Savvy Shoppers: What You Really Get at Outlets

Racked no longer publishes. Thank you to everyone who has read our work over the years. The archives will remain available here; for new stories, head to, where our staff covers consumer culture for Vox Goods. You can also see what we are doing in register here.

The New Jersey social worker, an enthusiastic label buyer who frequents sample sales and department store clearance events, was sifting through clothes racks at Neiman Marcus’ Last Call store a few months ago when she spotted a DVF piece. Weitsz, no stranger to the brand, felt something was wrong.

“The pattern was great and the dress fitted perfectly, like DVF makes all of their clothes, but something was seriously wrong,” she explained during a recent shopping spree in New York. “I think maybe it was the fabric or maybe it was the stitching. I don’t know, but I haven’t been back to it since.”

Shopping at discount prices brings many joys: discovering the finds of your favorite designers, discovering the trends you missed last season, shopping for wardrobe basics at a deep discount. Most customers believe that they do indeed find pearls, that what they are about to buy came from their favorite stores a few seasons ago, but it was either returned, overstocked, or just not a bestseller.

In reality, much of the merchandise in department store outlets is made or purchased specifically for these outlets, with designers and salespeople creating familiar-looking pieces at lower cost, often indicating quality lower.

Neiman, Nordstrom, Bloomingdale’s, Barneys New York and Saks Fifth Avenue all have their own outlets; customers flock to these stores for the brand cachet and believe they are buying last season’s carefully selected inventory. However, this is not exactly the case. Nordstrom Rack, for example, confirms to Racked that only 20% of what it sells is clearance merchandise from its stores and website, while the rest is purchased expressly for the outlet.

“These are existing merchandise that we are able to purchase from our supplier partners,” says Naomi Tobis of Nordstrom Rack. “An example might be end of season closings or excess inventory that a brand has and wants to eliminate. In some cases, and you can see this in our public balance sheet with our inventory levels, we buy those closeouts or excess product at the end of the season and keep it in a warehouse for a while.”

A shopper inspects a bag at a Gap outlet. Photo: Getty Images

For those shopping at Neiman Marcus outlets, things get a bit more confusing. Neiman has of them POS types: Last Call Clearance Centers carry excess inventory from full-price stores, while Last Call Studio stores sell items specifically designed for POS. Yes, done. Ginger Reeder, vice president of corporate communications for Neiman Marcus, explains that the company works with designers like Equipment, Theory, Stuart Weitzman, Tahari, Furla, Kate Spade New York and Vince to design and produce merchandise for their points of sale. While she hasn’t confirmed whether this inventory is of lesser quality, she did note that the items are for an “ambitious buyer.”

“We found that for an ambitious buyer, they are looking for the same design mix as Neiman Marcus, but at a lower price,” says Reeder. “Many of the designers we carry are designers we have in our full online store, but there may be different fabric or buttons or the finishes may be different. I wouldn’t call the clothes cheaper, it’s is just cheaper. For example, a DVF dress may have a pattern that hasn’t been picked up in our full-line stores, so we’ve made a batch for Studio stores.”

Barneys and Saks wouldn’t provide comment to Racked, but it’s pretty safe to assume Barneys Warehouse and Saks Off 5th’s release practices are similar. According to News Feedlast year, the 5th executives of Saks Off told investors that only 10% of their merchandise came from Saks, 25% was private label, and the rest was created for the point of sale by specific vendors.

The formula employed by these outlets – designers watering down their original concepts with inferior materials and production methods to get a lower price – wouldn’t seem so underhanded if shoppers knew what they were buying. Reeder says Neiman Marcus outlet shoppers are fully aware of the difference in outlet offerings, but vague labeling continues to puzzle shoppers. If the DVF dress Weitsz almost bought was similar to a $350 dress, but made with inferior materials and sold for $150, “shouldn’t the price say $150, not” compare to $350 “”, she asks.

