jncos more often than not.

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I've had this discussion with my wife many times. When we go to outlet stores, or the mall has massive "50%" off or "BOGO" sales, and there are throngs of women fighting over items, I roll my eyes and state. "You know I can buy 90% of these items or something similar online for 20% off of their "sale" price, right? From the comfort of my own home."

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@Laura Northrup: Mee too! For years I have preferred the outlet BR to the mall locations. I was always sad there was not one close to me and made it a point to go when on a business trip or some other venture. Now, however, not so much....I guess I am just disenhanted with the whole brand.

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I went into an Old Navy Outlet store recently and I was really disappointed.


NOTHING was on sale. NOTHING was cheaper than the non-outlet store.


As someone who shops at a regular ON relatively frequently, I was comparing the prices in my head, as well as the merchandise. I noted that the costs were virtually the same. The merchandise at the oulet was STILL BEING SOLD in the regular store.


The only plus? That it was in Delaware so no sales tax...

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It's a mixed bag for sure. Some outlets are good deals others are full retail. What I find funny is that most outlets have book stores where they sell books similar to the Barnes and Noble discount books, except the books are way worse and out of date, ie, "Learning Microsoft Windows ME" for $6.98 or "Consumer Reports Buyer's Guide from 2003". Who the hell is buying this crap?

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@Kimaroo - 20% More Kitty Added!: The Mills malls were never really full outlets, and that's the trick, too. The Mills line had two or three true outlets, but the rest was just overstocks of other brands and crappy second-line book stores. No wonder the chain ran into trouble.

I see the same thing happening here in kansas city with The Legends "outlet" mall. But they're a little smarter in that they're not promoting it as an outlet mall as much as a destination around the NASCAR track.

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@Laura Northrup: My entire closet is basically a banana republic outlet.

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@OminousG: Oh man, I remember JNCOs. I used to envy the shit out of my friends with money because they got to wear them while I was stuck with knockoffs! I was a skater kid in the '90s.

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@Laura Northrup: The only store my wife and I will shop at in outlet malls is Banana Republic. The prices are ridiculously cheap and I like the clothes they carry. The one nearest me frequently is 60% off the already reduced prices. I usually get their Polo shirts for under 10 bucks, which is a good deal regardless of the brand.

However, I am regularly astonished (in a bad way) by the prices at the other outlets stores. The Timberland outlet being the worst. I saw the same pair of boots which I had recently bought at DSW for 39.99 being sold at "50% Off" for 129.99.

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@pecan 3.14159265: The Mills malls were a hybrid. There was one in Phoenix and one in Ontario, CA, that we used to frequent. But they weren't really outlets either. Ann Taylor Loft was a factory store, as was Gap and Coach. Most of the stores were just overstocks or seconds. The prices were never THAT good. But there was a Dave and Buster's and a great movie theater, so people put up with it.

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Nothing about this book impresses me at all. There's nothing there we don't already know.


And as someone who grew up with tons of outlet stores around me (Reading, PA) and now has great outlets in between Tucson and Phoenix (Casa Grande) that I can shop at whenever I'm travelling between the two cities, I've never gone out of my way to shop at an outlet.


If you go outlet shopping and tell yourself the retail price on the tag is really correct, you're a fool. Most of us know better. However, I cleaned up recently at the Van Huesen and Eddie Bauer outlets; and I guarantee you I got great deals. I spent less than $200 and came home with my entire summer wardrobe.

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@JustinSane07: You'd be surprised how much of this "old information" isn't familiar to a lot of people, especially older people who don't spend much time reading consumer news on the net and young people so eager to spend money that they don't educate themselves or shop around like they should. Yeah, to us it's old news, but there are a lot of people out there that don't know what's up and any book that educates consumers gets an A+ in my book.

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@Ichiro51: I'm actually surprised that there was someone wearing JNCO jeans as recently as 7 years ago. Isn't that like having bought Jordache 'mom jeans' in 2003? They're passe now, but they were still old fashioned when purchased.

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@gfonner: I don't think ON has outlet stores... they house their regular stores in outlet malls, but I'm a Gap, Inc fan and on their promotional materials I've seen them refer to Gap and BR outlets, but only ON stores.

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I remember when outlet stores actually sold discounted factory seconds. Farberware used to sell pots and pans dirt cheap just for minor blemishes that had no affect on your ability to cook. I'll be darned if I could tell what exactly was wrong with some of the stuff I bought. I miss those days.

You can still find some good deals at the Black and Decker stores, both on tools and kitchen appliances.

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If not for the Lands End online outlet and the Gap outlet store near me, I would have had nothing to wear for my first job after graduate school. My employers were really lowballing me on my salary, so I couldn't afford full-price stuff.

