Are Outlet Malls a Scam?

A new book called Cheap: The High Cost of Discount Culture is suggesting that outlet malls are deliberately trying to fool consumers. Excerpted on the site AlterNet, the book has some interesting assertions:

It says outlet malls’ long distances from metropolitan centers aren’t only a result of developers trying to get cheap real estate. It’s also a psychological maneuver that makes people want to buy more since they’re investing more time. “Because the effort required to reach and shop at them is substantial, even extraordinary, the experience of going to the outlet is elevated in our minds to ‘special occasion’ status.”

The author also claims that regular outlet-mall shoppers are akin to gamblers. Instead of loading up on cheap staples, they often go there trying to “beat the house.” ” What these shoppers too often forget is that, just as in Vegas, the house almost always wins.”

The article also says that those manufacturer-suggested prices aren’t always what they seem to be and that many manufacturers actually sell items that they specifically made for outlet stores, negating the idea that shoppers are getting a luxury fashion item at a discounted price. ”Coach, the Gap, Brooks Brothers, Ann Taylor, and Donna Karan, among others, add to their mix items made explicitly for the outlets. Generally these items are cheaper to produce, have fewer details, and are of lesser quality.”

We can’t touch on every point, so we suggest you click here to read the full article.

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17 Responses to “Are Outlet Malls a Scam?”


  1. 1 Will August 12, 2009 at 8:31 am

    This is absolutely true, I’m glad someone wrote about it. I remember growing up, factory outlet stores were around to get rid of the stuff they couldn’t sell to retailers. You would get the seconds, overstock, or just ugly designs at a fraction of the cost. We had a great Champion factory outlet down the street from where I lived, and I remember getting t-shirts for a buck, sweatshirts for 5, you just had to deal with some random high school’s logo on them. Now these stores are just malls, and retailers are selling their regular clothes at regular prices. I never go to outlet malls, I rarely find anything good at a true bargain price. If I want discounted, name-brand clothes at a good price, I go to Marshall’s ot TJ Max.

  2. 2 GetReal August 12, 2009 at 8:36 am

    Everyone has known for years that outlet stores sell items specifically manufactured for them. The Gap’s outlets, as mentioned in the blog, are especially noteworthy. But not all stores do this. Outlets attract shoppers not only because people think they’ll get a bargain. They also offer selection. For example, outlet malls are a great place to shop for shoes because there are so many stores in one place — far more than in a typical regional mall.

  3. 4 Dana August 12, 2009 at 9:00 am

    If you can’t beat outlet mall prices, you don’t know how to shop.

  4. 5 Mark August 12, 2009 at 9:12 am

    Took a lot of coffee for some to wake up to this. One CAN find deals at outlet malls by shopping hard and looking close, but often shoppers ARE presented with secondary brands at high prices. For some items (e.g., shoes), I’ll buy discontinued models at an outlet mall, if the items are top quality (think Allen-Edmonds), but real deals are hard to find.

  5. 6 phreddman August 12, 2009 at 9:13 am

    That may all be true, but if you need extra small or extra large sizes, outlets still provide more options than regular stores. This is especially true for men whose shoe size is over 13.

  6. 7 Martian August 12, 2009 at 9:28 am

    The author seems to be surprised that there is an element of myth in the retail business. Is it really a scam? ALL retail is based on some kind of myth-whether it’s the feeling of satisfaction one gets when finding a “steal” or the pride one associates with owning something with a designer name. Does it matter if your Coach bag or Saks 5th Ave shirt may not be of the same quality as the full price version-you are buying the brand not the shirt. Who can afford to buy anything at Saks?

    An another note, all Outlet leases require at least a certain percentage of the the store (usually 70%)to be at least a certain percentage off (usually 20%)of the closest metro retail. The malls that don’t abide by this tend to transform into full price malls(see The Mills). Also, if you shop the clearance racks, you can often get the real deal at real discounts.

  7. 8 James August 12, 2009 at 9:31 am

    Shopping at Outlets takes way too much time and effort for no net benefit, its surprising more of them haven’t failed. I leave the outlets feeling like I’ve been duped again, so now I just don’t go back. They are feeding off the “shopping as recreation”
    fad that is now definitely out of style. Outlets will be heavily negatively effected by online shopping as more and more people realize the convienence and reliablity of shopping online. By the way, most if not all of the stores at the Outlets also offer online shopping.

