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Outlet stores

Outlet store buying guide

Last updated: April 2013
Getting started

Getting started

The worst days of the recession may be over, but shoppers still are looking for bargains. And that's why the $30 billion outlet industry is thriving. "When the economy turned south, everyone and their brother mustered all the discipline they could to save money," Linda Humphers, editor of the trade publication Value Retail News, said. "People say, ‘I've got to cut back but don't want to shop at Walmart.' Outlets represent value."

But are outlets delivering on that promise? To find out, we surveyed 17,753 readers who made close to 39,000 visits to outlet stores. The result is our Ratings of value, quality, selection, and service at 58 of the nation's biggest outlets. We also interviewed experts and hit the outlets ourselves, buying $2,000 worth of shirts, slacks, socks, sweats, and other items to examine in our labs.

The results show that some outlets offer serious bargains on well-made merchandise sold by a knowledgeable and solicitous staff; others stock so-so goods at so-so prices. Our research revealed:

Readers like a range of stores

Among the top choices: Jockey and Carter's (clothes, underwear), Harry & David (food), Corningware (kitchenware), Izod and Van Heusen (clothes), and Coach (accessories).

Shoppers are basically pleased

Overall, 60 percent said that they were completely or very satisfied with their experience. That's below our readers' scores for general-merchandise stores such as Costco, Kohl's, and Target but similar to scores for fast-food restaurant chains and supermarkets. Eight percent of shoppers complained about the store environment, including crowds, few fitting rooms, unattractive stores, and confusing layouts.

Prices are praised--and criticized

Sixty percent of shoppers said outlets offered exceptional value, and 30 percent said that prices were much lower than sale prices at regular stores, especially at Coach, Haggar, Izod, Van Heusen, and VF Outlets (the parent company of dozens of apparel brands). Yet the top complaint about outlet shopping was higher-than-expected prices, cited in one of five store visits. Stores more likely to be called out for high prices: Bose, Calvin Klein, Casual Male XL, Gymboree, J.Crew, Levi's, Nike, Polo Ralph Lauren, Pottery Barn, Samsonite, and Sunglass Hut.

The goods are good

Almost three-quarters of shoppers described the merchandise quality as excellent or very good. About the same percentage rated outlet merchandise equal in quality to the same brands sold at regular stores; 11 percent judged outlet goods slightly poorer but said the differences were barely noticeable. Two percent thought outlet lines were "substantially poorer" than goods sold elsewhere. Specifically, Banana Republic, Brooks Brothers, Gap, J.Crew, and Pottery Barn were cited more than other stores for selling goods inferior to regular-store counterparts.

Selection and service could improve

Readers said one-third of the outlet stores they visited had a narrower assortment than did regular stores. Nineteen percent of shoppers termed selection fair, poor, or very poor. The exceptions: Bose, Carter's, Harry & David, and Le Gourmet Chef, all of which rated higher for selection.

Twenty percent of respondents called outlet service fair, poor, or very poor. Harry & David was alone in earning a top score for help.

Outlet stores then and now

Decades ago, outlets were near the factories and mills where goods were made, providing manufacturers with a convenient way to dispose of excess or imperfect inventory at a discount because there was no middleman. Although many companies still use outlets to move older or unpopular stock, they sell fewer blemished or cosmetically flawed items.

"No one wants seconds anymore," said Jack Abelson, an industry consultant and president of Jack Abelson & Associates, based in Leawood, Kan. "Companies don't want to tarnish their names, and it's easier for them to sell those flawed items overseas on-site where they're made." Indeed, when our reporter shopped for seconds at several outlet centers in the New York metropolitan region, they were tough to find (except at Le Creuset, where he could buy chipped cookware at 35 percent off the if-perfect price). That was true even at shoe stores where seconds were plentiful a few years ago. Clerks at several Adidas and Nike stores we visited said they no longer sell "B grade" stock.

What you will find is more merchandise made just for outlets. "Retailers can't depend on leftovers, returns, and seconds to stock the outlets," Marie Driscoll, a retail analyst with Standard & Poor's Equity Research in New York, said. "So goods are being made specifically for sale in this distribution channel." To sell for less, manufacturers often cut corners, as our textile expert discovered.

