You know that amazing feeling when you walk into one of your favorite brand’s outlet stores and see that glorious red sticker that reads “WAS $178, NOW $59”? Those of us who love bargains practically salivate at the mouth when we see those huge discounts on possibly off-season Cynthia Rowley or Michael Kors, but some new reporting shows that those prices are not all that they seem. What you’re buying aren’t amazingly marked down designer deals, they’re actually lower-quality clothes made to look like designer deals.
According to a report by The Brass, outlet clothing never goes to a regular store and is made to go specifically to outlet stores. Stores like J. Crew and Banana Republic have separate factories that make cheaper quality clothes that are made specifically for the store’s outlets. Are retailers trying to deceive their consumers? Possibly. However, their main objective with creating cheaper clothing is to compete with fast fashion retailers like H&M and Zara who are currently dominating the retail market. Stores who sell higher-quality clothing obviously can’t compete, however they utilize their outlet stores to serve as their entry point into the fast fashion space.
Another particularly deceptive side of the coin comes courtesy of stores like TJ Maxx and Nordstrom Rack. Sometimes they’ll have crazy amounts of certain brands at dirct cheap prices but be careful because that severely “marked down” Calvin Klein dress might just be the product of a TJ Maxx factory outlet with a Calvin Klein label sewn on.
According to The Brass:
In this situation, the brand (ex: Calvin Klein) agrees to let TJ Maxx produce clothing with their label on it in return for a percentage, usually between 5-20% of the wholesale price of the garment. To put this in perspective, in 2012 Calvin Klein reported that “licensed products currently represent slightly over 50% of global retail sales.” At that time, licensing alone accounted for more than $3.8 billion in CK sales.
So basically, everyone is in on it, except the consumer. Obviously, if you’re a die-hard outlet shopper then by all means get your outlet on, but at least you’ll be a more informed and savvy shopper.