Outlets not necessarily cheaper than regular promotions

Many retail chains often have cheaper prices in their regular stores than in their outlets.

According to recent research from consulting firm Haynes & Co., outlet costs were significantly higher in some instances than costs at regular branded stores. For example, prices at American Eagle's regular stores were cheaper than costs at its outlet stores 43 percent of the time, reported The Wall Street Journal.

The study gauged the minimum, average and maximum prices for various categories. The study also found that Ann Taylor's retail stores were cheaper than its outlets about 25 percent of the time.

As another example, traffic at Ralph Lauren outlet stores declined about 5 percent in the last quarter of 2014, and sales at American Eagle factory stores fell 10 percent in the same time period.

The better bargains at traditional retail locations are an indication that U.S. shoppers are becoming reliant on discounts. The price difference could also mean trouble for the growth of outlets, which thus far has been one of the bright spots in U.S. retail since the recession.

Additional research shows that some consumers are growing weary of outlet shopping. About one-third of consumers who previously shopped only at outlet stores are now also shopping at regular stores, according to a Citi Retail Services study.

"The more regular stores are on sale, the less reason shoppers have to visit outlets," Simeon Siegel, an equity analyst at Nomura Holdings, told WSJ. "And if they stop shopping at outlets, retailers will lose one of their last remaining opportunities for domestic expansion."

Despite the research, many retailers are actually increasing their footprint in the outlet space. For example, Macy's (NYSE:M) recently announced plans to open four discount stores in the New York City area that will feature the department store's clearance items. And Express, which closed 32 stores last year, currently operates 41 outlet stores and plans on reaching a total of 150 locations with a focus on cheaper merchandise in the next few years.

For more:
-See this Wall Street Journal article

Related stories:
Macy's to launch discount format with four new stores
Nordstrom, Macy's keeping outlets need flagships
Outlet malls thriving in the suburbs
Express to expand outlet stores
Target to open 9 small-format stores

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