||Outlet Stores: Do They Offer the Best Deals?
It takes at least an hour for Renee Wyatt to drive from her Palm Beach County (Fla.) home to the Vero Fashion Outlets, so she makes the most of the trip.
"I print out the map (of the shopping center) at home and highlight where I want to go, so I don't waste time," said Wyatt. "This is power shopping; I try not to bring kids, and I always stop by the management office to get the book of special offers."
Outlet malls have long beguiled bargain hunters like Wyatt: They lure shoppers with the possibility of finding name-brand items for up to 65 percent off, beckoning consumers to make the drive to the out-of-the-way shopping center in hopes that they'll score a pair of Nike shoes for half price or a Coach handbag at a fraction of the retail cost.
Indeed, there are some good deals to be had in outlet stores. But finding them may not be simple.
"When the consumer goes to an outlet center -- to the Gap outlet or the Ann Taylor or the Coach outlet -- what they're expecting is a deal," said Howard Davidowitz, chairman of national retail consulting and investment banking firm Davidowitz & Associates Inc. "Many times, in a consumer's mind, they think they'll get the same merchandise when they go in a Coach outlet store as you'd find in the retail store, but that's usually not the case."
Davidowitz said outlet shoppers dream of finding a $1,200 purse marked down to $300 -- and such deals occasionally do happen. But these days, most items found in outlet stores were made specifically for those stores.
Lisa Quier Wagner, a partner at EWB Development LLC, the leasing and marketing arm of Vero Fashion Outlets, said that a number of outlet centers in recent years have run ad campaigns explaining the truths and myths of outlet shopping.
"Twenty years ago, when I started in the business, outlets were for getting rid of excess goods," Wagner said. "Then retailers realized that the direct-to-consumer channel is lucrative to them, so they started making items specifically for outlets, geared toward the more moderate customer."
Take the Coach outlet stores. In the third quarter of 2010 (which is the company's first fiscal quarter of 2011), 87 percent of the merchandise at Coach outlet stores was manufactured for the outlet. The rest was made up of items that came from the retail stores -- perhaps excess inventory, or returns, or items that were no longer in season.
The same period a year ago, 76 percent of the outlet merchandise was outlet-specific.
Luxury retail analyst David Wu of the Telsey Advisory Group said that the shift for many of the higher-end retailers was a conscious decision to protect their brand name.
"Some companies are realizing that discounting does hurt the brand," Wu said. "They saw that consumers were bothered that they'd buy a Gucci bag or a Coach purse for full price and then see it marked down later."
But at the same time, outlet stores provide a way to get the company's brand out to more consumers, Wu said.
In general, items made for the outlets have a higher margin for retailers because they are made using cheaper materials or utilizing simpler designs or made in countries with cheaper labor, experts say.
"It's impossible to offer something that's the same quality for a cheaper price," Davidowitz said. "But that doesn't mean it's not a good value. I'm not saying you're getting ripped off. If you buy something from Coach, they're going to make it carefully. But the outlet bag is just not the same quality, won't have the same details, as the one at the retail store for $1,200."
In many cases, consumers will be hard-pressed to find much difference between outlet merchandise and items at the full-price store.
Pat Slaven, a textiles expert for Consumer Reports, said often there are only small differences between items, such as the thickness of the fabric or the number of embellishments on a shirt.
But while much of the merchandise is made for outlets, there are certainly deals on merchandise from the full-price stores to be had as well, whether it's an item that is no longer in season or style at the full-price retail store or an overrun of inventory.
"These past few years, the consumer has been hurting very badly," Davidowitz said. "That motivation to get a deal has never been stronger."
(Source: The Palm Beach Post, 02/04/11)
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