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Outlet Shopping Not Always the Bargain It Used to Be


The business news starts with a bargain that's not so cheap.

(Soundbite of music)

INSKEEP: Outlet stores are a $12 billion a year business, and that business is changing. The first outlet stores were usually no-frills places attached to factories. Manufacturers would use them unload overstock or slightly flawed products.

The deals were good. Customers who were willing to travel great distances could often find bargains. And today, there are about 225 outlet malls across the country. But as NPR's Jim Zarroli reports, outlet shopping doesn't bring the savings it used to.

JIM ZARROLI reporting:

The Tanger Outlet Mall in Riverhead, New York, sits at the very end of the Long Island Expressway - the better to snare customers as they head to the Hampton's beaches. It's an 800,000 square foot temple of consumerism, with dozens of designer stores rimming an enormous parking lot, including Ralph Lauren, Ann Taylor, and Calvin Kline.

On this afternoon, Liz Finnerdy(ph) and her three kids have driven here from Locust Valley, about 70 miles away.

Ms. LIZ FINNERDY (Shopper at Tanger Outlet Mall): I'm buying especially for my 16-year-olds who want to shop in J. Crew. It's just a little bit cheaper out here, and I don't feel so bad spending the money.

ZARROLI: Each year, well over a million cars come to this mall, and many of the shoppers - like the Finnerdy's - drive long distances to get here.

Ms. JANINE NEVANS(ph) (General Manager, Tanger Outlet Mall): Outlets are the thrill of the hunt. We call it bargain hunting at its best.

ZARROLI: Janine Nevans is the long-time general manager of the Tanger Mall. She says people tend to come to outlet malls in groups, and they usually have something in mind that they want to purchase. But, she says, once they get here and see the deals, they usually buy more.

Ms. NEVANS: They come, they look for something, and when they least expect to find that white pair of sandals in January that they really didn't think that they were looking for. And they take it home for, you know, a terrific price, and that's the thrill of the hunt.

ZARROLI: Nevans says customers can usually count on saving 20 percent to 60 percent off the manufacturers' suggested retail price at an outlet mall, and sometimes more than that. But some people who have studied outlet malls say the picture is, perhaps predictably, more complicated than that.

Consumer Reports recently conducted a major survey about outlet shopping. Its conclusions weren't a big surprise. Senior editor Todd Marks.

Mr. TODD MARKS (Senior Editor, Consumer Reports): By and large, if you shop at an outlet, you can be reasonably confident of getting very good merchandise at a very good price. And you're going to get good value.

ZARROLI: But, the magazine says the deals aren't necessarily any better than you can find at a department store during a very good sale. Retail analyst Howard Davidowitz is a bit more skeptical.

Mr. HOWARD DAVIDOWITZ (Retail Analyst, Davidowitz and Associates): It's a mixed bag. Are there some great deals? Sure there are. But there's less deals today than there used to be.

ZARROLI: Davidowitz says that as outlet malls have proliferated, the kinds of merchandise they offer has changed. He says outlet stores once sold overstock goods, or slightly irregular products, but now there are so many outlet malls that there aren't enough irregular products to go around.

Mr. DAVIDOWITZ: Now you've got chains like Dress Barn and (unintelligible). They've got hundreds and hundreds of outlet stores. It's a business. It's institutionalized. Regular merchandise is in there, and it's really a marketing gimmick as opposed to all these overruns and deals.

ZARROLI: Davidowitz says many of the biggest retailers, like the Gap and Ralph Lauren, now make products just for outlet stores.

Mr. DAVIDOWITZ: A lot of times, merchandise is made more cheaply for the outlet stores, and, of course, it sells for less. But it's not the same quality. So you're paying less, and you're getting less.

ZARROLI: Davidowitz believes many consumers have caught on to this, which is why sales at many outlet malls have been flat in recent years. NPR contacted several big retailers that have outlet stores, including Coach, Ralph Lauren, and Timberland. All declined to comment or didn't return calls.

Tanger's Janine Nevans says it's true that many retailers sell products made exclusively for their outlets, but she believes the quality is almost always the same.

Even at an outlet mall, you have to be a smart shopper if you really want to save money.

Ms. NEVANS: …get the $5 dollar coupon books every time you walk in the door, and…

ZARROLI: Like a lot of malls, Tanger offers promotional deals that can cut the price of many items. Maureen Mahoney(ph) showed up recently at the mall's information center where coupon books are sold. Mahoney comes to Tanger regularly, but not for the prices. She likes the fact that there are so many stores here located in one place.

Ms. MAUREEN MAHONEY (Shopper at Tanger Outlet Mall): If you want to do one-stop shopping, male, female, shoes, you can do it all at once here. There's more variety. But you can do as well at the department stores with the sales. Sometimes better.

ZARROLI: But Mahoney comes from nearby South Hampton. Most people don't live so close. And with gasoline prices so high these days, outlet malls are having to work a lot harder to draw customers.

Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.