Dirty Secrets of Outlet Shopping

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dirty secrets of outlet shoppingOh, the outlet mall.

It gleams like an oasis of designer savings in the desert. It’s a day of promised savings, rewarding the dedicated shopper who will find a trove of off-price goods that were sold at luxury retailers—perhaps last season, but who’s counting?

Right?

That is occasionally still true. But over the last few decades, as retailers recognized the profitability of attracting Americans looking for a deal (yes—they will use this great quality about you against you!), they began to build an industry around outlet shopping that is completely separate from their regular business. And it’s working–there are 13,000 outlet stores around the country, and every year outlets draw more tourists than attractions like Washington D.C.’s museums or Philadelphia’s Liberty Bell.

The industry is based on some secret tactics designed to fool the customer–don’t be suckered.

Dirty Secret #1: Going the Distance

Outlets are often located in the middle of nowhere, far away from cities. Originally this practice was for two reasons: (1) real estate and rental prices are more affordable out in the boonies, and (2) off-price merchandise needed to be located a geographical distance from its full-price counterpart—in other words, there’s no Prada factory store slated to open on Fifth Avenue in New York anytime soon.

However, businesses noticed a great side effect. Since customers often drove a great distance to get to the outlets, they would make a day of it, and thus feel compelled to buy things to “make the trip worth it.” What’s an outlet shopping trip without a slew of bags to show you made good use of your day?

Dirty Secret #2: This Was Bought … Especially for You

Outlets have gotten by on the reputation that they stock items from the main store that are overstock, last season’s, or perhaps slightly damaged or not production quality. It’s very alluring to think you’re scoring a designer handbag at a 70% discount when the seam at the bottom was just slightly off, right?

Actually, luxury department stores now have dedicated buyers that buy separate product for outlets. Designers have dedicated production to manufacture items separately for outlets. An outlet buyer for a luxury department store in New York, who wished to remain anonymous, told us, “I would guess that only about 10-15% of our outlet’s stock was actually items that the main store carried. The rest of it was merchandise we bought or produced for the outlets—and truth be told, the main store would not find its quality worthy of the brand. We even use different labels for outlet merchandise so that distinction is there.”

Dedicated outlet products typically feature less edgy fashions at lower quality—shoddier construction, more synthetic materials. Some retailers use tactics such as weaving polyester into a natural fabric, but marketing the item as if the full price reflected a 100% natural fabric. Which leads us to dirty secret #3…

Dirty Secret #3: Faux Price Tags

Wait a second: If merchandise is being bought and produced especially for the outlet, that means… Yes, you guessed it, that price tag’s exuberant slash on that “original price” is not authentic, which essentially means your savings aren’t, either.

Again, some of the merchandise is actually from the main store, so not all price tags are fake, but if we had to hazard a guess, we’d say around 75-80% of outlet merchandise these days carries “fake” prices built into the price tags. Our anonymous buyer told us, “When I bought merchandise for outlet, I not only determined the selling price as I typically would, I also created a fake ‘full price’ for each item that would get marked on the labels. But, of course, our markup was based on the selling price.” Which means that the “$250 shirt” that is selling for $50 was bought for around $20.

Tips on Getting the Most Out of Outlets

We are not saying that outlets are evil, or that you should necessarily stop frequenting them. Outdoor outlets can be a fun way to pass a sunny day. We are just arming you with the knowledge that outlets have become a $17 billion dollar industry that takes advantage of the fact that outlet shoppers want a bargain—so they will do anything to make money off your feeling that you are getting one.

Head to the outlets (if you must) armed with these tips:

  • Know the value of a sunk cost. Even if you’ve driven for 45 minutes or more, if you don’t see anything you like, just walk away. Now that you understand the geographic strategy, don’t throw good money after bad to justify the road trip.
  • Ignore the “full price.” It’s probably fake, and the only thing that’s relevant is whether the item is worth the selling price.
  • Carefully check quality. Have a hawk-eye look at construction, stitching, potential damage. Check tags for fabric content and the country of manufacture. A Consumer Reports study said that 77% of people can’t tell the difference between outlet and regular merchandise. Don’t let that be you—if you favor a designer, regularly check their full-price merchandise at the store so you are familiar with its quality and will be able to tell the difference.
  • Research ahead of time. If you know you want a pair of Nike shorts, for example, check out the price online or at your local store, so you know how the outlet price compares. The savings may not be as great as you think, especially after you account for lower quality.
  • Check out Consumer Reports’ rankings. Top-rated stores include Mikasa, Lenox, and L.L. Bean. (A copy is here, and Consumer Reports subscribers can access the full article at their website.)
  • Beware regular retail stores. There’s no legal definition of an “outlet” in the US, so sometimes regular retail stores sneak themselves into an outlet.

