Real Deals? : Outlet malls seduce with sweet words such as <i> discount</i> and <i> bargain. </i> But experts urge buyers to do their homework.

Long tour buses pull in to the Desert Hills Factory Stores outlet mall several times a week and disgorge 45 people or more for a bargain-hunting expedition. Wearing comfortable shoes, cool clothing and looks of determination, the shoppers briskly fan out to the complex’s 55 stores.

No distractions here. The pink stucco mall stands alone on the sand in Cabazon, 15 empty miles from Palm Springs and a long way from anyplace else. Visitors can concentrate on getting a great deal--up to 70% off, as the outlet promoters promise.

Manufacturers outlet centers dot the country. They number more than 300 nationwide, five of them within a few hours’ drive of Orange County--in Commerce, Ontario, Lake Elsinore, Cabazon and Barstow. And they house 8,000 stores, including some big names that appear over and over: Polo, Anne Klein, Adolfo, Geoffrey Beene, Eddie Bauer, Bugle Boy, Hanes, Nike, Oneida, Corning.

These centers have legions of fans, most famously First Mother Virginia Kelley, a longtime regular at the Hot Springs (Ark.) Factory Outlet Stores because, she has said, “(I want) the best deal that I can get.”

But they also have their detractors. Some people complain that many manufacturers no longer sell overstock or irregular goods at cut-rate prices. Instead, they just produce more of their regular goods, or even special, less expensive goods, to fill the outlets. And there’s no great need to price those items for a quick sale.

No matter. Factory outlets are expected to sell $8.3 billion worth of goods this year.

“It’s becoming less relevant whether they’re ‘outlets,’ ” says Ira Kalish, an economist for Management Horizons, the retail consulting arm of Price-Waterhouse. “It’s a ‘Field of Dreams’ mentality: If you build it, they will come.”

The first outlets were bare-bones stores next to the factory where manufacturers sold off damaged goods, odd sizes or excess inventory. Even those built later at other sites were “ ‘vanilla boxes,’ four white walls with some pipe racks,” says Dawn Frankfort, editor of the “Joy of Outlet Shopping,” an annual guide published in Clearwater, Fla. “You had to suffer because you were getting good prices.”

Over the past 10 years, that scene has changed. In the early ‘80s, developers began building stylish multitenant malls of nothing but manufacturers’ outlets. Outlet shopping became fashionable, Frankfort says, thanks to an ‘80s love of designer labels and brand names and a ‘90s need to save money.

The malls gave manufacturers a good, even chic way to sell off excess inventory in “a controlled environment,” says Lisa Engler, president of Esprit’s retail division, which has a dozen outlet stores, including one in Cabazon. “You control the pricing, timing and presentation, which is important, particularly when you’re an image company.”

Indeed, outlets started as a place for manufacturers to unload unsold or irregular goods, Kalish says. “But they found they could sell first-quality merchandise, too, and they needed to, as there were fewer department stores, the (department stores) market share was shrinking and they were purchasing from fewer vendors,” he says. “For some manufacturers, (the outlets) may be part of a strategy to keep all their eggs out of one basket.”

Now outlets may contain a mixture of unsold inventory or flawed stock from the factory and merchandise made strictly for outlet distribution.

“Manufacturers are getting into the retail business as just another way of selling their merchandise,” says Janet Morgan, a Los Angeles business owner.

Harry and David, a Medford, Ore.-based company specializing in mail-order gift food, sells blemished baked goods alongside flawless ones produced for its four outlet stores, including one in Cabazon, the company says.

Along with overstock from retail stores, Esprit outlets carry “some basic items--T-shirts, for example--that we can’t count on having left over.” So the company produces enough for the outlets as well.

Manufacturers with dozens of outlets are likely producing merchandise just for the outlets. “When you get into numbers, big numbers, it’s definitely planned production,” says Elysa Lazar, publisher of the annual “Outlet Shopper’s Guide.”

Some manufacturers even create new merchandise exclusively for their outlets, Frankfort says. The Gap recently introduced a special, less expensive Gap Warehouse label for outlets, “in styles, colors, fabrics and finishes made especially for Gap Warehouse,” the company literature says. The merchandise found in the chain’s regular stores is nonexistent in the outlets, a company representative says. A regular Gap pocket T costs $10.50; a Warehouse T of the same design is $7.

“Your objective determines how you price your goods and run your business,” Engler says. “We have more stuff coming down the pipeline, and we want to move it through quickly. The people selling regular goods don’t need to mark it down and push it through.”

Many consumers are drawn by the original outlet concept and don’t realize how much the makeup of outlet merchandise has changed, experts say. And they often have no way of knowing what kind of store or merchandise they’re confronting.

