Outlets now the 'in' thing for retailers

The first modern outlet mall sprang up just outside of Memphis, Tenn., in 1979, according to Linda Humphers, editor of the outlet trade journal Value Retail News.

The idea was that a cluster of discount outlet stores, located about 100 miles from urban centers, would draw crowds of shoppers, willing to drive an hour or more.

And it worked. More than 300 outlet malls dot the countryside and they draw millions of shoppers each year - all in the name of saving money on top name goods.

These malls are a far cry from the first outlet "mill stores," located inside a shoe or clothing mill and designed to liquidate the manufacturer's rejects at sharp discounts.

That image of cut-rate, direct-to-the-consumer bargains persists, and many factory-outlet stores still carry castoffs and outdated wares.

Yet most outlets have evolved into far different affairs, with more sophisticated retail strategies.

Liquidation - cutting the manufacturer's losses on unwanted goods - is no longer the bottom line.

Profits are. "The aim for all the outlets is to increase their sales every year," Ms. Humphers says. "It's business. It's retail. And nobody does retail to lose money."

Today some manufacturers make special lines of lesser-quality merchandise to fill outlet shelves.

Clothingmaker Ann Taylor runs stores called Ann Taylor Loft.

"It's not an Ann Taylor outlet," explains spokeswoman Hillary Martin. "It's a separate brand, with its own design team, and a more accessible price than in Ann Taylor stores."

Other factory-owned stores, such as the Gap and Brooks Brothers, sell specially made merchandise along with traditional outlet fare.

And some factory outlets are no longer operated by manufacturers.

Designs Inc. of Needham, Mass, for example, runs 79 Levis and 16 Dockers outlets for Levi Strauss.

"We're an outlet partner" to the manufacturer, explains Dan Murphy, Designs vice president.

"We purchase irregulars and manufacturer close-outs, and then retail them."

It's still possible to find traditional mill stores. For example, Malden Mills, maker of popular Polartec fabric for outdoor wear, runs one at its factory in Lawrence, Mass.

But it's the exception. Outlet malls have become shopping "destinations," not just for individuals and families but for tour-group operators. They even figure into the itineraries for some foreign tourist groups.

WHAT TO FACTOR AT THE FACTORY STORE

Tips from the Council of Better Business Bureaus in Arlington, Va.,

on getting more out of outlet shopping.

* Ask clerks about the quality and age of merchandise you're interested in.

* Ask about the store's refund and exchange policy.

* Ask if you can return purchases to a full-price branch of the manufacturer's store, especially if the outlet is far from your home.

* Stop in the outlet-center's management office to request coupon books usually reserved for bus-tour groups; you may get one as a goodwill gesture.

* Out-of-season merchandise carries lower prices than in-season goods.

* Don't overlook irregulars. The flaws are often unnoticeable and don't affect durability.

* Look for products with labels that are cut or obscured; they're usually items from the manufacturer's retail boutiques, not items made to be sold at outlets.

* If you shop a brand often, ask whether the store has a frequent-buyer program. You may get bonus savings and advance notice of sales.