Remote Outlets Boom : Retailing: In the current economic slump, more shoppers are flocking to stores that peddle ‘seconds.’ The savings can be substantial.
Sarah and Richard Frazier both have well-paying jobs, and they own their own home high in the San Jacinto Mountain resort town of Idyllwild. So, what more could two 25-year-olds possibly want?
Well, for starters, lower food prices, a return to the gasoline prices of just six months ago and stabilized utility rates. In short: more economic certainty. “We’re more concerned now than ever about our personal finances,” sighs Sarah, a registrar of students at the Idyllwild School of Music and the Arts. “We’re trying to build nest egg for our future.”
It hasn’t been easy in recent months.
Since Iraq’s invasion of Kuwait sent prices of gas and a host of other goods skyrocketing, and a slump in home sales has crimped Richard’s job as a real estate salesman, the Fraziers, like many middle-class Americans, have altered their purchasing patterns.
Frequent trips to a mom-and-pop grocery in Idyllwild have been replaced by weekly treks to a supermarket in nearby Hemet, where prices are lower and Sarah can stock up on sale items. Casseroles are a dinner-time staple. And their clothing and Christmas presents this year are being purchased at the new Desert Hills factory outlet shopping mall in Cabazon, a tiny desert town along Interstate 10, about 100 miles east of downtown Los Angeles.
The Fraziers are particularly happy about the three-month-old mall, one of the first of its kind in Southern California and already a major attraction along the freeway to Palm Springs.
The mall, whose tenants range from Gorham silver and crystal items to Eddie Bauer, Evan Picone and Gant clothing, was so busy over the Thanksgiving weekend that incoming traffic backed up onto the freeway, the parking lot overflowed onto nearby dirt lots and shoppers had to line up for admission to the Guess and Esprit stores.
“Of course, we’d all rather have good times than bad,” says Barry Ginsberg of Ginsberg Craig, the mall’s developers. “But the worse the economy is, the more people will go out of their way to find bargains. We’re benefitting from that now.”
Although factory outlets tend to outperform regular retail shops during an economic downturn, they don’t need a recession to attract customers. In fact, the nation’s factory outlet industry, which accounts for somewhere between 1% and 4% of the $600 billion-a-year retail market, boomed in the late 1980s, growing to more than 270 centers and stretching its New England-based reach into the lucrative California market.
The center in Cabazon, which bills itself as the largest of the nine such malls in California, features 52 shops selling manufacturing overruns, “seconds,” end-of-season clothing and other cut-rate merchandise. The discounts are as much as 60% below regular retail prices.
Still, much of the merchandise appeals to the well-heeled, or nearly so, who are looking for bargains on “wanna-have,” discretionary purchases--not low-income families needing “gotta-have” items for daily living. For example, Nike sport shoes, even at discount, can cost $50 or more, and designer Oleg Casini’s sequined blouses are marked down--to $349.99.
Nevertheless, it has an appeal.
“It’s always fun to get savings,” smiles Kimberly Kennally, who visited the mall with her two children on a recent drive home to Glendale from their Palm Desert condo.
Normally a dyed-in-the-wool Nordstrom customer, Kennally says this holiday season she is trying “to watch my pennies” because her husband, a stock broker, has been buffeted by the topsy-turvy markets.
“We’re trying not to make Christmas blue this year, and this way we can get the same name brands, but for less,” she says while tying the laces on new Nike shoes for her 2-year-old son, Robert. Normally the tennis shoes would have cost $40. Because a little extra glue from the sole dribbled onto the canvas, they were discounted to $24.95.
In better times, Kennally admits she would have been happy to spend the full price. But now? “Things are tighter. We’re watching our spending by clipping food coupons and cutting our impulse buying,” she explains. “We’re thinking about each purchase and asking: ‘Do we really need this?’ And we’re shopping at places like this.”
Such sentiments, no doubt, are sure to depress even the most upbeat department store retailers.
Burdened by unprecedented debt from a binge of corporate acquisitions in the late 1980s, many retailers had been hoping for a strong holiday spending season to get them over the hump. A slowdown, or forced deep discounting, is likely to spell trouble for many department store chains.
It’s no surprise then that retailers in the Palm Springs area are already crying foul at the new Desert Hills center. And they’re getting results. The Evan Picone and Gant shop, one of the largest in the center, will soon change its name to Austin Hill--another brand name in the David Crystal retail lineup that includes Evan Picone, Gant and Izod--to avoid problems with retailers featuring those labels at full price.
“The biggest problem for factory outlets is the sensitivity of the regular retailers,” developer Ginsberg says. “These malls end up out in the boondocks to minimize conflict with department stores. Obviously, you can’t put one of these across from the Beverly Center.”
Such issues matter little to the shoppers.
“Of course, I’m comparing prices. Everywhere I go I do that,” says Deborah Christensen, who made a 40-mile drive from Sun City to Cabazon. She is comparing the lingerie in the Maidenform store to that in the Barbazon outlet a few doors away. “I’m always shopping for bargains.”
Meanwhile, Sarah Frazier is taking in the deals at the Eddie Bauer outlet across the parking lot. Will it be the blue sweater--the one that sets off her eyes--or the green one? There’s no doubt she will get one of them. The price is just too good to pass up.
“I probably wouldn’t buy it for $35,” she says, looking at the original price. “But at $14.99, it’s a great deal.”