Outlet stores

Outlet stores are not a bargain

J Crew

A J.Crew retail store


The common assumption about factory outlets is that you get the same products as a regular retail store without the high price tag.

But these “offers” might not be what they seem – Sapna Maheshwari at Buzzfeed writing that some outlets sell a separate line of lower quality products bearing the same brand name as items in the company’s regular retail stores.

In a way, these brands – J.Crew, Gap, and Off 5th, Saks’ store – sell fakes of their own products. Buzzfeed notes that J. Crew’s release items are, according to the company, “based on (full-price) products sold in previous seasons.” These cheaper products are made specifically for point-of-sale and may not have been sold at the brand’s usual retail stores at all.

For example, at Off 5th, only 10% of the merchandise remains in Saks inventory. The rest are private label products and merchandise created specifically for stores by “brand appropriate” suppliers.

Nordstrom Rack, the popular TJ Maxx-style discount store from the expensive department store, does it too. The company note in a press release: “The Rack transports goods from Nordstrom and Nordstrom.com stores, as well as specially purchased items from most of the major brands sold at Nordstrom. “

Price tags on outlet products can also be misleading. Usually, labels have “MSRP” prices that tell buyers what the item would cost at “full price”. But these items may never have been sold at this invented price. This gives the buyer the impression that they are getting a big discount when in reality it might not be. TJ Maxx does this.

LearnVest Noted in 2011:

In recent decades, as retailers recognized the profitability of attracting Americans looking for a deal (yes, they’ll use that great quality about you against you!), they’ve started to build an industry around factory outlets that’s completely separate from their regular business.

But sometimes there are ways to tell if the merchandise is from a full-price store or if it’s a cheaper version of the real merchandise – J.Crew Factory (the store’s factory brand). puts two diamonds under the “r” on its labels and the Gap outlet marks its products with three points.

Read the full story on Buzzfeed>

UPDATE: A Nordstrom manager contacted us to clarify the Rack pricing strategy:

Goods specially purchased for the Rack were originally produced for distribution at regular price, but we were later able to source them for sale to the Rack. For this merchandise, we compare to the original price given by the manufacturer which reflects the market price at which the product was actually offered and sold for a reasonable and substantial period of time (which is generally their MSRP). We are trying to verify this.

We fully believe in the honesty of our customers and we guarantee the integrity of our prices. Our buyers make every effort to validate that our prices faithfully reflect the real savings offered at the Rack.