How Outlet Malls Have Convinced Shoppers into Thinking They're Getting a Sweet Deal

By Ellen Rupel Shell, The Penguin Press. Posted August 8, 2009.

The following is an excerpt from Cheap by Ellen Rupel Shell (Penguin, 2009).

HOMER: Look at these low, low prices on famous brand-name electronics!
BART: Don't be a sap, Dad. These are just crappy knockoffs.
HOMER: Pfft. I know a genuine Panaphonics when I see it. And look, there's a Magnetbox and Sorny.
SALESMAN: Listen, I'm not going to lie to you. Those are all superior machines. But if you like to watch TV, and I mean really watch it, you want the Carnivale. It features a two-pronged wall plug, a pre-molded hand grip well, durable outer casing to prevent fall apart . . .
HOMER: Sold. You wrap it up, I'll start bringing in the pennies.
-- The Simpsons, "Scenes from a Class Struggle in Springfield," first aired Feb. 4, 1996

The "deluxe" room at the Excalibur was a bargain. There were even cheaper options available in Las Vegas that week, but not with Exacalibur's Knights of the Round Table meets Six Flags decor and its prime location just steps from the Strip. For $69 plus tax I got the full-throttle Sin City experience: a lobby thick with slot jockeys; billboards flashing round-the-clock neon teasers for bare-breasted "exotic" entertainment; and round tables of low rollers drinking scotch at 9 a.m., hope draining from their faces like transfusing blood.

I was in 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 Corum Golden Bridge or 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. Her standards were high, and when I shuffled into her modest office, her appraisal of my stated mission was, to put it kindly, dubious. "The mall you've picked," she said evenly, "is pretty bad. They have Catherine Plus Sizes and Dress Barn Woman." Naylor is tall and elegant and no plus size. I felt a little foolish to have come all this way with no fashion sense. Sensing my discomfort (and panic), Naylor gently suggested that we aim a tad higher. She named a glamorous-sounding venue featuring discount versions of Coach, Dolce & Gabbana, A/X Armani Exchange, and 120 other stores. Ashamed to admit that my budget was more Dress Barn than Gabbana, I agreed, and minutes later we were off in her Acura TL, windows up, air-conditioning steady, destination Las Vegas Premium Fashion Outlets.

Outlet malls are big in Europe, Japan, and Hong Kong. They exist in Turkey, Dubai, and South Africa. If there is one deep in the Amazon rain forest, and another just south of the North Pole, it would not surprise me. 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. Franklin Mills Outlets in northeast Philadelphia rings in four times the visitors of the Liberty Bell. A pair of outlet malls near San Marcos, Texas, outdraw the Alamo. Colonial Williamsburg can't hold a candle to mega-outlet mall Potomac Mills. This is not to suggest that Americans don't take pride in our national heritage; we surely do. We revere the Liberty Bell and Colonial Williamsburg. We salute the Alamo. It's just that most of us prefer to spend our time where we believe our dollar will go further.

About 55 million Americans shop in at least one of the nation's roughly three hundred outlet centers every year. Stretched over five years, that number adds up to nearly every man, woman, and child in the country. Even more astonishing is the number of miles chalked up in this annual pilgrimage. 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.

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; full-price "regional" malls are always situated with regard to demographics gauging the buying power and density of surrounding communities. And as a rule investors won't put money into malls without the requisite "threshold population densities" that all but ensure sales. Nor will builders build them. But outlet malls are different. Resolute in their remoteness, they stand secure that, like Muhammad and the mountain, the customers will come to them. Freed from the need to offer convenience, outlet malls are plopped down with what appears to be wild abandon. Of course that is an illusion: They are almost always located off a busy byway and, whenever possible, between two or more population centers. Generally this is a long drive from any particular population center -- 25 to 100 miles outside the metropolitan shadows, where real estate is cheap and the tax incentives sweet. In fact, until recently manufacturers preferred and sometimes even required outlet malls to locate far enough away from their department store rivals to avoid angering full-price retailers.

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Ellen Ruppel Shell is a journalist, correspondent for the Atlantic Monthly, and professor of science journalism at Boston University. She is the author of three books, including most recently, Cheap (2009).

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