Factory outlets: super savings with no frills and limited service

Clustered in towns and strung along highways, factory outlets en route to vacation destinations are attracting increasing numbers of value-conscious consumers in search of status-label items.

Visitors to L. L. Bean in Freeport, Maine, can step across the street to shop at Dansk, Colehaan, and Ralph Lauren factory outlets. Fall River, Mass., offers a veritable smorgasbord of outlets specializing in clocks, lamps, clothing, hats and gloves, curtains, ceramics, and other domestic items. The small town of Kittery, Maine, boasts a variety of outlets housed in a shopping mall.

Factory outlets, as part of the vibrant ''off price'' retail trade, provide a market for merchandise overruns, slow-selling items, discontinued lines, and canceled orders from retail stores. Shoppers can expect 20 to 70 percent savings on most items. They can also expect no-frills store interiors and limited service.

A bona fide factory outlet sells one manufacturer's goods at low prices by sidestepping the middleman. Typically, these outlets are remote from major urban centers. According to the National Retail Merchants Association, most factory outlets are concentrated in New England, the Middle Atlantic states, and the Southeast.

Some industry sources predict dramatic gains by off-price merchants nationwide - as much as 20 to 25 percent of all retail sales by the end of the decade. Other observers believe these claims are overambitious.

''The entire phenomenon of off-price is leveling off dramatically,'' says William Ress of Management Analysis Center Inc., a consulting firm in Cambridge, Mass. ''The big news about off-price retailing is that it's not hot news anymore.

''Off-pricers are diminishing their discounts to customers as they go for a more luxurious ambiance (in their stores), more first-quality merchandise, and better, more expensive locations. It's getting more difficult to distinguish the off-pricer from the more traditional retailer.''

While many off-price markets may have peaked, he notes, factory outlets in vacation areas continue to gain in popularity.

Further, the competition between traditional and off-price retailers and among discount retailers themselves is yielding a flood of bargains for customers seeking designer clothing and other name-brand merchandise.

For the most part, retailers say, off-price shopping appeals to thrifty, upscale consumers.

''The customer who shops off-price is what I term a meticulous shopper - a person who is very careful about his use of money,'' says Mr. Ress. ''These are the same people who clip coupons and shop for the best rate on their car insurance. You have to be willing to trade time for money to shop off-price.''

In ''The Status Shoppers Guide to the Big Pretzel: Reading, Pennsylvania'' (The Answer Group, Wyomissing, Pa., $5.95), author Suzanne Munshower offers these points to keep in mind when shopping at factory outlets:

* It is important to check the outlet's return policy. Some have ''no return'' policies; others, ''credit only.''

* Outlets may exercise a great deal of leeway when listing ''comparative'' or ''retail'' prices. Some shops don't list a comparative price. Becoming familiar with labels and common retail prices makes it easier to judge whether or not an item is really a bargain.

* Some outlets mix last year's merchandise with current output. It pays to acquaint yourself with a designer's current line.

* If you are going to need socks, hose, or other items for trying on clothes, bring them along.

* All prospective purchases should be examined for flaws. The following terms are often used in factory outlet stores:

Irregular: Item has slight imperfections that should be barely noticeable.

Second: Item has flaw in stitching, or in the pattern or printing of the design.

First quality: Item is free of defects.

Damaged: Item has an obvious flaw such as a missed stitch, ink blot, or run in the fabric. In some outlets the flaw is marked with colored tape or masking tape to show where the damage is.