  8. 9 vanessa August 12, 2009 at 11:15 am

    When I first moved to New York 16 years ago it felt like one big outlet here. New York had so many discount stores, bargain bin stores, 99 cent stores and Designers outlets. Now there’s not many left because the rents are so high. So I went to a one of these designer outlet malls and couldn’t believe the prices… I had a good time trying to find something to buy just because I felt I had too… I love the British High Street stores, they copy the runway so fast you can found cheap clothes that are well made and don’t hurt your purse strings. Walmart and Target are making okay clothes now so things are changing slowly here in the States.

  9. 10 kin powell August 12, 2009 at 1:13 pm

    I saw the author of that book on PBS Monday night, she is a conspiritist, that believes that every vendor is out to screw their customer. Any of us in retail or retailing Or retail landlords know is not true, we can’t live without repeat customers!

  10. 11 Carl Todd August 12, 2009 at 1:36 pm

    One of my most successful local retail chain clients told me in my early RE broker years when I first started renting stores: “That is not how cheap your are selling them item but how cheap the buyer things the price is when he is purchasing the item”. $5.99, not $6.00, 20% off, Labor Day Weekend only, first 25 customers, super Tuesday and the gimmicks go on and I’m sure the retail geniuses will constantly invent new ones.

    A good example is pointed out in Melody Petersen’s book: “Our Daily Meds” how the drug companies play a variation on a patented drug when the patten protection is about to expire by coming out with a new and improved version costing more than the old one and at times is less effective than the old one and even less effective than a cheap over the counter remedy.

    Barnum was right and the retails prove it daily.

  11. 12 A reader August 12, 2009 at 7:36 pm

    I would say that it was more of a scam when outlet malls first started. That being said, it was a treat of a scam – regional malls were not that plentiful prior to the 1980′s and the chains that were in the regional malls were things like 5-7-9 and Deb Shops. There were not the choices that we have in today’s world for shopping or brands; so going to an outlet mall was a real treat, scam or not. In today’s world, outlets are very close to malls and malls are discounting like crazy (even before the recession); if you can’t find a coupon for a regular store or an outlet store, or find a sale at either, then you really need some lessons in how to shop in the current landscape. You can get a deal on quality products anywhere, you just have to pay attention to what’s happening and know what you want. Sometimes that will be at the outlet mall and sometimmes it won’t. It’s not that her story is off base, it’s just a little behind today’s retailing world (like by at least 15 years!). Also, it can be nice to have the products made for the outlets only – if you buy off the rack, you may be less likely to see the same outfit on someone else.

  12. 13 Janet August 13, 2009 at 1:14 pm

    What I love about this is the number of readers who have actually taken the time to respond! What does that tell you about outlet shopping? To me its a sign that outlet shoppers care and are really are motivated by the “bargain hunt” aspect of the outlet experience.

    Ms. Shell, if you’re reading this, I invite you to email me. I actually work in the outlet retail sector and would be happy to provide you with factual data based on over 20 years of experience.

    If not Ms. Shell, perhaps there’s an editor at Penguin Press who might like to take advantage of the opportunity to do some fact checking!

    If anyone is interested in reading more about how the U.S. consumer reacts to outlet shopping, I’d recommend might the April 2006 edition of Consumer Reports which included a very well-researched article on the subject.

  13. 14 Brian August 13, 2009 at 7:56 pm

    Actually, the primary reason outlet malls were originally developed so far away is due to radius restrictions imposed on clothing manufacturers by department stores who did not want the same merchandise they sold to be sold by the manufacturers at discounted prices within the dept. stores’ trade area. Things have changed since, but this is the genesis of the rural outlet mall location.

  14. 15 BIll McInerney August 17, 2009 at 8:29 am

    Great article….keep up the good work.

  15. 16 efleaa September 2, 2009 at 11:34 pm

    Hello,
    Very well written and very informative article, keep up the impressive writing, Thanks Jerry.

  16. 17 lucaboden September 16, 2009 at 5:48 pm

    I like Pottery Barn and Calvin Klein.


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