That said, I've had great luck since at Liz Claiborne and Calvin Klein outlets. Their quality seems to be just fine. But don't go into a Coach outlet if you want to keep your sanity. I visited the one in Lancaster a few years back, and it was stuffed to the brim with entire families, three generations' worth, buying literally everything they could grab. It was a madhouse.

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There's lots of good and bad to be found at outlet malls. Just a couple examples:

Good:
- Bought a pair of Salvatore Ferragamo Tramezza (their highest men's line) shoes that retailed at around $600 (and that MSRP is NOT a work of fiction) for $159 since they were a sample in my size. Trust me, they're gorgeous.

- Regularly find Ralph Lauren Purple Label and Black Label items (they go straight to clearance at the outlet malls) at the RL outlet. You won't find these nicer RL lines at the mall, so yes, the outlet mall offers better quality items than you'd find at a regular shopping mall (at least in this case).

- One of my dresser drawers is filled with basic t-shirts from the Banana Republic outlet - yes, from the line created especially for the outlet - that I pick up in the clearance section for around $4-6 each.

Bad:

- I was searching for a pair of Oakleys to wear while playing sand volleyball, but to my dismay found that the model I was shopping for was being sold at $5 MORE than MSRP at the Oakley outlet. Though it's not being discounted anywhere, I can find them all day long online at MSRP and not have to pay taxes (or shipping).

- You'll find a Big Dogs outlet at every outlet mall that does nothing but waste space.

There are definitely worthwhile deals to be had at outlet malls - there's certainly no reason to dismiss them outright like Ellen Shell does.

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I have never seen any spectacular deals at the outlets, at least not anything worth making a special trip for. That being said, I drive from AZ to CA and back a couple of times a year and usually stop at the monstrosity that is Cabazon since it's right off the highway. I usually just go there for a soft pretzel and to stretch my legs. The wife likes to hit a few specific stores, but rarely finds anything.

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I remember when there was only one local outlet mall, and they actually had true "outlet" stuff. Clothes from last year, factory seconds, etc all at really good prices.

Now there are 4 or 5 outlet malls all within 1 hours drive, and the new ones almost never have any true "outlet" products.

Also I've found Gap outlet and Old Navy Outlet not only have their own line of clothes (tag says Gap Outlet), but often cost more at the outlet vs the actual store's "sale" price.

Really silly. I used to love going to outlets, now I avoid them like the plague.

(Did manage to score a Tumi garment bag for $50 a few years back, at the Tumi outlet. Huge score)

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@HirsheysKissMyArse: I pretty much always go to the Banana outlet and to Nordstorm's rack every time I visit my folks since I pretty much always hit pay dirt in terms of finding awesome deals. It's crowded and stuff, but knowing what you're looking for, makes my trips to that mall be fairly quick events.

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I've only been outlet-shopping once in my adult life, in Flemington, NJ. I was so absolutely underwhelmed by the "deals" that I left.

I guess they can be good if you are brand attached, like if you HAVE to have something from Coach or J Crew or whatever. But I have no brand loyalty whatsoever, so I just see "pair of jeans; mediocre; too expensive" and look elsewhere.

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@Laura Northrup: Yes! And they are more traditional, classic styles as opposed to the more trendy things found in the mall. I think the last time we were there everything in the BR outlet was an additional 40% off.

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One of the things most people don't realize is that most stores that are called "outlets," are not actually what they think they are. Time was an "outlet" was a manufacturer-owned shop that sold seconds, irregulars, refurbished and/or discontinued goods, at a discount. Back then, it was possible to find terrific bargains at "outlets," not only because the goods were second-rate but because there was no "middleman" ... you were buying direct from the manufacturer.

But that's no longer what they are. They are full-blown retail chains in their own right, often with no direct connection to any manufacturer. They might still sell some refurbs, seconds, etc. but the savings are minimal at best, because there is now a "middleman," that being whatever company owns and runs the "outlet," since the manufacturer no longer does.

As if it weren't bad enough that the manufacturer-labeled "outlets" are no longer true "outlets," now we have retail chains operating their own "outlets." I can't conceive of how it's any cheaper to run (say) an Ann Taylor "outlet" than it is to run an Ann Taylor "store." But apparently they've fooled shoppers into thinking it's true.

Not sure I recall this correctly ... but a number of years ago, when some outlets were built in southern Connecticut, the A.G. went after some of them for calling themselves "factory outlets," because they were not factory-owned. They could, it turns out, legally call themselves "outlets," but they couldn't have that "factory" inserted in there if they weren't actually owned by the factory/manufacturer.

This was the first time most people in CT were aware of the phenomenon of the "non-outlet outlet," but it doesn't appear to have dented them, since the outlets in question are bustling even now in the midst of a recession.