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Posted: October 17, 2014

The secret you don't know about outlet shopping

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By Clark Howard

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Do you like outlet shopping? What you think is a deal may be no deal at all because of a secret that the outlets keep closely guarded. 

Outlet shopping moves from exurbs to the suburbs

Outlet centers had their origins in rural mill towns. They were typically attached to factories and were a dumping ground for irregulars, factory seconds, and unsold inventory from manufacturers.

Then in their next incarnation, they moved closer to mid-sized and bigger cities. Though they were always careful to stay 50 miles or more away from the city core. 

Yet the outlet business model has become so key to retailing that now outlet centers are often in the suburbs. They're no longer in the exurbs 50 miles away.

When I was a young man, I had to wear a suit with a dress shirt and tie to work. (Now I would never be caught dead in that at work!) So I would go to factory outlets and buy factory second shirts for $2 and irregulars for $6. The factory seconds would have these huge mis-stitches. So if I had a meeting, I had to wear my jacket all day to cover my $2 shirt!

The greatest finds were when big production runs were done for a retailer and that retailer went bust or declined delivery or went on credit watch.

The big secret hiding in your neighborhood outlet store

Today, outlets are just regular versions of retail stores by another name. They can be high end like Saks Fifth Avenue or Coach or another brand name department store. Or they can be brand names like Nike or Gap.

But here's what you need to know: The percent of merchandise in today's outlet stores that are irregulars or factory seconds is around 1% to 5%.

What's there is stuff being specifically made for outlet stores. The good are designed for outlets only using inferior stitching and subpar material. You'll almost never find what's being sold in the outlet store in the traditional retail store. It may look the same, but it's not.

So it is an experience going to these places, but they're not a place to save money. Think of them as a place to get aspirational fashion. Nothing more, nothing less. That bag may say 'Coach' on it, but it's not the same quality of the true Coach bag you would find in the real non-outlet store.

Know what you're getting and don't believe the "was/is" pricing -- "was $200/is $18" or whatever it may be. That's just retail theater!

ARTICLE: 4 items to always buy used

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