Bottom Line: The designer outlet buyer suggests that the best way to snag a deal is to head to the department stores or designer retailers at the end of each season (March and August) when merchandise is all marked down. “It will only get marked down a little bit more, maybe 10%, before it gets transferred to the outlet.” This way you have a nicer shopping environment and know you’re getting real, full-price merchandise for a real deal.

Otherwise, if you head to the outlets, be armed with this knowledge: The best defense is to look at the selling price, check quality, ask whether it’s worth it, and consider nothing else. If it’s not worth it, walk away. There’s always the food court.

  • Liz

    one thing when I do when I make the trip to the outlets is set a price i’m willing to spend, and don’t spend over that price no matter what I see. It is easy to get suckered into the fake original prices and even though you may think you are saving lots of money, you can still spend hundreds for just a few items.

  • Liz

    one thing when I do when I make the trip to the outlets is set a price i’m willing to spend, and don’t spend over that price no matter what I see. It is easy to get suckered into the fake original prices and even though you may think you are saving lots of money, you can still spend hundreds for just a few items.

    • Belrod

      I love shopping at the outlets for the convenience, yet I only live about four miles away. I shop there just like I would at a department store at the mall, needs based, bottom line price. . .any frugal shopper knows the ‘regular price’ at any store is such a random beginning point. One disadvantage to some shops like Gymboree, Coldwater Creek, etc., is if you’ve made purchases at the outlet, the retail locations will not honor refunds and/or exchanges and vice versa . . . I disagree with the statement in the article “the outlets are not as nice of a shopping environment” . . .I prefer walking and shopping there as with the teenagers that have been turned loose at the mall . . .

    • Belrod

      I love shopping at the outlets for the convenience, yet I only live about four miles away. I shop there just like I would at a department store at the mall, needs based, bottom line price. . .any frugal shopper knows the ‘regular price’ at any store is such a random beginning point. One disadvantage to some shops like Gymboree, Coldwater Creek, etc., is if you’ve made purchases at the outlet, the retail locations will not honor refunds and/or exchanges and vice versa . . . I disagree with the statement in the article “the outlets are not as nice of a shopping environment” . . .I prefer walking and shopping there as with the teenagers that have been turned loose at the mall . . .

  • http://twitter.com/familiesgo eileen gunn

    There are definitely outlet stores I like better than others. Banana Republic and J Crew have noticeably lower quality stuff at their stores. Ann Taylor Loft doesn’t offer much of a discount from its not outlet stores because it’s prices are already pretty low. I’ve never bought comfortable shoes at an outlet; they’re often too narrow. Outlet bras seem to run a little skimpy, too.I’ve found good deals on quality stuff at Ralph Lauren and Brooks Brothers. Outlets also seem to be a good source for pricier items like coats. Bought London Fog and Bennetton winter coats at an outlet at least 5 years ago for $100 apiece. Nice, warm coats and still in excellent shape. Definitely got my money’s worth there.

  • http://twitter.com/familiesgo eileen gunn

    There are definitely outlet stores I like better than others. Banana Republic and J Crew have noticeably lower quality stuff at their stores. Ann Taylor Loft doesn’t offer much of a discount from its not outlet stores because it’s prices are already pretty low. I’ve never bought comfortable shoes at an outlet; they’re often too narrow. Outlet bras seem to run a little skimpy, too.I’ve found good deals on quality stuff at Ralph Lauren and Brooks Brothers. Outlets also seem to be a good source for pricier items like coats. Bought London Fog and Bennetton winter coats at an outlet at least 5 years ago for $100 apiece. Nice, warm coats and still in excellent shape. Definitely got my money’s worth there.

