How to Buy Into Discount Outlets

Gretchen Finnelie doesn’t mind driving around for a hard bargain. The Escondido resident travels North County highways searching for deals such as a 97-cent, brand-new Bill Blass nightgown, purchased at a second-hand store in Rancho Santa Fe, or $300 worth of groceries for $100 at an Oceanside outlet.

“Because of the recession, people are watching their pennies,” said Sally Pickens, assistant manager of the Family Bargain Center, a discount clothing and household items store in Escondido. Pickens, who worked for six years at a higher-priced retail store, said people are not shopping the way they did a few years ago.

Statistics confirm her assessment. Consumers are spending less time cruising the malls, from 10 hours per month in 1985 to a mere four hours in 1990, and more time in outlet stores, which grew nationwide from 3,786 in 1988 to 8,460 this year, according to Value Retail News, a Clearwater, Fla.-based publication that tracks the industry. At 450 discount warehouse stores across the country like the Price Club in San Marcos, which charges an annual membership fee, buyers spent more than $20 billion in 1990.

The national trend toward discount shopping is reflected in a number of projects being developed in the area.

In October, the North County Outlet Center is scheduled to open in San Marcos. It will be the largest merchandising center of its kind in North County, with 25 outlets in an enclosed mall setting.

Next week, the huge national Wal-Mart chain plans to open a discount store in Poway, its first foray into San Diego County, and is also considering a site in Oceanside. Costco Wholesale, a membership discount warehouse similar to Price Club, plans to open a store in November at the intersection of Interstate 805 and California 52, and is considering another location in Solana Beach. The La Jolla Village Square shopping center on Interstate 5 at Nobel Drive is about to undergo a renovation that will convert it to a discount shopping center, expected to open in the fall of 1993.

Although Price Club and Costco are examples of highly successful discount stores that require membership fees, most are open to anyone.

The success of specialty chains such as Ross Stores Inc., Marshall’s Department Stores and Home Depot Inc. encouraged smaller retailers to investigate the discount market. One Escondido fine china and silverware shop recently metamorphosed into a discount store

“For the past three years, we have been tracking consumer buying habits,” said Jeffrey Miller, co-owner of Wilhelm Miller. “Consumers are not interested in paying inflated prices for a product.”

For the consumer, the trend spells more bargains, but shopping at some of these stores can be time-consuming and inconvenient. Many are in out-of-the-way places, since some wholesalers won’t sell items to discount stores if they are in direct competition with retail stores offering the same products.

Some are open only Monday through Friday during the day, since their primary business remains wholesale.

The policies on returns and service that traditional retail stores offer their customers are not usually part of the deal at the outlets.

Yet, those willing to investigate the market have discovered some great buys. Ann D. Ukrainetz, co-author of the recently published, “There’s No Sale Like Wholesale,” cites a couple of examples: She bought a $120 track-lighting unit for $66 at an Escondido store, and a $1,200 top-of-the-line mattress for $500 at an Oceanside outlet.

Here is a sampling of discount outlets available to North County shoppers:

MERCHANDISE

CLOSE-OUTS:

Selling factory seconds and discontinued items

“We are re-marketeers,” said Joe Arias, owner of the Canned Food Grocery Outlet in Oceanside. “We specialize in merchandise close-outs, change of labels and odd lots.”

Consumers who are addicted to a particular brand may not find it at Canned Food, or similar retail outlets, since items in the store vary daily. “We’re like the crackerjack box; every time you open us, you find a new goodie,” Arias joked. “We always have canned fruit, veggies and juices. We have the same categories but not the exact same product.”

The variation in brands doesn’t matter to shoppers like Gretchen Finnelie. “My food budget for 10 people is $500 a month,” said Finnelie, who operates a senior board-and-care facility in Escondido. “At Canned Food, I can buy $300 worth of groceries for $100.”

The 19,000-square-foot outlet, although privately owned, is part of a San Francisco-based nationwide chain. The store stocks grocery items, including frozen foods, paper products, beer and wine, pet and health and beauty supplies. It does not sell milk, meat, produce or other perishable items.

