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The Pros and Cons of Outlet Stores: Are You Really Saving Money?

Modern-day outlet shopping isn’t what it used to be.

Consumers aren’t limited to factory-flawed Jockeys and Levis anymore. High-end brands such as Kate Spade, Coach and Jimmy Choo are entering the mix and attracting customers who want great deals on luxury items.

And it’s big business for retailers.

As of February 2014, the U.S. had more than 12,796 outlet locations raking in an estimated $31–42 billion in sales. That’s a lot of bargain shopping!

But does the word “outlet” necessarily mean you’re getting the best deal? We wondered the same thing. Here are the pros and cons of contemporary outlet store shopping.

Do Consumers Really Save?

Pro: Usually, consumers do score a discount. According to Value Retail News, factory stores report discounting their items by 38% on average. That’s not as high as you might imagine, but it’s not bad either. Another study by Consumer Reports, in which testers bought and compared similar items from outlet and regular locations, found that most outlet store goods were 3% to 72% cheaper than retail locations.


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Con: Not surprisingly, testers also found that some items were actually more expensive or the exact same price at the outlet locations. For example, a boy’s backpack from Old Navy cost the same, while a girl’s outfit from Osh Kosh B’gosh actually cost $10 more.

Is the Quality the Same?

Pro: Gone are the days when damaged goods accounted for the majority of factory store merchandise. Now, roughly 86% of stock is made specifically for the outlet, according to research firm Buxton. That means you’re less likely to see cast-off goods and more likely to find items resembling their full-priced counterparts.

Con: Since big brands are generating product lines specifically for their less expensive locations, they’re also finding less expensive ways to manufacture them. That may mean skimping on a few of the details. For example, Consumer Reports bought two pairs of ballet flats from J.Crew—one from an outlet and one from a regular location. While the footwear looked almost identical, the outlet shoes were made in China using a synthetic material and the retail shoes were made in Italy using real leather.

Is It Worth the Drive?

Pro: Remember the days when you had to drive out to the boondocks in search of an outlet mall? Times are changing. More and more outlet stores are moving closer to major metropolitan areas and catering to their urban clientele. That means you don’t necessarily have to haul it to the middle of nowhere anymore to get your bargain shopping on.

Con: Although outlets are moving closer, Consumer Reports noted that they’re still less conveniently located than their retail counterparts. That’s significant, since after a longer drive consumers may be in the mood to spend more. Distance shopping can also become an issue if you need to return an unwanted or defective product, as many retailers will not accept items purchased from their outlet locations.

How to Really Save at Outlets:

Outlet shopping is an American pastime that isn’t losing any traction. And while consumers can usually score some good deals, impulse buys and overspending are just as dangerous at outlet locations as traditional malls. So make a plan for your dollars, set a spending limit, and pay with cash.

The best deals always start (and end) with a budget.

Need help sticking to a budget? Start by organizing your cash!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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