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Direct factory outlets

Factory outlets can offer great bargains, but beware of their retailing tricks.

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Last updated: 03 September 2014


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If you're shopping for clothes, shoes, dinnerware, electrical appliances, furniture – just about anything, in fact – you should check out what's on offer at your nearest factory outlet centres. If you're canny enough to resist impulse buys, you can save big bucks.

Factory outlet centres have major brands such as Country Road, Villeroy & Boch and Esprit, plus cafés and parking, but best of all their stock's always "on sale" — some of it at more than 70% off. A major challenge to traditional CBD retailing, factory outlets are a huge success in the US and UK, and very popular in Australia, as more 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.

How factory outlets work

In Australia, major labels such as Bonds 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outlet centres — Villeroy & Boch and Royal Doulton, for example — stock discontinued lines, but it's not just lurid or outdated dinner sets that end up there.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.

Why we like shopping at factory outlets

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.

You'll find most factory outlet shopping centres 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.

Research shows that, on average, shoppers spend between 30 minutes and two hours and about $70 at a normal shopping centre, compared to three to four hours and $200 to $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-rate price.

There's no doubt you can save money at a factory outlet centre, 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.

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

Consumers 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 360° 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.

Price comparison

So how much can you expect to save? It can be plenty. 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 (Rodd & Gunn), a woman (Jigsaw) and a child (Pumpkin Patch). 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.

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.

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 Refunds and returns - 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 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.
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