Canned Food does not accept manufacturers’ coupons, but Arias said the prices are 25% to 40% cheaper than at a traditional grocery store, with discounts of up to 50% on some items. The outlet sells in small quantities--shoppers can buy a single bar of soap or one can of baked beans--as well as large.

Canned Food Grocery Outlet, 316 N. Horne St., Oceanside; hours: Mon.-Sat. 9 a.m. to 7 p.m., Sun. 10 a.m. to 5 p.m.

At the Family Bargain Center stores in Escondido and Oceanside, shoppers can purchase clothing for $10 or less. The stores are crammed with racks of merchandise for men, women, teen-agers and children, but items can change daily. Although some brand-names are sprinkled throughout the store, much of the clothing is factory seconds and discontinued merchandise.

“Not all of our merchandise is seconds,” said Sally Pickens, assistant manager of the Escondido store. “(Many) of our items are name brands that are overbuys. We carry quality things.”

The Family Bargain Center in Oceanside is a larger, more open store than the one in Escondido. Both stores carry inexpensive household products such as linens, sheets, potholders, kitchen towels and the like, although they are primarily inexpensive clothing stores.

“It is inexpensive for casual clothes, but not if you want something better than that,” said shopper Dominique Neal. “For kids, it is good, since they grow out of their clothes so fast. The only disadvantage is you have to look at the items you’re buying (for defects).”

Family Bargain Center, 607 W. Quince, Escondido; hours, Mon.-Fri. 10 a.m. to 8 p.m., Sat. 10 a.m. to 7 p.m., Sun. 10 a.m. to 8 p.m.; and 1028 Mission Ave., Oceanside; hours: Mon.-Sat. 10 a.m. to 9 p.m., Sun. 10 a.m. to 7 p.m.

The Sears Outlet Store in Encinitas carries overbuys from the regular stores as well as returned catalogue items, according to Ryland Harrelson, national operating manager. Sears became one of the first national companies to enter the outlet business, with the opening of free-standing “overbuy” stores in 1968.

“They were called ‘surplus stores’ then. We went into the outlet market about four years ago,” Harrelson said. “We found it was the best way to liquidate our stock by offering buys to customers.”

On any given day, the outlet could carry clothing, shows, appliances or luggage. As shopper Margaret Turner said, “If you see something, grab it, because it won’t be here next time.”

Sears Outlet, 1327 Encinitas Blvd., Encinitas; hours: Mon.-Fri. 10 a.m. to 9 p.., Sat. 10 a.m. to 7 p.m., Sun. 10 a.m. to 6 p.m.

WHOLESALERS:

Going directly from the

middleman to customer

Wholesalers, whose primary business is selling to department and other specialty stores, have discovered that the retail market can be a profitable venture for them.

“The walk-in traffic pays for our overhead (at the warehouse),” said Essie Frankel, co-owner of the Jewelry, Handbag and Shoe Outlet in San Marcos.

The 2,000-square-foot outlet, opened in March, 1990, carries women’s shoes in sizes 5 to 10, sometimes going to 11 and 12, and designer-reproduction handbags in leather, vinyl and machine-washable fabrics. The jewelry--watches, rings, pendants, bracelets and earrings--are reproductions of designers such as Paloma Picasso and Rolex. Some unisex T-shirts and pants are also available.

The items carried in the store are not available at retail stores. Close-out goods or factory samples make up most of the merchandise, although some items can be reordered in a particular style or size at the discount price.

“We have a standing agreement with the factories that they can send samples,” co-owner Tom Whalen said. “If it is something we don’t want in our catalogue, it goes on the floor at cost.”

Jewelry, Handbag and Shoe Outlet, 120 N. Pacific St., A-4 & A-5, San Marcos; hours: Mon.-Fri. 10 a.m. to 6 p.m., Sat. 10 a.m. to 4 p.m.

With North County locations in Carlsbad and Escondido, Smart & Final is the oldest warehouse grocery chain in the United States.

