Outlet malls have exploded in popularity in recent years, becoming one of the fastest-growing segments of American retail. For many shoppers, this siren song of bargains and high-quality designer merchandise at a low price is too irresistible to avoid, and they simply must stop to shop. But beneath all the fancy sparkle and fresh spackle of the countless outlets popping up all over the country, do they really deliver all they promise? It turns out that outlets have a few sneaky ways of tricking us into thinking we're getting a much better deal than we actually are.
The Merchandise Isn't What You Think
The original outlet and factory stores sold overstocked, discontinued items, and imperfect merchandise unfit for retail sale; that's what made the prices so cheap. But nowadays, the majority of common outlet stores supplement their stock with merchandise created especially for outlet-store sale. These lines carry the brand name, but they're made with lower-quality fabrics and cheaper construction techniques. The companies depend on customers' inability to tell the difference between the quality of real designer merchandise and the lower-quality knockoffs carrying the same label. The knockoffs may be cheap, but that cheapness comes at the expense of quality.
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It's All About the Marketing
Merchandise at outlet stores usually comes with a price tag that prominently displays both the retail and the outlet price: "Manufacturer's Suggested Retail Price $100, Our Price $25." The tags lead customers to believe that they're getting a huge discount. But the truth is that the listed MSRP is whatever the store wants it to be-there's no guarantee that the item is really worth that much, or that it was ever listed for that price at a retail store. This trick, called "reference pricing," is widely used to assuage shoppers' anxieties and loosen their purse strings by convincing them that they're saving more money than they've spent.
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The Location is Remote So You Never Leave Empty-Handed
Outlet malls are notorious for being located in out-of-the-way suburbs and off deserted interstate highways. One big advantage of the remote location is a psychological effect called the "sunk cost fallacy," according to Ellen Ruppel Shell, author of Cheap: The High Cost of Discount Culture. By driving twenty-five, fifty, or one hundred miles to the outlet mall, customers invest serious amounts of time and energy; it'd be a pity if they didn't leave with something. Customers don't like to feel like they made a bad investment, and making purchases justifies all that effort. Of course, behavioral economists know that it's irrational to spend more time and money to justify spending time and money, but whoever said that shoppers were rational?
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How to Out-Smart the Outlets
In reality, outlet malls promise something-high quality for a low price-that is very hard to deliver. The next time you're tempted to swing through an outlet mall, consider these savvy shopping tips.
- Look at apparel tags. Irregular or imperfect merchandise usually carry tags that are sliced, marked on, or otherwise altered to indicate that it's not fit for retail sale, whereas knockoffs usually carry different tags altogether. At Gap Outlets, the tags are white with blue lettering, the reverse of the retail tags. At Banana Republic Factory Stores, the tags have three small diamonds indicating they're not retail quality. Get familiar with real retail tags, so you can spot the impostors at outlet stores.
- Know what an item is really worth. How can you know whether you're getting a great deal at the Samsonite outlet if you don't know the real retail price of a suitcase? Comparison shop for large purchases; don't rely on the reference price quoted by the store.
- Think seasonally. It's a good bet that any in-season merchandise is from an outlet-only line. Real retail overruns don't arrive in outlet stores until after the season has passed.
- Remember that fewer stores = better quality. If you're shopping at a store that has posts in every outlet mall in the country, you're almost guaranteed to be getting outlet-quality merchandise. At an outlet with only a few locations, the merchandise is more likely to be true overruns, discontinued items, and last-season's line because the company doesn't have to fill hundreds of stores.
- Shop the sales. Outlet stores have sales at the same times that normal retail stores do, and customers can often get even better discounts at these times. But sales at retail stores can offer savings just as valuable as regular outlet prices.
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