One of the primary strategies used to encourage shoppers to patronize outlet stores is emphasizing the value of the savings to be had at these stores, even when that means inflating the savings. Outlets make it possible for middle- and lower-income shoppers to access aspirational brands that they'd otherwise be unable to afford. Often, the shoppers who typically make purchases at a brand’s retail locations aren't the same shoppers making purchases at its outlet stores. Utilizing the difference between outlet and store locations is a key part of many companies’ business strategies. If the merchandise can't be sold on clearance in one store, it may be moved to a different store or donated. ![]() At the end of the season, a department store may be required to sell unsold merchandise back to its original supplier, whereas an overstock store typically has to keep unsold merchandise indefinitely. The reason why overstock retailers can offer in-season goods at discounted prices is that, unlike traditional retailers, they're not subject to buy-back clauses. Today, these stores primarily purchase their merchandise from the same suppliers that sell to traditional retailers but may buy it piecemeal or place orders more regularly. These stores are often known as overstock retailers because, traditionally, they purchased merchandise that was “left over” at retail stores at the end of each season. TJX Companies, the parent company behind TJ Maxx, Marshalls, HomeGoods and Sierra, operates thousands of off-price retailers around the world. Not all stores that sell damaged and excess goods are outlet stores, though. Sometimes, brands create entirely separate lines to sell at outlet locations that are not sold in the retail locations. These items may be similar to those found in full-line retail locations but are manufactured with lower-quality material or construction methods to make it possible to sell them at a discounted price. Items in this final category make up the bulk of the items sold at many of the stores in outlet malls across the United States and Canada. Items that have been manufactured specifically for the discount retail location.Items that have been altered or refurbished for discount sale.Clearance items from the brand’s full-price retail locations.At stores like this, shoppers find a variety of items. In Nordstrom’s case, discount locations operate under the name Nordstrom Rack. Many retailers, such as Nordstrom, operate discount retail locations. Factories are typically far outside urban cores, and outlets needed to be near their factories.Preventing competition between the outlet and retail locations.Taking advantage of cheaper land and retail space in sparsely populated areas. ![]() ![]() These stores were located far outside urban centers for a variety of reasons, such as: Thus, the traditional factory outlet meaning literally is a store that sells a factory’s goods that can't be sold in the brand’s traditional retail stores. A few notable factory outlets that operate on this model include: These stores sold the damaged and excess goods produced by the factory at sharp discounts, in some cases only to the company’s employees and in others, to the general public. When they weren't attached to the factories, they were located fairly close by. Traditionally, factory outlets were store locations attached to factories that manufactured the goods sold within. Another key to understanding the difference between outlet and store is understanding the history of factory outlets and the true factory outlet meaning. It can be easier to understand the difference between factory and company retail stores by looking at a few examples of both.
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