The stores carry more than 10,000 assorted grocery, deli and frozen-food items as well as paper products and janitorial supplies, which are sold in institutional sizes.

The stores serve as wholesalers for the restaurant and small-business trade.

Smart & Final carries a consistent assortment of items daily, and it does not sell discounted or close-out items. The chain has 11 San Diego County locations, and a Smart & Final warehouse is scheduled to open in Poway next summer, according to Alan Canada, manager of the Escondido store.

Smart & Final, 2618 El Camino Real, Carlsbad; hours: Mon.-Fri. 7 a.m. to 7 p.m., Sat. 8 a.m. to 6 p.m., Sun. 9 a.m. to 5 p.m.; and 670 N. Metcalf St., Escondido; hours: Mon.-Fri. 7 a.m. to 6 p.m., Sat. 8 a.m. to 5 p.m., Sun. 9 a.m. to 5 p.m.

About a year ago, Beeba’s Creations Inc., a high-end wholesale clothing distributor, opened an outlet next to its factory in San Marcos. Beeba’s specializes in women’s sports clothing and lingerie, although occasionally there are some items for men. The clothing is imported from more than 10 overseas countries. Overruns can be discounted up to 75% off the retail store price.

“We made a concerted effort to not just carry overruns, but sample production items as well,” a company spokeswoman said.

Beeba’s sells clothing under several labels, but often only minor differences separate one line from another. Customers who shop the outlet are getting the same quality merchandise sold through the retails stores Beeba’s supplies.

The discount clothing outlet maintains limited hours. Occasional factory sales offer additional bargains.

Beeba’s Clothing, 1040 Los Vallecitos, San Marcos; hours: Wed.-Fri. 10 a.m. to 6 p.m., Sat. 9 a.m. to 6 p.m. BRAND NAMES,

NO LABELS:

Shops that deal directly with factories

“As a retailer, we won’t be back to what it was like in the ‘80s when people wanted the service and the brand names, and price wasn’t such a factor,” said Jeffrey Miller, co-owner with his wife, Lin, of Wilhelm Miller, a discount fine china and flatware store. “When you pay for a lot of service and an expensive atmosphere, you can’t be as competitive on price.”

The couple closed their store in Bonsall and now sell the Lenox, Royal, Dalton, Oneida and other name-brand products for discounted prices at their Escondido store. Miller said he is able to sell at lower prices because he has streamlined the operation. He purchases directly from the factories, eliminating the wholesaler.

The store carries samples of china and flatware designs. Orders are then placed with the manufacturers for the pattern and quantity that a customer wants. Shoppers can save 40% on flatware and from 30% to 40% on china. Parking lot sales, which are announced through flyers to customers on the store’s list, can save shoppers more than 50% on dinnerware.

Wilhelm Miller, 1131 E. Washington Ave., Suite K, Escondido; hours: Mon.-Sat., 10 a.m. to 5 p.m., Sun. special sales.

Andrea Rothschild knows she is onto something. The clothes at her Vista budget boutique, Designer Women’s Outlet, rarely stay on the racks for long.

“I have a very fast turnover,” Rothschild said, adding that some items are sold out in two or three days. “I go to L.A. every Monday to bring back merchandise. When I come in on Tuesday, customers are waiting in line. They are devotees of this sort of stuff.”

What she sells is designer clothing at a discount. Rothschild explained that she buys merchandise about six weeks after it appears in the department stores. Since the price is lower, she passes the savings on to her customers.

Designer Women’s Outlet, 1025 S. Santa Fe Ave., Suite B; hours: Mon.-Sat. 10 a.m. to 5:30 p.m.

Barbara Laird, owner of the Clothes Merchant in Rancho Bernardo, shops at factories in New York, San Francisco, Los Angeles and Dallas for the best buys in women’s clothing.

The manufacturers will sell to her after the clothing lines have had four to six weeks to debut in the department store.

“I’ve been in business 14 years, and I can do it because I have cheap rent. Most discount stores are in out-of-the-way places. We can’t be where there are a lot of small stores that sell the same lines. We would be butting heads with them.”

