The Truth About Outlet Malls

ByABC News via logo

April 11, 2006 — -- Outlet malls are a $12 billion-a-year business, promising shoppers huge discounts on everything from cooking pots to ball gowns. But are consumers really getting a bigger bang for their buck at outlet stores?

Consumer Reports magazine went undercover to find out, shopping in hundreds of outlet malls across the country and surveying 6,000 shoppers. Researchers scrutinized the quality of the merchandise and the number of discounts, and turned up a few shopping surprises. The full report will be in the magazine's May issue.

Tod Marks, senior editor at Consumer Reports, said that, overall, outlet malls lived up to consumers' expectations.

"The great news is that the outlet goods are good," Marks said. "Factory seconds, defective products, are really a small type of the merchandise at stores today."

According to the magazine's survey, 75 percent of readers said the quality of the merchandise was as good as what they found at regular retail stores, with only 5 percent saying they were disappointed in the quality.

What shoppers might not know, though, is that with 225 outlet malls in America, there's not enough traditional merchandise from many brand-name stores to fill them. So many retailers now supplement their regular merchandise by making less-expensive lines just for their outlet stores. One expert estimates that 90 percent of stores do this now.

Very few brands let shoppers know that they're getting the "outlet" merchandise, Marks said, but there are a few exceptions. LL Bean marks clothing with a "Factory Store" label, and Brooks Brothers merchandise that is exclusive to the outlets has a "346" label. All Gap merchandise, which includes Old Navy and Banana Republic, is made only for the outlets and has three small squares under the logo.

Marks says, though, that the difference in quality is often negligible. Because the brand has its name on the clothes, it cannot afford to sell shoddy products.

If you are worried that you're buying "outlet" products, just ask the sales clerk, Marks said.

"We found that the salespeople are really knowledgeable, and they're very forthcoming," Marks said.

In the past, outlet stores simply stocked their shelves with imperfect merchandise and last season's styles that didn't sell.

Yesterday's outlet malls were deliberately built at least 60 miles from major cities, so they wouldn't compete with a company's retail operation. Now, outlet malls have crept closer to cities -- often within 30 miles.

Consumer reports also looked at whether consumers were getting the deep discounts they hoped for when outlet shopping.

Marks said that many times people didn't find the huge savings they had hoped for, with many outlet stores promising savings of up to 70 percent. The magazine found that, overall, the price discount at outlets was about 25 percent for most shoppers.

Consumer Reports also asked its responders to rank outlet stores.

When rated for value and quality, the top choices were Lenox, L.L.Bean, Mikasa and OshKosh B'Gosh.

When quality alone was considered, the top picks were Coach, Harry & David (for kitchen goods), L.L.Bean, Lennox, Mikasa and OshKosh B'Gosh.

Marks also had a few tips for avoiding the outlet crush and saving more:

ABC News Live

ABC News Live

24/7 coverage of breaking news and live events