This past weekend’s monumental $52 billion shopping binge notwithstanding, that most American of retail institutions—the mall—hasn’t fared particularly well in recent times. Especially not when compared to their low-budget sibling, the outlet mall: While the regular malls have average vacancy rates of 9%, an empty outlet mall storefront is a rarity, and new outlet mall construction is in the works all over the country. Lower price is the main appeal of outlet malls, of course, and the reason why apparel sales rose nearly 18% last year, compared to an increase of just 2.5% at department stores. But just how much cheaper are outlet malls really?
The price-obsessed folks at Cheapism aim to get answers. As with this operation’s previous price-comparison studies—like the matchup of Costco vs. Sam’s Club—this report doesn’t claim to be entirely scientific or comprehensive. But it’s enlightening and worthy of attention nonetheless.
The study was conducted by way of a classic store-to-store comparison-shopping excursion. Armed with a list of 50-odd items, the secret shoppers hit the outlet mall, took note of prices for each item in stores like Gap, Coach, and Restoration Hardware, and then did the same thing at stores in a nearby retail mall selling the same merchandise.
To be fair, this isn’t exactly an apples-to-apples comparison. As the study’s authors note:
Retail merchandise is frequently trendier and slightly higher quality than outlet stock.
That may be understating things. It’s been estimated that as much as 85% of items sold at outlet malls were never available at traditional malls. Instead, they were produced—on the cheap—specifically to be sold at outlet malls.
So the outlet mall merchandise better damn well be less expensive. For the most part, it is.
Overall, outlet prices were nearly 30% less expensive in the Cheapism study. For specific merchandise from certain brands, outlet mall prices were substantially cheaper than their retail counterparts. A five-pack of Banana Republic men’s dress socks cost $20 in the outlet mall—and $52.50 (61.9% more) at the Banana Republic store in a regular mall. As for children’s apparel at Gymboree, outlet mall prices were more than 40% cheaper when it came to girls tights and holiday dress, as well as boys pants, argyle sweaters, and button-down shirts.
The Cheapism study is limited to one outlet mall and its nearby retail equivalent, so the discounts (or lack thereof) at outlet locations in different parts of the country may vary.
But the discounts found in the Cheapism study are pretty much on par with a 2005 in-depth report on outlet malls conducted by a pair of marketing professors. In their study, the average price discount across all outlet stores was 24% compared to their standard retail equivalents. The researchers traced the typical path of goods:
Merchandise is first available only at the primary retailer—for full list price and with a high level of service. Some weeks later, the same items appear as “New Arrivals” at the outlet store, at a 40 percent discount. Meanwhile, any units still on the racks of the primary retailer are also marked down 40 percent.
Retail markup for clothing, the researchers note, is typically 50%, so if the average item sells at an outlet mall for about one-quarter off the original price, the store is happy. Shoppers are generally happy, for that matter, to not be paying the full original price.