Bargain hunting: The truth about outlet vs. retail shopping

Shopping season is in full swing, and retailers are doing everything they can to compete for your dollar. Malls like Erin Mills Town Centre and Square One have completed multi-million dollar upscale renovations, while big-box destinations like Heartland and the Toronto Premium Outlets vie for attention among more bargain-conscious shoppers looking for brand name goods without the brand name price tags. Outlet shopping can be a great way to pick up a lot of items on a budget, but be aware - those brands you’re buying may not be what you think they are.

Long ago, when people used to make pilgrimages to the US for “outlet shopping” trips and return with enormous hauls of designer goods at unheard-of prices, the business model for outlets was that they would carry overstock, clearance, and out-of-season items that needed to be moved out of regular retail stores to make room for new inventory. These days, that quaint practice is incredibly rare, with “factory” or outlet stores often running as entirely separate brands, with their own buying teams and inventory made specifically for outlets – inventory that was never intended for and has never seen the inside of an actual retail location. That dress shirt you bought at the J.Crew “factory” store? Everything from the fabric, stitching, fit, and finish might have more in common with something bought at Target than with apparel from an actual J. Crew retail store.

From personal experience, I can tell you that I’ve bought similar dress shirts from both Banana Republic retail and Banana Republic Factory stores, and the quality difference is real. Though they were both 100% cotton, after a year of regular wear the Factory shirt started fraying at the cuffs and looking a little worn and faded, while the regular retail shirt looked as good as the day that I bought it. The Factory shirt also had less detail throughout, noticeable stitching differences, and the fit wasn’t as flattering.

Aside from simple quality differences, another problem with the outlet-exclusive approach is that pricing becomes much more difficult to judge. Are you really getting as good a deal as you think you are? Kate Spade and Michael Kors recently faced lawsuits in the US over heavily-discounted items that allegedly were never intended to be sold for their “retail” or “list” price. So did T.J. Maxx, part of the same family of stores as Winners and Marshalls, which all use “compare at” pricing as opposed to “list” or “original price” tags. This “compare at” strategy was the subject of a CBC Marketplace investigation earlier this year, with Winners telling the CBC that this pricing nomenclature “…reflects our buyer's assessment of the regular, retail selling price of a comparable item in traditional department or specialty stores.” What Winners considers a “comparable item” is anyone’s guess, but it certainly makes figuring out whether you’re getting a real bargain less straightforward.

So how do you spot the real deal from the made-for-outlet doppelgängers? Sometimes they’ll be part of an outlet-only line, like Lauren by Ralph Lauren. In other cases, outlet exclusives are designated by a series of symbols: J. Crew Factory clothing will have two diamonds on the label, while Banana Republic Factory labels will have three diamonds, and Gap Factory labels will have three squares.

Banana Republic Factory tag (3 diamonds on label)

Banana Republic Factory tag (3 diamonds on label)

Banana Republic retail tag (no diamonds on label)

Banana Republic retail tag (no diamonds on label)

Armed with all of this information, one question remains: does any of this really matter?

If what you care about most is getting quality clothing that’s a great deal, you’re better off waiting for sales at retail than outlet shopping. That means braving the violent crowds on Black Friday or Boxing Day, signing up for retailer mailing lists to get periodic coupons, and patiently scouring clearance racks. However, if your priorities are less about bargain-hunting and more about simply having clothes that are stylish, comfortable, and affordable, outlets are still a great choice - they offer a lot of wardrobe flexibility year-round (not just during sale periods), and they can be a great way of developing a variety of different outfits without breaking the bank.