Are Outlets Really Cheaper?

At the nation's outlet malls, shoppers are still defying grim predictions for the season. We visit a Maryland outlet center to find out if people are really getting better bargains than at department stores.

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ALEX COHEN, host:

This is Day to Day from NPR News. I'm Alex Cohen.

MADELEINE BRAND, host:

I'm Madeleine Brand. There are plenty of predictions that this year's holiday shopping season will be one of the worst in decades. One bright spot, though: outlet malls. NPR's Tamara Keith paid a visit to one.

TAMARA KEITH: The Christmas music has been blasting from the speakers of the outlet mall in Hagerstown, Maryland, since November 1st. But Anthony Taylor(ph) and his wife were just getting around to starting their holiday shopping. He's been looking for a job for more than a year. So, as he puts it, they're counting their pennies.

Mr. ANTHONY TAYLOR: I just feel like the prices are - they're better, not to say that they're good; they're just better. It's less markup, is the best way to look at it.

KEITH: Taylor drove 50 miles to get to the outlet mall. Cheaper gas prices made it seem like a good idea - that, and the promise of bargains at favorite stores like Polo.

Mr. TAYLOR: Why not look at an outlet, just to see if you can't get the same thing for a better deal? Between the outlets and online shopping, that's the way we're going to have to do it.

KEITH: Outlet stores used to be small operations near factories where people could buy damaged goods. Now, there are more than 200 outlet shopping centers. The marketing message is still all about value. The savings tend to be anywhere from 20 to 60 percent compared to typical retail prices.

These days, the clothing, purses and shoes usually aren't seconds. But they also often aren't exactly what you'd find in full-priced retailers. Outlets carry last year's models, or products made from slightly different materials. And these centers have become a thriving subset of the retail industry as a whole.

Ms. KAREN FLUHARTY (Senior Vice President for Marketing, Prime Retail): I think it's safe to say that we're on par with last year's levels at this point.

KEITH: Karen Fluharty is senior vice president for marketing with Prime Retail, the owner of the Hagerstown outlet. She says that both sales and traffic at Prime's outlet malls are holding up despite the recession.

Ms. FLUHARTY: What we've seen in the last few months certainly parallels what we saw in the early '90s, when the economy was somewhat soft. And during times like these, what we see are shoppers that are really looking to make smarter choices with their dollars.

KEITH: There are no outlet industry-wide numbers. But at the 33 Tanger outlet centers, sales are up just slightly over last year. That's not stellar, but also not nearly as bad as the double-digit losses experienced by many retailers. Steve Tanger, the outlet company's president and COO, says outlets tend to be more stable, regardless of the economy.

Mr. STEVE TANGER (President and COO, Tanger Factory Outlet Centers, Inc.): The old adage, in good times, people like a bargain, and in not so good times, people need a bargain, is really true today.

KEITH: One firm, Premium Outlets, expanded this year, even as the economy was contracting. In early November, the company celebrated a grand opening at its newest center, on the Jersey shore.

Ms. MICHELLE ROTHSTEIN (Senior Vice President, Chelsea Property Group): The big question was, will shoppers come out?

KEITH: Michelle Rothstein is senior vice president at Chelsea Property Group, which owns the Premium Outlets. She says shoppers came out in droves. And yes, they were spending.

Ms. ROTHSTEIN: People very much want to be shopping. They just are very cautious, and when you give shoppers a very good, tangible reason to come out and good deals, the shopper is responding.

KEITH: But the outlets aren't entirely immune from troubles facing the retail sector. Outlet stores are slashing prices earlier in the season than usual, just as their mainstream counterparts are doing. Still, for Paula Chacala(ph), the outlet prices just aren't low enough this holiday season. She came to Hagerstown with her boyfriend and mom and hasn't bought much of anything.

Ms. PAULA CHACALA: Not even - but coming all the way up here and wasting gas to save like five bucks on a shirt.

KEITH: Chacala say she'll be doing most of her holiday shopping at Wal-Mart or Target - her and a lot of other Americans. Tamara Keith, NPR News, Washington.

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