Manufacturers with a significant number of outlets in the US include Warnaco (manufacturer of Hathaway shirts and Warners lingerie), Van Heusen, Palm Beach, Gap, Samsonite, Levi's and Ralph Lauren. Some retailers with strong brand names such as Saks and Brooks Brothers operate outlet stores too. They do this to avoid selling excess merchandise at markdown prices in their regular stores. There are large outlet malls in Connecticut, Florida, New York and other states. In 1998, there were 13,000 US factory outlet stores representing 500 manufacturers.

Interestingly, outlet centres progressed from no frills warehouses to well-designed buildings with a strong entertainment component. Basically, manufacturers opened so many outlets they could no longer fill them with irregulars and overruns. So, some factory outlets also offer full line, first quality merchandise. In fact, some outlet centres are located in strong tourist centres. For instance, there is a 1.2 million sq ft factory outlet mega mall at the Niagara Falls, New York.

The concept of factory outlets has caught up in other countries too.

In Hong Kong, with international brands such as Donna Karan and Emanuel Ungaro, the savvy local bargain-hunter is often found perusing the clothes-rails in these factory establishments, which also gives local designers a chance to air their latest designs at down-to-earth prices.

In Italy too, while small stores dominate the retail market, the factory outlets are fast gaining recognition. These have become a necessity today and have made the survival of retailers much more difficult. These outlets sell stocks that get piled up with the manufacturers/ importers because of rejection of samples or over-confidence in a style leading to overbooking of stocks.

Now the recent riots are over, price-savvy Indonesians are flocking back to snap up factory seconds from Banana Republic, Versace, Gap, Calvin Klein and others at about 10 per cent of their normal prices. In a country where an imitation Rolex watch from a street vendor can cost hardly $1, Indonesians call the goods sold by the factory outlets `real fakes' — but often it takes a professional to spot the flaws in these so-called rejects.

Japan has its own Marathahalli in a fake New England fishing village named Sawtucket at Yokahoma. This factory outlet mall is called the Yokahoma Bayside Marina Shops and Restaurants, and crowds of yen pinching customers (on any given Saturday, more than 20,000) make their way there. For decades, Japanese customers had wanted only the newest version of products, and manufacturers had avoided selling leftovers openly, often destroying excessive inventory to avoid hurting their brand image. With the national economic distress, consumer attitudes were revolutionised and they increasingly started patronising second-hand stores and discounters. Now, factory outlet malls can be found in or near most big cities and stock famous brands such as J. Crew, Eddie Bauer, Reebok, Nike, Levi's, Guess and Coach.

But coming back to our very own Marathahalli, a look at the cross-segment of shopper profile leaves you really confused — you have the singleton bachelor newly-employed (in Bangalore, mainly IT!) types looking for office wear a la Allen Solly, Arrow and Colour Plus, or casual denims or sports wear, apparel as well as footwear a la Adidas, Reebok and Nike; then there is the fashion-conscious populace who cannot afford to splurge in the upscale shopping plazas; there are harassed mothers or fathers with newly brand conscious teenagers in tow; or sometimes people of our parent's generation who having skimped and saved their entire lifetime to provide their children with expensive education, have now retired and feel that they deserve branded wear for themselves, but still think it's a crime to pay MRPs at full line retailers when the same material is available cheaper elsewhere; and strangely enough sometimes even yuppies just browsing around for the pleasure of picking up a good deal.

This leads to the inevitable confusion — who really is the target audience for the factory outlet? The sample of shoppers on the weekends seems to indicate everyone! So, will the new Victoria Mall at Brigade Road serve the same slice of the consumer pie, as does Marathahalli? From the manufacturer's point of view, surely that's not desirable. After all, most items that are not impulse purchase products need a certain amount of interaction with the consumer in an environment that is conducive to his purchase decision. From that standpoint, retail investment is an integral part of any brand image strategy. Consumers need to get to know brands in the right way. But factory outlet malls are the last place where they can do this.

So why is it that the same shopper buys an expensive salwar kameez in a boutique but shops for her walking shoes at the Nike factory showroom?

This inconsistency in shopping behaviour can be explained by a concept called component lifestyles. Basically, this recognises that shopping behaviour cannot be typecast by the shopper's demographics and lifestyles, but is more individualistic and situation based. Consumers are really full of contradictions when they are spending money. While we may eagerly pay Rs 100 for a glass of cold coffee with add-ons at Barista, we buy our rice from a wholesaler. We buy plastic utensils, bed sheets and towels from the Big Bazaar sale but if we see a wading swimming pool for the child priced at Rs 500, we MUST buy it, as long as we feel we are getting our money's worth. It doesn't matter how much money we have or where we went to school.

The other point is that consumer patronage differs sharply by product category. The pattern of buying both premium as well as low-priced merchandise, or patronising expensive, status-oriented retailers as well as price-oriented ones is called cross shopping. So while the Indian upper-middle-class cross-shopper has the profile of a department store customer, he is seeking more value through cross shopping at factory outlets — and this perception of value differs across product class. So, while consumers may cut back on dining at expensive restaurants, the same people may buy expensive pasta sauces at the supermarket.

The only thing with factory outlets is that they sometimes have factory surplus and seconds. Basically, since quality controls at most factories are stringent, seconds merchandise is generated. Consumers are aware that these garments have minor flaws — either by way of fading colour, frayed seams or discolouration. These items are sold at deep discounts — sometimes upto 60 to 70 per cent. Just make sure you check everything you buy thoroughly before you pay for it.

And of course, beware of fakes: At a large party, the manufacturer of a famous apparel label — instantly recognisable — greeted his guests, many of them also instantly recognisable — with great warmth. Until one guest arrived wearing the manufacturer's label. Except it was in a colour the manufacturer never made!

(The author is a marketing professional. Feedback can be sent to bleditor@ thehindu.co.in)

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