With more focus on merchandise made specifically for outlets, it's getting tougher to find "treasures," Abelson says. Several years ago, our reporter found in an outlet a Brooks Brothers silk jacket marked down to $50 from its original specialty-store price of $400. Not this time.

When we asked outlet-store employees and customer-service reps for differences between goods at their chain's outlet and retail stores, they were candid, and it's clear that every company has its own strategy. Staff at Under Armour and Coach told us that the outlets sell older merchandise from regular stores and goods made just for the outlets. A Guess employee explained it fills its shelves with discontinued items, while a worker at Gap said the chain offers apparel that never saw the light of day in a regular store. At Black & Decker Factory Stores, you'll find fully warranted demo and refurbished equipment and brand-new goods. Lands' End "Inlets" carry year-old inventory, clearance items, and returns. Harry & David outlets sell a lot of the food and gifts in the company's catalog and on its website (though not always fruit), but prices and promotions differ. Sunglass Hut offers a mix of old and new glasses at "prices not necessarily cheaper" than those at its mall-based stores, a customer-service representative told us.

Some retailers don't draw any line between outlet and regular merchandise. A customer-service rep for Dress Barn told us that in all the company's stores, "it's the exact same stuff, just different prices and promotions."

If you're unsure of what mix of merchandise your favorite outlets are selling, ask. We found the staff and representatives at companies' toll-free lines very willing to answer.

Shopping tips

For most people, outlet shopping requires a commitment of time. Most centers are in tourist destinations such as Orlando and Las Vegas, or in areas at least 30 miles away from full-price stores in big cities, to avoid what the trade calls "retailer sensitivity." But those distances have narrowed: Outlets used to be at least 60 miles away from full-priced competitors.

Thirty-seven percent of outlet stores where readers shopped were more than 50 miles from their home; one in five were more than 100 miles away. Seventy percent of outlet center shoppers visited three to 10 stores, and 46 percent spent at least 3 hours shopping.

Given the distance and the price of gas, enhancing the customer experience is an industry priority, insiders told us. Malls are upgrading restaurants and adding children's play areas, benches, water fountains, and parking-lot shuttles. Many stores are designing bigger fitting rooms and eliminating cement floors, pipe shelving, and harsh lighting to more closely resemble retail boutiques.

Ultimately, though, it's the deals that keep shoppers coming back. The lure of the outlets is simple: Everything is on sale every day, even brands that are often excluded from sales at department stores, including Coach, Nautica, Polo Ralph Lauren, and Tommy Hilfiger.

Still, claims of discounts of up to 65 percent may be somewhat inflated. First, the loftiest discounts tend to be on clearance goods that shoppers have rejected despite repeated markdowns (think size XXXL sweaters in fuchsia and lime green). Also, the discounts are based on deductions from the full retail price, not necessarily the price most people pay. When you factor in sales and discounts at regular stores, says Humphers of Value Retail News, the average savings at outlets is 38 percent. Our own comparison showed savings of 15 to 61 percent on an assortment of goods.

You could probably save at least as much, and avoid a trip, by checking the clearance, outlet, or tent-sale sections of retailers' websites. But that's not what shopping is about, Humphers says. "Twenty years ago, catalogs were supposed to shoot down outlets," she said. "It didn't happen. Retail is about feeling the fabric and talking to a person. It's a tactile and sensory experience that a keyboard and screen can't provide."

How to shop, how to save

Here's how to improve your outlet experience and save even more.

  • Before you hit the road, go to the outlet-center website to see store locations so that you can park and shop strategically.
  • Go to the center's management office or call to find out about unadvertised sales.
  • Shop early in the day, when crowds are smaller and merchandise hasn't been picked over. Dinnertime is another good time to beat the mobs. Crowds tend to be at their worst between noon and 3 p.m.
  • Shop midweek. Tuesday to Thursday is usually quietest. Weekends are chaotic.
  • Think twice about shopping during the holidays. Crowds are intense, though outlets do offer special holiday deals.
  • Look for off-season goods.
  • Join shopper programs such as Premium Outlets' VIP Shopper Club (free) or Tanger Club ($10 and you get a free coupon book) for exclusive promotions and discounts. Sign up for e-mail alerts and get bonus savings by becoming a fan on sites such as Facebook.
  • Seek other discounts. Some centers offer deals for seniors and the military. Go to the center's website for specifics.
  • Know the return policy. Most regular retailers won't take returns from outlets.
   

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