Amondo Redmond, director of Gap outlets, notes that Gap-branded outlets (which also include Banana Republic) alone have clothes made especially for them. Unlike department stores, they’re pretty vocal about that distinction: There’s no spillover from the regular Gap or Banana stores, and Redmond says the company tries to be as simple as possible about its wares. He thinks there needs to be more honesty in the industry when it comes to telling buyers what they are buying.

“One thing we’re aiming for is trying to be transparent about what exactly the brand is offering,” Redmond said. “It’s always good for brands to be transparent about what they’re offering. We’re clear: if you love Gap, you’re going to love our destination. We offer design that has a different value proposition, and that’s is our way of being transparent.” . We think other brands should follow as well.”

Some shoppers Racked spoke to weren’t surprised by these murky tactics, and say the lower quality of the apparel doesn’t necessarily bother them because the alternative – going to a discount store like Old Navy – is not an option for brand-conscious buyers. .

“I don’t expect outlets to tell me that their clothes are made with substandard materials. It’s obviously bad for them,” says Phil Popowitz, a 25-year-old real estate agent who buys in department stores of brand-name work shirts. like Ralph Lauren, Calvin Klein and Nautica. “Obviously it’s a ‘pay for what you get’ situation, and that won’t stop me from shopping there. There’s no other option for me because I wouldn’t go to the regular department stores and spend tons of money, and these outlets have better variety and design than shopping at Target!”

Photo: Getty Images

Adam Gidding, an English teacher living in New York, has similar feelings.

“I take shopping seriously and have had great experiences with outlet stores,” says Gidding. “Some of my favorite clothes are from outlets. I don’t think it’s of lesser quality, and if it is, I certainly don’t feel it. I’m just happy that the clothes retain a likeness with the style of the designers who make them. They found a way to connect with their authentic style, and for me, that’s enough.”

Yet the deceptive practices of factory outlets have caught the attention of many, including members of Congress. Earlier this year, three senators and one representative wrote to the Federal Trade Commission requesting an investigation into “potentially deceptive marketing practices of outlet stores across the United States”.

They explained that the county’s 300 malls generated some $25 billion in sales in 2013, and in addition to being the fastest growing retail segment, they are also considered a vacation destination. for those who travel (in other words, a tourist trap). Citing issues such as misleading labels and price tags, they wrote that “factory outlet consumers are being misled into thinking they are buying products originally intended for sale in the retail store. usual” and noted that the labels could violate FTC rules. Guides against misleading prices.

“Historically, outlets carried excess inventory and slightly damaged merchandise that retailers were unable to sell in regular retail stores,” the January letter read. “Today, however, some analysts estimate that more than 85% of goods sold at outlets were made exclusively for outlets. Different brand names and labels to distinguish goods produced exclusively for outlets, others don’t.This leaves consumers unable to determine the quality of factory outlet merchandise bearing brand labels.

The FTC would neither confirm nor deny that it is launching an investigation into factory outlets, but it is clear that Congress’s concerns have not fallen on deaf ears. In March, two months after receiving the letter, the FTC published an article on its site titled “FTC Tips: How to Shop Wisely at Malls.” Some of the tips include getting familiar with regular prices at department stores and shopping for off-season items to make sure you’re buying clearance merchandise rather than clothes made for going out.

“Recognize that if you’re buying something that looks new and in good condition, the price may be lower for a reason. For example, plastic may replace leather trim on a jacket, or a t-shirt may having fewer seams and a lighter weight fabric,” the article explains.

FTC consumer education specialist Colleen Tressler wrote the article and told Racked she decided to do it because she didn’t think there were enough facts about what was going on. went through the points of sale.

“People work hard for their money, so we want to make sure they’re getting what they pay for every time they make a purchase,” says Tressler. “I know from personal experience that I didn’t know there was a different league of merchandise in factory outlets as opposed to retail outlets. I asked around here and a lot of people didn’t know Neither has there been enough penetration of this type of information.