Manufacturers are reluctant to discuss their outlets. Howard Buerkle, president of Jones New York’s outlet chain subsidiary, has described outlets as an “underground industry.” Talking about the business “would cause some concern among our retailers,” he says. Indeed, the outlets may be selling the same merchandise as retailers at deep discounts. The outlet malls never advertise specific merchandise or specific prices, and individual stores won’t reveal how much they sell.

Steve Craig of Ginsburg Craig Associates in Newport Beach, which has built six outlet malls in four years, says, “We look for stores truly cleansing their system of excess inventory.” But his company requires only “that a high percentage of goods be marked down at least 25% off” in its leasing contracts.

But 25% off what? Most outlet price tags provide an “original” or “suggested retail price” for comparison. “The impression is that it’s cheaper,” says a Los Angeles shopper who drives to Cabazon once or twice a year. “You just trust what they say the price was, and how they discounted it.”

“A lot of it is 30% or 40% off,” says Sandy Kajiwara, a Los Angeles paralegal who recently visited Cabazon with her sister and her Christmas shopping list. She goes for specific manufacturers, such as Coach (her sister got a handbag that was about half the retail price) at Cabazon and London Fog raincoats at the Lake Elsinore Outlet Center. “You have to know your prices.”

But other bargain hunters are skeptical about the savings in outlet malls, partly because they often look like regular malls, with food courts and lavish decor that make them tourist attractions.

The colonial motif of the Williamsburg (Va.) Outlet Mall and the neo-Old New England style of the Freeport, Me., center draw busloads of shoppers on day tours from nearby cities. Some bus companies include the malls on longer tours, like cruise ships making stops at duty-free ports.

For someone accustomed to riffling the crowded racks at Loehmann’s, Marshalls and T.J. Maxx, outlet stores seem too much like department stores, says Janet Kidder, a Michigan advertising and marketing consultant who has shopped Southern California’s factory malls. She also prefers the merchandise mix in general off-price stores. “I hate just one label,” she says.

Some discount hounds tell of items bought cheaper in regular stores--no surprise now that struggling department stores put on sales weekly and offer 50% off brand labels.

Maxine Lynn, a New York City social-work administrator, periodically treks up the Hudson to a big outlet mall. She recently bought a Liz Claiborne suit “at 50% off the last marked price” at Lord & Taylor in New York. At $100, it was $25 less than in the Claiborne outlet.

Gail McClellan, a Sherman Oaks business consultant and self-described “hard-core flea-market shopper,” concedes that the Coach bag she recently bought in Cabazon “was not priced much less than retail, but Coach just isn’t on sale anywhere else.”

Except for a pair of $9.99 Nikes, Janet Morgan has also been disappointed. “You find prices much like in retail stores. Who buys at full retail? Everyone always has sales, and if you’re a good shopper, you watch for them.”

Today’s consumers are also wary of comparative-price promotions.

“The so-called ‘regular’ prices at so many outlets have gotten so outrageous,” says Edgar Dworsky, an assistant attorney general in Massachusetts, “that even half off is still outrageous.”

Missouri recently challenged the discount claims of one of its outlet malls. The Factory Merchants Mall in Branson, one of the state’s biggest, was told last year to quit advertising savings of up to 80% off retail, a claim it could not substantiate, says Terry Ball, complaint manager for the attorney general’s consumer protection division. “Now, (the ads) just say ‘Come shop,’ ” Ball says. (California’s attorney general has had no outlet-related consumer complaints.)

At outlets, as at all off-price stores, the best deals are had by shoppers who do their homework, the experts say.

“You have to know the price they call regular retail, “ Dworsky says. “You can’t go assuming it’s a deal.”

Says shopper’s guide publisher Lazar, “It’s easier to shop the outlets when you’re looking for (brand-name) dishes or sheets and towels, because you can go into a retail store and see what they’re selling for.” Pricing clothes is more difficult.

Dworsky agrees. “You have to treat outlet shopping like regular retail, shopping at special times of year when they’re discounting their own prices,” he says.

And they do, sometimes offering bigger discounts. “Most outlet malls will run special sales around holiday weekends, slashing prices another 25% to 30%,” Lazar says. “The smartest way is to wait for those big sales and look for irregulars.”

Outlets should offer better bargains, if only because “they’re out of the way, the real estate’s cheaper, the labor’s cheaper, and it’s a low-cost operation,” Kalish says.

But one shouldn’t count on it. The more upscale these malls get, the more entertaining, the more that could change.

Outlets “could wind up really hurting themselves,” Lazar says. “People don’t mind going through boxes, and they’d sacrifice lavish decorations and sales help for lower prices.”

There’s still room for change in the outlet industry, Kalish says. It’s “growing very rapidly, and it’s not really saturated. It could get up to 500 centers, though eventually consumers will get kind of tired of them, as they got tired of regional malls. It’s just riding its life cycle.”