Demystifying: Factory outlets might not be as interesting as you think

Attention, outlet shoppers: Still reveling in those Boxing Day thefts? A CBC Marlet Factory outlet shopping can be cheap for a reason, survey finds: it could be of lower quality than retail products.

Outlets were traditionally a place where retailers sold products that didn’t fly off the shelves last season, cleared excess inventory or sold factory seconds.

But now, many retailers are making specific clothing lines for their outlets, which may not be the quality consumers expect from high-end brands.

“I think outlet stores are set up to try to mislead most people into thinking they’re getting unbelievable overruns, unbelievable bargains,” says Mark Ellwood, a New York-based shopping expert. York and author of Bargain Fever: How to Buy in a Discount World. “When you walk into a factory outlet, you must think that this product was designed to be cheaper.”

Marketplace looked at items in outlet stores and comparable products sold in retail stores, and found that some were made with less durable leathers and different fabrics. (Radio Canada)

Marlet compared similar products at outlets and retail stores of popular brands Banana Republic, J. Crew, Kate Spade and Coach. The clothes and handbags in these outlets often look very similar to the products in the retail stores, but Marlet found that some products were made with inferior materials, such as less durable wools and leathers.

Quality at outlets ‘varies widely’

Depending on the outlet store, a certain percentage of inventory may consist of clearance merchandise from the regular retail store. But the problem for outlet stores is that this type of inventory doesn’t have a reliable supply, says retail analyst Maureen Atkinson.

“When you walk into a factory outlet, you must think that this product was designed to be cheaper,” says Mark Ellwood, a New York-based shopping expert and author of Bargain Fever: How to Shop in a Discounted World. (Radio Canada)

“Once you get past about five clearance stores, unless you have a huge problem and that’s not a good thing, you can’t fill the stores all the time, then you need another source,” she said.

Marlet found items in factory outlets made with less durable leathers and different fabrics than comparable products sold in retail stores.

“The quality of products in retail outlets varies widely. Remember that these products were largely made just to sell at low prices, so they will save money,” says Ellwood.

Marlet found that, when asked, Canadian outlet store staff could often identify which products were made specifically for in-store sales and which were discontinued items from the retail store.

In shops Marlet watched – Coach, Kate Spade, Banana Republic and J. Crew – the majority of products were made for retail outlets. But sometimes there were indicators, such as differences between labels on retail and outlet products.

Companies admit differences in products

Coach, Banana Republic and J. Crew have all confirmed that they make items specifically for their outlet stores.

J Crew said Marlet their factory outlets only sell products designed for point of sale.

“In some cases, we use different fabrics or adjust design details to maintain a more reasonable price,” J. Crew said in a statement. “We are always careful to maintain the quality and design integrity you expect from J.Crew.”

Banana Republic’s outlet stores do not carry any products from its retail stores.

“At Banana Republic Outlets, we offer quality apparel and accessories at great prices,” Banana Republic wrote in an email to Marlet.

Coach claims that all of its products, regardless of which store they are made for, are made from “the finest quality leathers and fabrics”.

“Generally our product made for release will be less embellished – using less overall hardware and/or simpler hardware, may not have an outer pocket, or may have a tighter gusset, may have a simpler lining ( unbranded), or may use flat or tumbled leather – compared to the retail bag that inspired it.”

Kate Spade would not comment on this story.

Misleading for consumers?

Banana Republic is being sued for selling specific versions at retail product outlets in California.

When you shop, point-of-sale staff can sometimes tell you if you’re getting the same product sold in retail stores. (Radio Canada)

The lawsuit against the retailer’s parent company, Gap Inc., alleges that the company misleads customers into believing they are getting the same quality at an outlet as at a Gap or Banana Republic retail store.

Last year, four representatives of the US Congress asked the Federal Trade Commission (FTC) to review products made for factory outlets.

“We are concerned that consumers in outlet stores may be misled into believing that they are buying products originally intended to be sold in the usual retail store,” congressional officials wrote.

The FTC released a blog advising consumers on how to get value for money in malls.

“If you’re unsure whether the store only sells ‘designed for point of sale’ merchandise or how to tell the difference between this and retail merchandise, ask the staff,” says the blog post written by Colleen Tressler of the FTC.