Consumers and retailers have embraced outlet malls during the penny-pinching recession. But will its promise of name brand deals deliver?
Outlet malls bring the promise of big brand names at discount prices.But do they deliver?
No longer are outlet stores filled with seconds and last season's merchandise that didn't sell at retail stores. Most retailers these days have items manufactured specifically for their outlet business. Other brands sell mostly through department stores but use the outlet as a way to cut out the middleman.
It's true that many outlet centers are located outside the city and require a bit of driving to get to. That's one of the criticisms Boston University professor Ellen Ruppel Shell, who wrote the book “Cheap: The High Cost of Discount Culture,” has with them.
Either way, it's all about the name. When The Outlet Shoppes at Oklahoma City opens next month, it will have big names like Saks Fifth Avenue, Coach and Michael Kors. It will have storefronts not found anywhere else in the state, such as Brooks Brothers, DKNY, Polo Ralph Lauren and CorningWare.
“Outlet stores are the opposite of a convenience store,” she said. “Because you travel so far to get to these stores, you tend to want to recoup your investment.” This mindset causes shoppers to overspend, she says.
However, in Oklahoma City, the new outlet mall is only about eight miles from the city center. And as one outlet retail expert explains, retailers are sensitive to their business at department stores and try to keep their outlets a safe distance away.
Another criticism Shell has of outlet centers is the merchandise. She says retailers are increasingly using outlet stores to sell lower quality merchandise carrying the same brand name as a way to trick the consumer.
“It's really a case of buyer beware to know what you are getting. And the sales clerks don't always know,” she said.
Shoppers embraced outlet malls as a penny-pinching mentality took over during the recession.
Consumers don't necessarily want cheap, they want a good value, evidenced by the findings of a recent report by the NPD Group, a market research firm in New York.
“Retailers really use outlets to connect with a variety of shoppers that may never hit their regular store,” said Kathy Grannis, a spokeswoman for the National Retail Federation.
Take Coach for example. Owning a Coach handbag probably is too costly for most women, but buying a discounted outlet version may be possible.
Grannis said outlet centers aren't just a place for consumers to find deals.
What's not to like
“Shoppers want an experience. They aren't going to spend a day to get to an outlet to hit one store and leave,” she said.
Shoppers can find clues to whether an item was made for the outlet by checking the tag. Sometimes it will read “factory store,” have extra symbols printed on it or be from an unfamiliar line extension, for example Chico's outlets-only brand Additions, according to an article published in the July 2010 issue of Consumer Reports' ShopSmart magazine.
At Saks Fifth Avenue OFF 5th, about 17 percent of the merchandise is leftover from a Saks department store, said Sophia Brown, senior manager of public relations and special events.
“The majority does not come from Saks Fifth Avenue. Our customer is typically a very different customer. There's not a lot of overlap. They are looking for the fashion Saks is known for at a lower price point,” she said.
What to expect
There will be recognizable brand names, she said, but none of the super-luxe pieces.
Its report published July 12 found that sales of clothing at factory outlets and warehouse clubs posted double-digit gains, rising faster than online sales. For the 12 months ending April 2011, sales climbed nearly 18 percent at factory outlets, according to NPD.
And retailers recognize this. Saks, for example, is opening four new OFF 5th outlet stores this year (and relocating a fifth), but is adding no new department stores.
In Oklahoma City, the OFF 5th store will be 27,000 square feet and designed to feel like a loft, with a cement floor, elegant furniture, mirrored tables and pops of color throughout, Brown said. It will feature departments for men, women, children, home and beauty.
And while most of the stores at the mall will be national retailers, the food court features all local flavors. Restaurants include Bella Pizza, Chao Praya, City Bites, Orange Leaf Frozen Yogurt and Primo's Pronto.
Jeff Havern, owner of Primo's, said there will be similarities to his dine-in restaurant menu with “a little flair you won't see everyday at a food court.” Items include risotto, pastas, salads, soups, Tiramisu and creme brulee – which will be fired on-site.
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