  • http://neatfreakwannabe.blogspot.com Jenna

    Although I would love to be able to frequent regular retail stores enough to be able to snag great deals on end-of-season merchandise, I don’t usually have the time. If I need some new clothes, I can usually pick up more in one visit to those stores’ outlets since the merchandise is consistently lower-priced, as opposed to visiting the regular stores and possibly not finding anything on the sales racks. If I am planning a day to shop, I usually prefer to go where I have a better chance of finding clothes within my budget. I do recognize the lower quality levels, but I also usually plan my outlet trips when I have 20-30% off coupons for my favorite stores. To me, the compromise is worth it, especially if you are buying somewhat trendy items that would go out of style by the time the clothes wear out.

    • http://twitter.com/kgal1298 Kate G ♥’s Fashion

      I suggest signing up for the Outnet…which is Bluefly’s outlet site they hold a sale once a year for their anniversary and it’s basically designer duds for whatever year anniversary it is last year they had it for $2, but it sells out fast. Love that sale though this year I hope they do it and I hope it’s $3. Haha

  • http://neatfreakwannabe.blogspot.com Jenna

    Although I would love to be able to frequent regular retail stores enough to be able to snag great deals on end-of-season merchandise, I don’t usually have the time. If I need some new clothes, I can usually pick up more in one visit to those stores’ outlets since the merchandise is consistently lower-priced, as opposed to visiting the regular stores and possibly not finding anything on the sales racks. If I am planning a day to shop, I usually prefer to go where I have a better chance of finding clothes within my budget. I do recognize the lower quality levels, but I also usually plan my outlet trips when I have 20-30% off coupons for my favorite stores. To me, the compromise is worth it, especially if you are buying somewhat trendy items that would go out of style by the time the clothes wear out.

  • Outside

    Outlets ” can be a fun way to pass a sunny day.” I hope you meant rainy day. Don’t spend your sunny days inside shopping — get outside & get moving.

  • http://www.askfitnesscoach.com Skyler Meine

    Super interesting. You never know what you are getting. Unless you know what you are getting.

    • constance brown

      brilliant! lol

  • http://www.askfitnesscoach.com Skyler Meine

    Super interesting. You never know what you are getting. Unless you know what you are getting.

  • None

    Well duh. Any idiot knows all this

    • Ceej

      Clearly not otherwise the outlets wouldn’t exist as they do. Duh.

    • Ceej

      Clearly not otherwise the outlets wouldn’t exist as they do. Duh.

  • None

    Well duh. Any idiot knows all this

  • guest

    If you shop outlets, you already know this info. :)

  • guest

    If you shop outlets, you already know this info. :)

  • guest

    If you shop outlets, you already know this info. :)

  • Guest

    great article. i know so many people who get sucked into this outlet culture – when you are just spending a lot of money on things you don’t need, just because you think you’re getting a deal.

  • Guest

    great article. i know so many people who get sucked into this outlet culture – when you are just spending a lot of money on things you don’t need, just because you think you’re getting a deal.

  • http://www.smartmouthblog.com Nicole Longstreath

    I think it’s best to just avoid outlet shopping all together. Obviously, it’s only the illusion of getting a discount and, if you think about it, shopping at an outlet is kind of like letting the retailer manipulate you.

    If you really want good deals, learn to navigate a good thrift shop.

    http://www.smartmouthblog.com/2011/02/08/how-to-navigate-a-thrift-shop/

  • http://www.smartmouthblog.com Nicole Longstreath

    I think it’s best to just avoid outlet shopping all together. Obviously, it’s only the illusion of getting a discount and, if you think about it, shopping at an outlet is kind of like letting the retailer manipulate you.

    If you really want good deals, learn to navigate a good thrift shop.

    http://www.smartmouthblog.com/2011/02/08/how-to-navigate-a-thrift-shop/

  • http://www.smartmouthblog.com Nicole Longstreath

    I think it’s best to just avoid outlet shopping all together. Obviously, it’s only the illusion of getting a discount and, if you think about it, shopping at an outlet is kind of like letting the retailer manipulate you.

