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Are Outlet Malls Worth It?

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When I was a kid, I remember going to the outlet mall, the promised land where I would actually be able to buy stuff with my own money because it was so cheap. I didn’t care if it was last season’s or it wasn’t the greatest piece of clothing, because the allure of low prices drew me in, as well as millions of other people across the country. Over time, however, outlet malls have changed, and not for the better.

According to research quoted in the book “Cheap” by Ellen Rupert Shell, outlet malls now function less as a place for people who want great deals on merchandise, and more like regular retail stores with new, high-priced in-season items and even more sneaky ways to separate people from their money. For example, outlet malls used to be just outside of the city since the land was cheaper. Now they tend to be even farther out, frequently in the middle of nowhere between two large cities, because once you’ve driven an hour to go shopping, you’re not going to go home without SOMETHING to show for it. As Shell puts it, placing an outlet mall in the boonies “is a deliberate strategy. We have to work to get there, piling up hefty ‘sunk costs.’ All that time! All that gas!” Because it’s not simply a quick jaunt down to the corner store, we expect that the more we’ve put into the trip to get there, the more we must be rewarded with low prices.And while the outlets do offer low prices, these low prices are not on top quality, name-brand goods as their signs often boast. Many brands now have items that are manufactured solely for the outlet stores.

Outlet malls are a great natural experiment for economists. This paper gives a breakdown of how stores can end up selling more when they combine the regular retail experience in a normal mall with the low-frills experience at an outlet mall. By doing so, outlet stores attract two completely different sets of people – people who buy for the brand or for quality and are willing to pay higher prices, and people who buy for the low price alone and are only somewhat concerned about quality.

I’m of the latter group and outlet stores have tricked me in the past. For example, I know that I wouldn’t go into a designer store in the mall since I would assume I could never afford anything, but I might be willing to go into one at the outlet mall since I would reason that there must be something affordable for me. These stores can also make you vulnerable to a shift in your price point mentality – if you’re in a store where everything is $100 or above, something that’s $40 might look like a great bargain because you’re only comparing it to the other items in the store. Other than at the outlet store, where else could you find such a great deal? This is how I ended up buying a $60 bedside table at the Pottery Barn outlet. (Oops.)

One interesting thing about companies selling their brands at outlet stores is that they risk losing their cachet altogether. Joseph A. Banks, an upscale men’s retailer, was recently criticized for their plans to open more outlet stores because it will affect how people think about the brand and ultimately whether they are willing to pay full price at the regular retail stores. If you constantly saw a brand at outlet malls that was discounted up to the gills, would you still consider it a luxury brand?

I do still enjoy shopping at outlet malls, but I feel like I need to be more on my guard to make sure I’m actually getting a good deal. With actual deals becoming scarcer, and cheap, quality items becoming a thing of the past, the rules of smart shopping apply more than ever. Here’s more insight into how to keep the marketing machine at bay while you shop.

What do you think? How much do you shop at outlet malls? What are your tips for making the most of shopping at the outlets

(photo credit: net_efekt)

Kira Botkin
Kira is a longtime blogger and serial entrepreneur who enjoys gardening, garage sales, and finding stray animals. She lives in Columbus, Ohio, where football is a distinct season, and by day runs a research study for people with multiple sclerosis. She hopes that the MoneyCrashers team can help you achieve your goals and live a great life.

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