Outlet stores

Watch out for buyers: what you actually get in factory outlets

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New Jersey social worker, enthusiastic tag buyer who hangs out sales example and department store liquidation events, was sifting through the clothing shelves at Neiman Marcus’ Last Call store a few months ago when she spotted a DVF part. Weitsz, who is no stranger to the brand, felt something was wrong.

“The pattern was awesome and the dress fits perfectly the way DVF makes all of her clothes, but something really was wrong,” she said during a recent shopping spree in New York City. “I think maybe it was the fabric or maybe the stitching. I don’t know, but I haven’t been back since.”

There are many joys in discount shopping: tagging finds from your favorite designers, discovering trends you missed last season, grabbing your wardrobe basics at a rock bottom price. Most customers believe that they are indeed finding gemstones, that what they are about to buy is from their favorite stores a few seasons ago but has either been returned or overstocked or just not a bestseller.

In reality, much of the merchandise at department store outlets is manufactured or purchased specifically for these outlets, with designers and salespeople creating familiar looking pieces at a lower cost which often indicate inferior quality. .

Neiman, Nordstrom, Bloomingdale’s, Barneys New York and Saks Fifth Avenue all have their own outlets; customers flock to these stores for the hallmark of the brand and believe they are buying last season’s carefully curated 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 their stores and website, while the rest is purchased specifically for the point of sale.

“These are existing goods that we can purchase from our supply partners,” says Naomi Tobis of Nordstrom Rack. “An example could be end-of-season closures or excess inventory that a brand has and wants to liquidate. In some cases, and you can see it in our public balance sheet with our inventory levels, we buy those closures or excess product at the end of the season, and keep it in a warehouse for a period of time. “

A customer inspects a bag at a Gap point of sale. Photo: Getty Images

For those shopping at Neiman Marcus outlets, things get a bit more confusing. Neiman has of them Point of Sale Types: Last Call Clearance Centers have excess inventory from full-price stores, while Last Call Studio stores sell items specifically designed for point-of-sale. Yes, done. Ginger Reeder, vice president of corporate communications at 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 clients. points of sale. Although she does not confirm whether or not this inventory is of lesser quality, she noted that the items are intended for an “ambitious buyer”.

“We’ve found that for an ambitious buyer, they look for the same mix of design as Neiman Marcus, but at a lower price,” Reeder said. “A lot of the designers we offer are designers that 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 just cheaper. For example, a The DVF Dress may have a pattern that was not picked up from our full line stores, so we made a lot of that for Studio stores. “

Barneys and Saks would not provide any comment to Racked, but it is safe enough to assume that the exit practices of Barneys Warehouse and Saks Off 5th are similar. According to Buzzfeed, last year, Saks Off 5th executives told investors that only 10% of their merchandise comes from Saks, 25% is “private label” products and the rest is created for point of sale by retailers. specific suppliers.

The formula these outlets use – designers sweetening their original concepts with inferior materials and production methods to get a lower price – wouldn’t seem so devious if buyers knew what they were buying. Reeder says buyers of Neiman Marcus’ outlet stores are fully aware of the difference between outlet store offerings, but vague labeling continues to baffle shoppers. If the DVF dress Weitsz almost bought was similar to a full-priced $ 350 dress, but made with inferior materials and sold for $ 150, “shouldn’t the price say $ 150, and not” compare at $ 350? “” she asks.

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

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

Some shoppers Racked spoke with weren’t surprised by these obscure tactics, and say they don’t necessarily mind the substandard quality of the clothes because the alternative – going to a cheaper store like Old Navy – isn’t an option for brand-conscious buyers. .

“I don’t expect stores to tell me their clothes are made with inferior materials. Obviously that’s bad for them,” says Phil Popowitz, a 25-year-old real estate agent who buys from big business. stores of branded work shirts. like Ralph Lauren, Calvin Klein and Nautica. “Obviously this is a ‘pay for what you get’ situation, and that won’t stop me from shopping there. outlet stores have better variety and better design than shopping at Target! “

Photo: Getty Images

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

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

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

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

“Historically, outlets have offered excess inventory and slightly damaged products that retailers were unable to sell in regular retail stores,” the January letter read. “Today, however, some analysts estimate that over 85% of merchandise sold in factory outlets was made exclusively for these outlets. different brand names and labels to distinguish goods produced exclusively for point of sale, others not. This leaves consumers unable to determine the quality of outlet store merchandise bearing branded labels. “

The FTC has neither confirmed nor denied that it is launching an investigation into the factory outlet stores, but it is clear that congressional concerns have not fallen on deaf ears. In March, two months after receiving the letter, the FTC published an article on his site titled “FTC Tips: How to Shop Wisely in Malls”. Some of the tips include familiarizing yourself with regular department store prices and buying off-season items to make sure you’re buying clearance merchandise rather than clothes made for the outlet.

Recognize that if you buy something that looks new and in good condition, the price may be lower for a reason. For example, plastic can replace leather trims on a jacket, or a t-shirt may have fewer seams and a lighter fabric, ”the article explains.

Colleen Tressler, consumer education specialist at FTC, wrote the article and tells Racked that she decided to do it because she didn’t think there was enough facts about what is going on in points of sale.

“People work hard for their money, so we want to make sure that they are getting their money’s worth 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. There hasn’t been enough penetration of this type of information.

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