Are there great deals to be had at outlet stores? It depends
ST. LOUIS - As Amy Wittman sorted through merchandise in preparation for the opening of the St. Louis Premium Outlets, she noticed familiar stickers on some items. Some, but not all.
She estimated that only about a quarter of her store's merchandise, which is first sorted at a central warehouse for all outlet stores, comes from full-line department stores. Much of the rest comes directly from vendors who produce goods specifically for outlets.
As more outlet centers crop up across the country, many shoppers have been wondering what exactly these stores sell. How much of it is clearance or slightly damaged goods from full-price stores? How much of it is being made directly for outlets? And, of course, how good are the deals, really?
Marshal Cohen, chief retail analyst for the NPD Group, said that the outlet business started off decades ago selling mostly leftovers and overruns to recoup costs and margins. But these days, more than 85 percent of the merchandise at outlet stores is designed and produced specifically for those stores.
Made-for-outlet products are often similar to those at full-price stores, but they may have a lighter-weight fabric or no lining, he said. In many cases, the lower-grade merchandise may be good enough for consumers who may not notice or care about the difference, he added.
Carol Spieckerman, president of retail strategy firm Newmarketbuilders, said brands could sometimes make more profit from selling products dedicated to their outlet stores because they have discounts built into the quality of them and the stores are not as expensive to operate.
She added that it's no accident that it's difficult to compare the prices between regular and outlet stores, because they sell different merchandise. Brands have purposefully done so, especially as outlet centers have moved in near cities where they are closer to full-price stores.
Where the deals are
To find the best deals in outlet stores, Cohen recommends going to the sales rack, keeping an eye out for clearance merchandise from full-line stores and looking for higher-end products that might have a deeper discount. And a general rule of thumb, he said, is that the brands or retailers with fewer outlet stores tend to have the best deals.
The savvy shopper can definitely find some great deals at outlet stores, he added. But he said that shoppers should also be aware that some retailers might sell the exact same merchandise in both venues - and in some cases a 75 percent off sale at a full-price store can be a better deal than you can find at the outlet.
"There are some stores that offer deals at outlets that aren't any better than a regular store on any given day," he said.
We're in the midst of the biggest boom in outlet-mall development since the mid-1990s, and the trend is poised to continue, said Linda Humphers, editor of Value Retail News, which tracks the outlet-mall industry.
"There is a lot of pent-up demand," she said. "I think next year we'll have another eight to nine open."
There's been only one full-price traditional shopping mall built in the U.S. since 2006, according to the International Council of Shopping Centers.
Much of the recent growth in sales and profit among higher-end brands and department stores has been coming from the outlet segment, said Wendy Liebmann, chief executive of WSL Strategic Retail. "So I think we are going to see more outlet malls for the time being and will see more shrinkage of traditional malls," she said.