Direct factory outlets guide

Factory outlet centres can be a bargain hunter’s paradise but don’t let the sale signs go to your head.
 
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  • Updated:18 Oct 2007
 

01 .Introduction

DFO logo

In brief

  • If you’re prepared to spend some time looking, you can make serious savings at factory outlet centres.
  • Beware of overspending. Research shows that while shoppers can save money at these centres, they generally buy more items, voiding any saving they may have made.
  • ‘Made for factory outlet’ stock isn’t necessarily of a lower quality, it’s just not available in mainstream stores.
  • Faulty stock is rare in factory outlets, and should always be clearly labelled.

Forget your local Westfield: there’s a new breed of shopping centre appearing around the country. These creatures have all your favourite labels: Country Road, Villeroy & Boch and Esprit, plus cafés and free parking, but best of all, their stock’s on sale all the time — some of it’s at more than 70% off.

Welcome to the world of factory outlet centres. A major challenge to traditional CBD retailing, they are already a huge success in the US and UK, and starting to boom in Australia, as a growing number of consumers find they can get the brands they want for less.

If you live in a capital city, chances are there’s already a Brand Smart, Harbour Town or DFO shopping centre near you. And if there isn’t, there’s likely to be soon. More and more retailers are tapping into this emerging market, realising it’s a great way to offload stock and raise their profile with a fresh set of consumers.

In this report we explain:

  • How factory outlets work
  • The type of goods you can expect to find
  • Ways to get a genuine bargain
  • The results of our price comparison between stores

Please note: this information was current as of October 2007 but is still a useful guide to today's market.


 
 

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What they stock

In Australia, major labels use their factory outlet stores to sell last season’s stock at discounted prices. You might also find surplus stock from the current season, samples, discontinued lines or faulty goods at outlet centres. Generally, though, faulty merchandise is rare — and it should always be clearly labelled.

In the US, some factory outlets stock a large range of ‘seconds’ — items with imperfections. Many brands also have stock manufactured especially for their outlet stores, and generally it’s of slightly poorer quality than their standard retail lines.

In Australia, factory outlets don’t sell as much second-grade stock. A few retailers such as Sheridan, Oroton and Nine West manufacture product lines especially for their factory outlet stores — mainly because they don’t have enough discontinued or out-of-season stock to fill their shelves. But they say this ‘made for factory outlet’ stock isn’t necessarily of a lower quality, it’s just not available in their mainstream stores.

Homewares stores at factory outlet centres — Villeroy & Boch and Royal Doulton, for example — stock discontinued lines, but it’s not just lurid dinnerware sets or outdated designs that end up there. You can find popular patterns, purely because big retailers like Myer and David Jones have to make room for new designs. The outlet retailers also stock some lines that the big retailers have chosen not to buy in.

Who shops at factory outlets — and why?

You’ll find most factory outlet shopping centres out in the suburbs, so chances are you’ll have to invest time and petrol to get to one. Most offer one-stop shopping, stocking everything from sportswear and fashion labels to crockery and electrical appliances, all at a discount of up to 70% or more.

For many Australians, shopping is a leisure activity and going to one of these centres has become a weekend excursion for the whole family. On Saturdays and Sundays, they’re packed — so if crowds are your idea of shopping hell, only attempt factory outlet retail therapy during the week.

Research at the Australian Centre for Retail Studies shows that the average shopper spends one hour and $30–$50 at a normal shopping centre, compared to three to four hours and $200–$300 at a factory outlet centre. If you’re from out of town, you might spend as much as $700.

Shoppers make the journey to these centres thinking: “It’s going to be worth my while — I’m going to get a bargain.” This puts them in a good mood, and when you’re in a good mood you’re in the right frame of mind to buy.

Shoppers are likely to have saved up for their shopping trip and gone in with a ‘what to buy’ list. These bargain hunters are primed and ready to spend time browsing — and they need to.

There‘s a lot of stock and you have to be prepared to pick through it to find what you want. You may not find an outfit that’s in the pages of the latest Vogue, but you can pick up well-known Australian labels like Oroton, Rodd & Gunn, Jigsaw and Pumpkin Patch at a cut price.

There’s no doubt you can save money, but the low prices can tempt you into buying things you didn’t plan to. And buying more items means you may end up spending more, rather than making savings. (See How to bag a bargain for tips on avoiding the traps.)

