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.