A nonprofit consumer watchdog found that roughly half of the outlet and factory stores it examined did not offer deep discounts [2].
This finding challenges the primary appeal of outlet shopping, where consumers typically expect to find high-end brand merchandise at a fraction of the original cost.
Consumers' Checkbook conducted the investigation to determine if shoppers are actually receiving the savings they expect at these locations [1]. The watchdog examined 40 different brands [1].
The investigation revealed that many items sold at these outlets had never been sold at regular retail prices [2]. Because these products were created specifically for outlet stores, the advertised discounts may be overstated since there was no original retail price to discount from [2].
While some stores continue to offer genuine clearances, the report indicates that a significant portion of the merchandise is not a leftover from main-line retail stores. This practice allows companies to maintain the appearance of a bargain while selling products designed for a lower price point [1].
Shoppers often visit these factory stores under the impression that they are purchasing premium overstock. However, the data suggests that for about 50% of the stores studied, the "deal" is a marketing strategy rather than a price reduction on standard retail goods [2].
“Roughly half of the outlet and factory stores examined were not offering deep discounts.”
The shift toward creating outlet-specific merchandise transforms these stores from clearance centers into separate retail channels. By producing lower-cost versions of their products specifically for outlets, brands can maintain high margins while leveraging the psychological lure of a 'discount,' effectively decoupling the outlet experience from actual retail overstock.