Recently, she carried a three-piece sports outfit, which the Marriott hotel boutiques sold for $150. Her price was $60. But Laird, like many discount outlet owners, has a no-return policy. Shoppers can get the bargains but they need to be sure it is what they want.

The Clothes Merchant, 13330 Paseo de Verano Norte, at the Bernardo Winery in Rancho Bernardo; hours: 11 a.m. to 5 p.m., seven days.

Loehmann’s in Oceanside is part of a national company, founded in New York 65 years ago, that specializes in discount clothing. In a no-frills setting, including a large, one-room dressing area with mirrors and no separate cubicles, women can find $100 silk blouses for $30.

In the front of the store, customers can browse through racks of dresses, casual pants and shorts, swimsuits and accessories, such as scarves, belts and handbags. The Back Room carries designer originals, formals, suede outfits and beaded cocktail dresses. One Back Room shopper purchased a $300 silk jacket, with matching pants and interchangeable skirt, for $100.

“You can get designer clothes for a lot less,” customer Ivy Keville said. “I bought an Ann Klein skirt for $30.”

After the major department stores get their deliveries, Loehmann’s offers cash for whatever the manufacturer has left.

Because Loehmann’s carries some of the same brands as department stores, the labels are usually removed from the clothing for sale. A few weeks ago, the Oceanside store carried some items with brand labels intact because the manufacturer had recently gone bankrupt.

Loehmann’s, 3833 Plaza Dr., Oceanside; hour: Mon., Tues., Sat. 10 a.m. to 5:30 p.m., Wed., Thurs., Fri. 10 a.m. to 9 p.m., Sun. noon to 5 p.m.

“It’s a one-man show here--me,” said Mark Dodd, owner of Sofa Biz in Poway. “Most furniture stores are bigger, and they have to pay more rent and for their employees. That’s how we can beat our competition.”

Dodd deals with 15 different manufacturers, who offer between 50 and 300 fabric choices depending on the sofa style. “People will say, ‘I saw your sofa cheaper somewhere else,’ but I tell them, you have to buy it in that fabric. We give you a choice,” Dodd said.

Only sofas and love seats are sold at the store, and average prices range between $400 and $500. A second Sofa Biz outlet is located in Solana Beach.

Sofa Biz, 14168 Poway Road, Poway; hours: Mon.-Fri. 10 a.m. to 6 p.m., Sat. 10 a.m. to 5 p.m., Sun. noon to 5 p.m., evening by appointment; and 985 E. Lomas Santa Fe Dr., Solana Beach; hours: Mon.-Thurs. 10 a.m. to 6 p.m., Fri. and Sat. 10 a.m. to 5 p.m., Sun. noon to 5 p.m.

Mattress Modes, another one-person operation, shares showroom space with Sofa Biz in Poway.

“We sell only locally made mattresses,” said owner John Riley. “Generally, the pricing policy of nearly all national brands, like Sealy, Simmons and Serta, is doubling the price for the markup. We don’t do it since we eliminate the middle man by buying from the factories in El Cajon and Chula Vista.”

Mattress Modes, 14168 Poway Road, Poway; hours: Mon.-Fri. 10 a.m. to 6 p.m., Sat. 10 a.m. to 5 p.m., Sun. 3 to 5 p.m.

WAREHOUSE STORES: Using volume

to gain an edge

To offer lower prices to consumers, some retailers buy in large volume and translate the savings into lower prices at their discount stores. While the prices may be only slightly lower than other stores, contrasted with the wholesalers or the smaller specialty discount shops, these discount outlet owners offer a large variety of merchandise to draw customers. Some of the stores offer a number of related services at a single outlet, making shopping more convenient for customers.

One high-volume, lower-priced store is the Pet Supply Warehouse in San Marcos, which sells supplies for small pets, from birds to guinea pigs. The store also offers in-house veterinary and dog-grooming services.

“The owners have been in the pet industry for 15 to 20 years. They have ties with major manufacturers so are able to buy large quantities for a discount,” Manager Phil Morgan said. “I’ve owned grooming shops for 10 years, and we based our prices on 1986 prices.”

