Outlet stores are cheap primarily because a significant portion of their merchandise is specifically manufactured for the outlet market at a lower cost and, consequently, often a different quality, rather than being surplus or past-season items from full-price retail stores.
The Evolution of Outlet Merchandise
Historically, outlet stores served as a clearance channel for overstock, factory seconds, or end-of-season merchandise from their main retail counterparts. Shoppers could truly find identical, high-quality items at a discount. However, this model has largely shifted.
Today, most items found in outlet stores are:
- "Made for Outlet" (MFO) Products: These products are designed and produced specifically for outlet sales. While they may bear familiar brand names and resemble their full-price counterparts, they are often created using:
- Lower-cost materials: Fabrics might be blended, hardware less durable, or construction simpler.
- Simpler designs: Fewer intricate details, embellishments, or complex stitching.
- Different production processes: Manufacturing might be streamlined to reduce costs.
- Unique SKUs: Outlet items typically have different stock keeping units (SKUs) than those found in standard retail stores, making direct price and quality comparisons challenging for consumers.
This strategic manufacturing allows brands to offer items at lower price points while protecting the perceived value and premium pricing of their full-price retail collections.
Beyond "Made for Outlet": Other Cost-Saving Strategies
While purpose-built merchandise is a primary factor, several other elements contribute to the lower prices at outlet stores:
- Lower Overhead Costs:
- Real Estate: Outlet malls are often located in more rural or suburban areas where land and rent are significantly cheaper than prime urban retail locations.
- Store Design: Outlet stores generally have less elaborate and more utilitarian store designs compared to flagship retail stores, reducing construction and decor costs.
- Staffing: They may operate with smaller staffs or less specialized service levels.
- Volume Purchasing and Efficiency: Brands can leverage their scale to produce large quantities of MFO items, benefiting from economies of scale in manufacturing and distribution.
- Reduced Marketing and Advertising: Outlet stores often benefit from the brand recognition established by their full-price counterparts and may not require the same level of individual marketing investment.
- Psychological Pricing and Promotions: Outlet centers frequently employ strategies like "compare at" pricing (showing a higher "original" price, often of a similar but not identical retail item) and frequent sales or bundle deals to create a perception of significant savings.
Retail vs. Outlet: A Comparison
To illustrate the difference, consider the typical characteristics of items found in full-price retail stores versus outlet stores:
| Feature | Full-Price Retail Stores | Outlet Stores |
|---|---|---|
| Product Origin | Current season, core collections, premium designs. | Primarily "Made for Outlet" lines; some past-season or overstock. |
| Material Quality | Generally higher quality, premium fabrics, durable hardware. | Often lower-cost materials, blended fabrics, simpler hardware. |
| Design & Details | Intricate designs, unique embellishments, cutting-edge styles. | Simpler designs, fewer details, classic or basic versions of popular styles. |
| SKU (Stock Unit) | Unique to full-price collections. | Often different SKUs, making direct comparison difficult. |
| Pricing | Premium pricing, occasional sales. | Consistently lower prices, frequent "sale" promotions. |
Maximizing Value at Outlet Stores
While outlet stores offer lower prices, it's important for consumers to understand what they are buying. To ensure you're getting true value:
- Do Your Research: If possible, compare materials, construction, and details of outlet items to their full-price counterparts online.
- Inspect Quality: Carefully examine seams, zippers, fabric feel, and overall construction before purchasing.
- Prioritize Needs: Outlet stores can be excellent for basics or everyday items where top-tier quality might not be a priority.
- Look for True Clearance: Some outlets still carry genuine overstock or past-season items from main lines; these are often the best deals.
Understanding that most outlet merchandise is purpose-built for its price point helps consumers make informed decisions and manage expectations.
