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The following is an excerpt from Cheap: The High Cost of Discount Culture, out this month.
I had come to Vegas to gamble, though in truth the casino was only a detour. My mission was to check out the retail gambit, which in Vegas seemed just as dicey as the slots. Scores of stores circle the hotel lobbies, and hundreds more line the Strip, hawking everything from tattoos (“Fresh needles for every new customer!”) to Chopard Haute Joaillerie watches with an optional diamond wrist strap. It is terra incognita for a bargain hunter, but fortunately I had a guide: Gillian Naylor, a professor of marketing at the University of Nevada, Las Vegas. Naylor’s paper, “Price and Brand Name as Indicators of Quality Dimensions for Consumer Durables,” in the Journal of the Academy of Marketing Science, had alerted me to her expertise in connecting the dots of brand name, price, and consumer perception. Our destination today was a premium outlet mall.
The New York Times once reported that outlet malls were not only the fastest growing segment of the retail industry but one of the fastest growing segments of the travel industry. The total distance that Americans travel to outlet malls each year equals 440,000 circumnavigations of the globe. If that number seems a little abstract, consider this: The distance to the moon is roughly equal to 10 trips around the globe. That is, we make 44,000 moon launches’ worth of outlet visits each year. And all for what?
Factory outlets and Las Vegas casinos both play on the natural human desire to “beat the house.” The difference is that when we lose in Vegas we know we’ve lost. At the outlets, our desire for bargains can blind us to what we really want, which is value. We believe we’ve won—no matter how badly we lose.
People travel celestial distances to outlet malls because until recently outlet malls were located celestial distances from people. On the surface this makes no sense; as a rule investors won’t put money into malls without the requisite “threshold population densities” that all but ensure sales. But outlet malls are different. Resolute in their remoteness, they stand secure that, like Muhammad and the mountain, the customers will come to them. The remote location of outlets is not merely a defensive, cost-saving maneuver. It is also a deliberate strategy. In the public mind, convenience is a trade-off for price, and price is traded off for convenience. Inconvenience connotes cheap, while convenience connotes pricey. In a very real sense, outlets are the anti-convenience store. Visiting the outlets demands an investment in time, deliberation, and energy beyond what we invest in most other leisure activities. We have to work to get there, piling up hefty “sunk costs.”
All that time! All that gas! Psychologically speaking, all this and more must be repaid in the form of purchases made. In making that long trip to the mall we are actually engaged in a transfer of power from ourselves to the outlet itself—it has already extracted a price from us. Our expectations are raised at the same time that our guard is lowered, and in making this bargain we are willing to forgo many things that we once demanded from a satisfying shopping experience: variety, serendipity, aspiration—and fun.
Navigating Las Vegas Premium Outlets was anything but fun: 435,000 square feet of brand-name storefronts lined up in standard mall formation like so many dominos. There was no place to sit, and most customers looked exhausted and not what you’d call fashion forward. Though not all were wearing T-shirts emblazoned with slogans, enough were to make Naylor, decked out in a Diane Von-Furstenberg style wrap dress accented with a stunning Plino Visona handbag, a true standout.
A single mother of three, Naylor knows a thing or two about value. On our 20-minute drive to the mall, she mentioned that her youngest daughter, a high school senior, was mulling over her college choices. Naylor had constructed a spreadsheet of public universities offering the best value for the money and had given her daughter a choice of the top three.
SNL: Equal Opportunity Objectifiers
Jon Hamm spent most of the Saturday Night Live episode he hosted last night shirtless.
Confessions of a Woman Comedy Writer
Allison Silverman accepts one from New York Women in Film & Television (and tells us why it's rare).
Comments
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Plenty of fake 'outlet malls'
By: Cassy | Tue, 11/10/2009 - 18:51
We all love getting a good deal and many of us are just looking for an excuse to buy those shoes and retailers know that. Feu outlet malls claiming fantastic bargains but really just stores wrapped up in a different look and feel are just another ploy.
I haven't been to the Vegas casinos so don't know what the story is there, but in Florence, Italy, one of homes of great labels they're on to this little scam in a major way. I was looking for the legendary Prada warehouse in Montevachi just south of Florence(which I did eventually find and its amazing by the way...old season Prada shoes and handbags for as little as 50 Euro!) and nearby they have constructed what they call 'The Mall' - supposed to be a seconds warehouse for all the big labels. Ferragamo, Dolce and Gabbana you name it they all had outlets in this new industrial looking complex in the middle of no where. And the prices...certainly looked pretty close to retail to me!
Just because its called an outlet mall doesn't mean its cheap!
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Didn't realize anyone still went to outlet malls in the U.S.
