Outlets’ popularity has risen sharply in recent years, quicker than the growth of normal retail locations over the same time. Increasingly budget conscious consumers want value from their stagnant wages. Lower cost goods from established brands allow people to experience luxury for a fraction of retail prices. If this sounds too good to be true, it often is. Today’s outlet merchandise has only tenuous connections to the main lines retailers peddle through flagship stores.
Outlet stores are not a recent invention. They can be traced back to the 1930s, when clothing factories started offering excess or damaged merchandise at reduced prices. Until the 70s, all of the offered stock was incidental to the normal manufacture of garments on a large scale. As people increasingly grew wise to these bargains, however, retailers could no longer meet consumers’ demand and the business model began to shift towards lines specifically manufactured for the outlets.
As an example of this often deceptive practice, let’s take a look at J.Crew vs. J.Crew Factory. The former is a higher-priced, higher-quality mid-range clothing manufacturer most people know. They make clothing popular with the college crowd and twenty-somethings. Though J.Crew’s prices aren’t always worth the accompanying quality, a 30% off sale places most of their clothing in a value sweet spot. The latter, J.Crew Factory, is a lower end brand designed to compete with Gap, Uniqlo and H&M. Other than clearance merchandise that sometimes shows up in these Factory stores, the normal stock has never seen the inside of a real J.Crew. Materials and stitching are lower quality. The MSRP is just a fabrication, as these stores constantly offer deep discounts designed to suggest big savings.
J.Crew is far from the only company doing this. They’re just capitalizing on the industry trend over the last twenty years. By slapping a coveted brand on cheaper goods, it’s easy to trick the coupon crowd into thinking they’re getting a deal. Inflating retail prices to levels consistent with the main line, while never selling the clothing at that price, is just dirty.
Men’s Wearhouse and Jos. A. Bank are two egregious offenders. It’s not uncommon to see outrageous offers like “Buy 1 Suit, Get 3 Free” deals from these menswear companies. So the MSRP may be $800 (grossly overpriced for the second rate, fused suits these companies sell), but with those three free you get each one for $200. There aren’t many businesses that can afford to mark down goods to ¼ of retail on a regular basis. The fact is that those suits cost much less than the discounted price to manufacture.
T.J. Maxx is joining the party. Overstock locations like this and Marshalls sell well-known brands to consumers for discounts. Unlike a normal outlet, whose parent retailer controls both the brand and manufacturing, department stores depend on the stock they receive from retailers, right? Not necessarily. Companies like Calvin Klein now license their brand to T.J. Maxx, who can then turn around and manufacture a line of apparel directly for the store. These goods aren’t made under CK’s supervision and don’t conform to the same quality control standards (which says even less when you consider the deterioration of Calvin Klein’s quality since the 1980s). Is nowhere safe?
Market reality is that there can’t possibly be enough second quality and overstock merchandise to meet consumer demand. Instead of maintaining integrity and either relegating small amounts of goods to fewer outlets OR being transparent and admitting to shoppers they’re browsing separate stock, retailers have chosen deception.
The appropriate response is to stop patronizing these stores and buy fewer, higher quality items, ideally made from fair paid labor. But education can be glacial. People will continue to hunt for what they perceive to be the best deals. The Federal Trade Commission needs to get involved, too. The government needs to end practices developed by businesses too inept to function without blatantly lying and condescending to their “valued customers.”