Shopping seduction

Supermarkets are notorious for designing their stores to maximise ‘impulse buys’ or ‘unplanned purchases’. Factory outlet centres also roll out all the retailing tricks to get you in and keep you there — after all, the most important factor in determining how much consumers buy is how long they spend in a shop.

Here are some of the tricks used:

  • Sale signs: We’ve become psychologically programmed to react to signs in shops — sale signs in particular. But displaying any kind of sign is likely to lure a shopper inside a store as it suggests a ‘shopping event’ may be in progress.
  • Price points: We also respond to psychologically sensitive price points like $99.99 — and you’ll see plenty of them at factory outlets.
  • Compulsory browsing: Shopping centres are commonly designed around a 360º pathway so that, unless you double back, you have to walk past every single shop before you reach an exit.
  • Right is right: Consumers like to touch merchandise, so shops often get better results by laying out the store so that consumers explore it in a counter-clockwise direction. This puts the touching hand, usually the right, closest to the stock. Shoppers have also been found to drift towards, and look to, the right.
  • The comfort zone: If you’re rummaging through racks for hours, strategically placed couches on the centre thoroughfare can provide some welcome respite — which in turn gives you the energy to keep shopping. You can also use them to offload weary partners and children while the serious business of retail therapy continues.
  • Fuel stop: Factory outlets want you to refuel quickly and keep shopping. You won’t be settling in for a long, three-course lunch — it’s all quick eats and functional but not-too-comfortable tables and chairs.
So how much can you expect to save? To find out, CHOICE went shopping at a factory outlet centre, and compared the final price with a mainstream retailer.

We bought an entire outfit for a man, woman and child. The quoted recommended retail price (RRP) is what was displayed on the original label, and is what we would have paid if we’d bought the item at full price, in season, at a mainstream retail store.

A casual look for him: Rodd Gunn

Rodd Gunn outfit

What we paid RRP Saving
Chinos $99 $159 $60
Shirt $99 $149 $50
Jacket $299 $459 $160
Total $497 $767 $270

 

 Work-smart for her: Jigsaw

Jigsaw outfit

What we paid RRP Saving
Top $100 $179 $79
Jacket $156 $329 $173
Trousers $79 $189 $110
Total $335 $697 $362
 

Cool for kids: Pumpkin Patch

Pumpkin Patch outfit

What we paid RRP Saving
Long-sleeved T-shirt $15 $20 $5
Zip-front hoodie $16 $27 $11
Jeans $17 $27 $10
Total $48 $74 $26

 

Total Cost

The total cost for the three outfits was $880. The recommended retail price was $1538, meaning we saved $658 by shopping at the factory outlet.

04.How to bag a bargain

 

Shoppers aren’t simply slaves to the retail planners. We now pride ourselves on seeing through cynical marketing exercises. We do product research on the internet or ask family and friends for advice, and we’re less likely to be brand-loyal than we used to be.

Here are some ways you can fight back against unwise shopping impulses.

Plan ahead
Shopping can cause the brain to release dopamine, the same pleasure pathway activated by food, sex and drugs. That’s why it feels good, and why you need tools to rein you in. Go in with a budget and a list of products you hope to buy and try to stick to it.

Monitor yourself
Be aware of your behaviour — ask yourself why you’re shopping. Is it to make you feel better? Are you shopping for things you need? Are you purely on the hunt for a bargain? Buying for pleasure is fine as long as that’s what you planned to do.

Cooling off
If you’re not sure about a purchase, give yourself some cooling-off time — even if it’s just 10 minutes — and ask yourself (and your shopping partner) if you really need it.

When enough’s enough
Partly because of the dopamine 'rush', people can develop a shopping addiction or 'compulsive buying disorder', which can lead to serious debt. This needs to be treated like any other behavioural addiction — by seeking professional help. 

Shopping rights at factory outlets

Most outlet shops display their returns and exchange policy. These do vary, so they’re worth a read. Some have the same policy as their normal retail shop. Others have a stricter ‘no returns’ policy — but even these stores must comply with the laws that protect consumer rights (see Your Rights for more information).

The basic principles are these:

  • Any item you buy must match what’s promised by its label or packaging, otherwise you’re entitled to a refund.
  • You’re also entitled to a refund for anything that’s faulty or not of ‘merchantable’ quality, unless it’s clearly labelled as a faulty item or ‘second’.
  • If you simply change your mind, you aren’t entitled to a refund or exchange. However, some retailers will give you one anyway — it depends on their store policy.