By: ockeghem | Tue, 07/14/2009 - 15:40
Actually, I was surprised this article didn't mention anything about the special outlet brands peddled at the outlet malls . I guess that's because it was excerpted from a longer book -- but as an article unfortunately it doesn't stand on its own.
But what amazes me is that this book would still be considered timely. The outlets have been selling specially manufactured, flimsy brands for over a decade, I think, and it did get media coverage when the shift started happening. And they haven't had any good values since. Some of the stores have even given up the pretense of selling clothes for less than the mall; I stopped off at a Premium Outlets in Orlando recently while there on a business trip, because they had a Destination Maternity store -- which supposedly carries Pea in the Pod and Mimi Maternity, which we don't have in my area -- and I refuse to pay full price for maternity clothes. The clothes in the store were the same as the mall, for once, but at the same prices, too -- full price or sale price. And the store was almost all the cheap Motherhood Maternity line. So it was a complete waste of cab fare for clothes I could have gotten on sale at Motherhood Maternity at home.
Also, I don't know about other areas of the country, but most of the outlet malls I know in the Northwest were built in the late 80s and have been hanging by a thread for about a decade. There's one on I-5 near the Canadian border, built to take advantage of the Vancouver shoppers, that has maybe three stores in it today. There's a mall in Post Falls, ID that's about the same. The newer Seattle Premium Outlets mall is doing better, but seems to be mostly frequented by Canadians, as anything in the United States seems like a huge savings compared to the prices in Canada.
So I'm not sure why this book is relevant -- I guess maybe there's a thought that there will be an upswing in outlet shopping with the recession. But the story that outlet mall shopping is a complete waste is an old one and the story about reference prices is an even older one. Not trying to be a curmudgeon -- but is there really a story here?
Value is getting tougher to find
By: janjanjan | Tue, 07/14/2009 - 15:06
I've noticed that retail is devolving to only 2 choices for most goods. We can buy cheap, at WalMart, Target, outlet malls, and elsewhere, and we get cheap goods. Or we can buy extremely high--places like Williams Sonoma, for example. I was looking for dish towels recently and found them priced between $2-$5 or over $15, nothing in between. And the $2-$5 was a range for the exact same quality. I'm not really interested in spending $20 for a dish towel, but I really want something nicer than what I find at Target.
WRT reference prices
By: jafi | Tue, 07/14/2009 - 13:30
I disagree slightly. Yes, I sometimes get excited over a reference price vs. sale price. But I always try to focus on the value of the product. Is it worth the price they're trying to sell it for? Do I know enough about the product or brand to know what it usually costs and how well it performs? I do a lot of comparison shopping. I have left things in the store to go check a price elsewhere or online. Occasionally I've missed a bargain as a result. More rarely I've bought and found I could get a better price elsewhere, or I misread how well made it is. At times I spend more to get better quality. But I am really after the good value not just the cheapest price. There are things I've bought in resignation because I can't find the quality I want or a price that is a fair value for the item. Little plastic things being sold for $3 or $4 dollars is infuriating when you can be fairly sure they cost less than 25 cents to manufacture and transport to the store. The margins on goods these days are often mind bogglingly high.
One of my favorite examples, is cables for TV's, computers, electronics. I buy them all at monoprice.com. Don't ever fall for the expensive computer/hdmi/ Monster Cable brand scam when you're buying an electronics item. Any HDMI cable will work, it's a digital standard, no special shielding or anything else needed. Unless you have a high end (as in many many thousands of dollars) stereo setup do not fall for the Monster Cable scam, you can get high quality cables for far cheaper at monoprice. Buy them online for $4 or $5 rather than the big box selling it to you for $20 or a High Definition Cable Package for $60.
But then I'm value obsessed. Friends like me to go shop with them because I'm focused on the quality/price intersection not just the discount. This gets harder to achieve all the time because the quality of materials and construction is very often cheaper than a few years ago.
The difficulty in finding quality goods is huge. I long for the days of clothing made in the former Yugoslavia, and even in Mexico. Beautiful well-woven thick yarn fabrics, great stitching, finishing, and reasonable prices, not always cheap but very good value. Now, a department store skirt for $250 wasn't lined, the seams weren't finished, and the hem was crooked. Plus the fabric was going to wear out in no time if the waist button and zipper didn't break and get there first! Why wouldn't I buy the big box skirt for $20 instead if they're both going to last the same amount of time?
Haven't read it yet but am looking forward to the account of the Chinese manufacturing focus on cutting costs by cutting corners.
Poorly Made in China: An Insider's Account of the Tactics Behind China's Production Game
http://www.amazon.com/Poorly-Made-China-Insiders-Production/dp/047040558...