Products are sold in small and large quantities. And while some food items are only about $1 less than a smaller pet store, consumers can save $4 to $5 on others. The store will accept all manufacturers’ and competitors’ coupons. A rack in the back of the store offers discontinued items at substantial savings.

Pet owners can bring in dogs and cats for rabies shots without paying the cost of an office visit to a veterinarian. “I was paying $50 every two weeks to have my dog (a standard poodle) groomed; now I pay $50 a month,” said one Pet Supply Warehouse customer.

Pet Supply Warehouse, 1609 Capalina Road, San Marcos; hours: Mon.-Fri. 9 a.m. to 8 p.m., Sat. 9 a.m.-7 p.m., Sun. 10 a.m.-6 p.m.

“We buy in large volume and pass the savings on to the customer,” said Carol Kassas, designer for the Silk Plants Warehouse, with locations in San Marcos, Temecula and Los Angeles. “Our prices can be 30% to 70% cheaper depending on the item.”

The warehouse sells a large variety of silk plants, from which buyers can make floral arrangements. There are also a limited number of prearranged displays for sale, as well as silk plant trees in containers.

“They have more variety and more colors than anyone else does,” shopper Marge Crawford said. “When I go to other places, they do not have the selection that you get here, although I’m not sure if all of the prices are that much cheaper.”

The San Marcos store opened about six months ago, and a refund for the difference in price at any other store is standard operating procedure, according to store Manager Jesus Romero.

Silk Plants Warehouse, 703 Center Drive, San Marcos, 10 a.m. to 6 p.m., seven days.

At the Kid’s Warehouse in San Marcos, which shares space with the Burlington Luxury Linen Outlet, shopper Merle Chic rates the prices as “medium.”

“It is the biggest baby store in town,” the Carlsbad resident said. “There are only a few in town that carry a lot of stuff. The smaller stores are so expensive.”

High-quality goods in quantity is the goal of owner David Mendelbaum. “Customers are becoming more destination oriented, as opposed to wandering around the mall,” he said. “There is not as much impulse buying, as people are watching their money. You will see a growth in (this type of) specialty outlet store.”

The cribs, dressers, rockers and other furniture items for children can be sold at a discount because Mendelbaum purchases in large quantities, thus saving on shipping costs. “If a small store orders six cribs from the East Coast, the freight is $25 on each,” he said. “If I order 300 cribs, the freight runs $6 each.”

Since Mendelbaum operates his own factory in Miramar, he has the warehouse space needed to accommodate large shipments. The factory is adjacent to a second Kid’s Warehouse. The owner also buys from overseas factories that make furniture exclusively for his stores.

“I used to be a manufacturer and sell only to (retail) stores, before I began selling to the public directly,” Mendelbaum said. “It is a factory outlet store that is rounded off by buying outside products.”

Kid’s Warehouse, 1617 Capalina Road, San Marcos; hours: Mon.-Fri. 10 a.m. to 8 p.m., Sat. 9:30 a.m. to 6 p.m., Sun. 11 a.m. to 6 p.m.

“We don’t carry the current styles,” said Kim McCall, assistant manager of Luxury Linens, a San Marcos factory outlet that shares space with Kid’s Warehouse. “We get stuff about six months later than the department stores so we can blow them out of the water (on prices).”

If customers don’t mind waiting a few months, they can buy the same items for 20% to 50% less, she said. Luxury Linens is part of the Burlington Coat Factory Chain, with corporate offices in New Jersey. The outlet carries brand-name (Waverly, Primrose, Springmaid) sheets, towels, comforters, blankets, tablecloths and accessories such as bathroom sets.

The Burlington chain, with 170 outlets nationwide, dictates occasional sales on overstocked items, with even lower prices. The San Marcos outlet also sells maternity and children’s clothing from the Burlington label.

Luxury Linens, 1617 Capalina Road, San Marcos; hours: Mon.-Fri. 10 a.m. to 8 p.m., Sat. 9:30 a.m. to 6 p.m., Sun. 11 a.m. to 6 p.m.