    If you really want good deals, learn to navigate a good thrift shop.

    http://www.smartmouthblog.com/2011/02/08/how-to-navigate-a-thrift-shop/

  • http://www.smartmouthblog.com Nicole Longstreath

    I think it’s best to just avoid outlet shopping all together. Obviously, it’s only the illusion of getting a discount and, if you think about it, shopping at an outlet is kind of like letting the retailer manipulate you.

    If you really want good deals, learn to navigate a good thrift shop.

    http://www.smartmouthblog.com/2011/02/08/how-to-navigate-a-thrift-shop/

  • Stolihotshot

    Thanks for the tips!! Always can use the reminders!! Sad, because a lot of the foreigners visiting from out of town get sucked in to these places and way overpaying. I LIVE IN ORLANDO BY THE WAY. OUTLET CITY!!

  • Stolihotshot

    Thanks for the tips!! Always can use the reminders!! Sad, because a lot of the foreigners visiting from out of town get sucked in to these places and way overpaying. I LIVE IN ORLANDO BY THE WAY. OUTLET CITY!!

  • Stolihotshot

    Thanks for the tips!! Always can use the reminders!! Sad, because a lot of the foreigners visiting from out of town get sucked in to these places and way overpaying. I LIVE IN ORLANDO BY THE WAY. OUTLET CITY!!

  • HaileyAC

    I’ve noticed with outlet stores the style of the clothing is very different. I’m from Ontario and visit my boyfriend in Indiana and we go shopping, a lot of the clothing tends to fit wide and short so I can never find clothing that fits since I like to wear my shirts a little longer. Certain stores like Coach definitely are stocked differently but the quality still seems fairly good.  You just need to be mindful at outlets like you should be shopping wherever.

  • Guets

    Also, outlets tend not to allow returns i.e. “Final Sale,” as opposed to the regular retail store.

  • Carrie Couch

    One of the biggest tips I have to score big savings at outlets is to sign up for their emails.  Brands have different emails targeted just for their outlets and they usually have some great coupons to offer.  These coupons are always better than the coupon books they offer at their info desk.

  • http://twitter.com/kgal1298 Kate G ♥’s Fashion

    This is so true the Camarillo Outlets by LA are a joke. Yeah okay Nike let’s just put a regular retail store here so people think it’s real. A couple stores were legit like the CCO, but honestly I find better deals online at things like Beyond the Rack that actually buy the real stuff to re-sell for the most part and I know that because I worked with a e-comm site that worked with them before and the practice isn’t bad, but honestly I get pissed anyway once you work in e-comm or any retail you know real price vs. retail price is sick we’re talking 300% minimum mark up on cosmetics and clothing can be 150% on up depending on the brand…bleh hate it. 

  • Urentropy2003

    There is no kidding about the games outlet stores play in this article. As a civil engineer who has worked on store design teams and with the corporate owners/representatives of these monstrosities, things are a lot worse than this article portrays. Not only are the items sold at outlet malls often lesser quality, those items that were transferred from a parent store because they did not sell may be as close to “USED” as one can get with a “NEW” label. (E.g., the bra sized at 40D but is labeled as 38C. How many times was this bra tried on and discarded before it wound up on the racks of the outlet store?) Ahhh, rip-off city!

  • http://twitter.com/CathrynLouis Cathryn Louis

    I had my fill of outlet stores. The only bargain I found that seemed to be a good value was a set of Samsonite luggage I bought for my daughter. Everything else? I got what I paid for. :)  My usual preference is shopping the deep discount sales at major department stores.

  • Get over it

    seriously, to try to to pick between outlet and retail…its all the same. Since the economy hit every retailer is trying to get the biggest bang for their bucks. Department stores, including Nordstrom’s are short handed because of cut backs and who wants to pay a million bucks just because you are shopping in a department store for a comparable item. Also, any damaged product that did go to outlets came from the horrible, ill mannered shoppers in these upscale department stores that just leave clothing inside out and damaged inside wardrobing rooms. Outlets rock…and if you don’t think so…stay in the Malls!

    • weakforchic

      I worked there. Everything you say is true, and then some. Nordstrom is yuck.

  • constance brown

    i always knew all that-outlet shopping is a joke