I sympathize with the thesis behind the book, but it's a bit of a catch-22: I only have a limited amount of money to spend, less now than ever. For the money I have I want the best possible quality I can afford. If I cannot find the quality(sometimes not available at any price), or can't afford it - then I'm going to go for the second best alternative - which might be the cheapest, depending on what the item is. Does that make me an evil bargain hunter when I refuse to buy the local expensive item that is no better in quality? I'll buy local peaches and tomatoes at the farmer's market because they're superior in taste and ripeness which justifies the cost. I bought a very expensive piece of Amish furniture years ago and expect to have it all my life. But I can't spend more just because it's local. It has to have the value because I am not wealthy enough to buy without watching the bottom line.
Evolution of the Outlet Mall
By: jafi | Tue, 07/14/2009 - 11:58
The article is right on about the shell game the outlet malls have become, though they weren't always that way.
I remember when outlets were really a place for fabulous bargains. In El Paso in the early 80's there was an amazing outlet mall for high end/ high quality clothing because a lot of clothing jobbers were in El Paso and Juarez. I was a poor college student but able to dress like a trust funder, buying Ralph Lauren, Izod (it was the 80's!) clothes and Amalfi shoes for Target prices.
I worked at the Gap for a while when I moved to Denver in the mid-80's. The store manager for a flailing free standing Gap at what was then Northglenn Mall convinced the Gap to start sending her customer returns and seconds to sell to help meet the store sales goals. When the store had $10,000 dollar days (this was 1987 when a good sales day in Denver might be $3000) selling merchandise at $3 - $20 an item, corporate Gap took notice. Tuesday was delivery day - people started lining up as soon as the delivery truck arrived. It was a feeding frenzy. I still have gorgeous handmade Gap sweaters that were only sold in the Manhattan stores that I paid $10 for. At this time TJ Maxx and Marshalls was also a place to score great one of a kind finds and bargains on better made designer and department store labels. I bought a lot of Jones New York suits there.
Companies took notice of how much activity these outlets generated and everything started downward. They created special clothing lines for outlet malls, meaning lower quality and higher priced. They jacked up prices artificially and then "discounted" them on any actual designer goods. Denver is ringed by outlet malls to the north, south, west, and mountain west. There are simply too many outlet malls and stores in the US for all of them to have actual outlet clothing.
In the early days the outlets were worth the trip to Castle Rock, Loveland, or Silverthorne because there was more merchandise that were returns, leftovers, or seconds than special manufacturing lines made just for the outlets. I still own the Kenneth Cole leather briefcase I purchased in 1991 at Castle Rock. Haven't seen that quality of leather goods offered there in years. And prices are damn near full retail these days.
You can still find the occasional store that is the actual outlet for the company. The Eddie Bauer outlet at Colorado Mills gets catalog returns and overruns in addition to the usual "outlet" merchandise. I got some amazing deals there last year, $7 dollar pairs of pants, $10 sweaters - all from their top end catalog lines. The Sears outlet store(not at a mall) off I-25 in Denver can be a great place to buy appliances if you're patient and go often. But the companies are wise to the game and true bargains are harder to find. You often have better luck at the second hand stores.
I do miss the days when a trip to an outlet meant the odds of a great find were high, rather than the tired dread of "maybe I can find something this trip" or resignation of "that was another wasted trip for nothing" that characterizes an outlet trip, (or even a department store trip anymore) these days. Buyers for stores in Denver, with the exception of Cherry Creek, tend to go for "casual" junk that I'm not going to wear. Shopping just isn't fun anymore, and most people can't afford a lot of these days anyway.
Shop carefully
By: Abby Normal | Tue, 07/14/2009 - 09:26
When I was in college my hometown was close to one of these ginormous outlet malls and I worked there during the summer. It didn't take too long to notice that, while not overtly ripping people off, our store was not offering "special deals" that customers thought they were getting.
Many shoppers have the perception that they can get slightly "irregular" or damaged designer items that would normally be very expensive but end up being sold at deeply reduced prices. A few storefronts at outlet malls still do this, and these "hidden treasures" can sometimes be found with a lot of perserverance.
However, I think the majority of outlet stores function much like the one I used to work in. I was at a store that had the same name as a women's clothing store that's found in most malls. However, we never carried any of the clothing that was carried in the "regular" stores. What we did carry was purchased specifically to be sold in the outlet, and generally consisted of less expensive, more poorly-made items. On occasion, I ran across pieces at discount stores like K-mart that were the exact same thing that we had on the rack at our store. Usually the prices were similar, so it didn't seem as though people were being overcharged. It just seems a shame that a customer would use up vacation time to go to an outlet mall and get something she thought was an amazing bargain, when she could've just saved the gas bought the same thing at Target.
best article
By: lightening | Tue, 07/14/2009 - 08:53
this is the most helpful, professionally written article I have read on this blog. Thanks!