TIME: Almanac 1995

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<text id=90TT3379> <title> Dec. 17, 1990: The Price Is Always Right </title> <history> TIME--The Weekly Newsmagazine--1990 Dec. 17, 1990 The Sleep Gap </history> <article> <source>Time Magazine</source> <hdr> BUSINESS, Page 66 The Price Is Always Right </hdr> <body> Outlet malls are hot, but other retailers see them as the Grinch that's stealing Christmas By CATHY BOOTH/MIAMI--With reporting by Richard Woodbury/New Braunfels Psssst! Want a deal on some Jordan Airs? Joan & David pumps? A Donna Karan dress? The latest Sony tape deck? Without slogging through the sales racks at five different department stores? And in a place where the teenagers can hang out and Dad can catch a football game on TV? Well, here's a concept in shopping-till-you're-dropping, just in time for Christmas and the recession: megamalls with maxi discounts. Step into Florida's Sawgrass Mills, the world's biggest outlet-and-discount mall. Situated 15 miles west of Fort Lauderdale, it boasts 2.2 million sq. ft. of name-brand shopping at no-name prices. The parking lot alone covers 170 acres. Two miles of storefronts, 150 in all, include outlets for such status labels as Ann Taylor, Maidenform, Van Heusen, American Tourister and Athlete's Foot, plus such familiar discount stores as Brands Mart and Marshalls. All offer goods at 20% to 60% off the usual retail price, a requirement that is specified in the stores' leases and that distinguishes such discount centers from ordinary malls. Try on a $218 Ann Taylor dress, slashed to $69.90. Reebok Sole Trainers that normally retail for $85, at $55. Anne Klein II perfume at $17.95 instead of the usual $32. More than 1.5 million shoppers have done so since Sawgrass opened its doors in October. "Everybody is looking for bargains these days," says William Cohen, 36, waving a pair of jeans selling at $30--half-price--at the jammed Guess? outlet. Unlike dreary discount stores or outlets of the past, which tended to be about as cozy as an airplane hangar, Sawgrass Mills has a Disneyesque ambiance that offers fun along with bargains. The innovative Coral Gables, Fla., firm Arquitectonica designed the mall in a wacky alligator shape, a nice touch considering its location at the edge of the Everglades. The Florida theme extends from the logo, a saw-toothed alligator, to parking-lot markers (a yellow toucan, a pink flamingo, etc.), to a windswept-looking Hurricane Food Court, complete with wind sounds and swirling banners. Shoppers stroll under palmetto trees down four "main streets" with themes ranging from Caribbean to Art Deco. And, for family amusement, miniature golf, roller skating and a movie theater are in the works. Upscale discount megamalls were perhaps inevitable, given these cash-poor yet image-conscious times. Since 1978 the industry has mushroomed from just seven outlet centers to more than 280, with gross sales estimated at as high as $18 billion. Last year sales for outlets and off-price stores rose 10% to 12%, about double the rate of increase at ordinary retail stores. Many of the most popular direct-from-the-factory establishments are individual stores, such as the L.L. Bean outlet in North Conway, N.H., or the V F Factory Outlet in Reading, Pa. But hundreds of outlet centers, ranging from spartan shopping strips to swank malls, now cater to tourists and travelers. Many are sited just off major interstate highways or close to vacation spots. "For these prices, I don't mind fighting the freeway," exults Houston housewife Laura Freeman, two small kids in tow, as she balances a mound of towels selling for $2.99 a pound at the Lone Star State Factory Stores mall near Galveston. Sawgrass, perhaps the snazziest discount mall to date, was built by Western Development Corp. based on the firm's two earlier successes: Potomac Mills in suburban Virginia and Franklin Mills on the fringes of Philadelphia. Each attracts 1 million bargain-hunting shoppers a month. "Western is doing something daring and truly different, gambling that this might be the future of malls in America," says Terry Dunham, publisher of Value Retail News, which tracks the outlet industry from Clearwater, Fla. Western has plans for four more discount malls: near Chicago, Detroit, Pittsburgh and Ontario, Calif. Not to be outdone, Benderson Development Co., Western's main rival in megamall retailing, is building what it touts as "the largest manufacturers' mall in the universe" near Niagara Falls. The 200-store extravaganza, scheduled to open in 1992, features a Fashion Avenue of stores of the most exclusive designers and "Epcot-like life-size video games." The labels-for-less malls may be the only bright spot in what is shaping up as a singularly lackluster Christmas for retailers. Last week Sears, Roebuck, faced with declining sales, announced a salary freeze for 20,000 of its 330,000 employees; Macy's was combatting speculation that recent losses might undermine its already precarious financial position. Meanwhile, Child World, the nation's second largest chain of toy stores, declared a six-week moratorium on paying its bills so that it would have enough cash to keep its shelves stocked through the holiday season. Many of the already battered retailers are howling about the growth of cut-rate competitors, who happen to include a number of their own suppliers. The 2,500 firms belonging to the National Shoe Retailers Association went on record against the proliferation of manufacturers' outlets; some are boycotting brands that have opened their own shops. "It's impossible to compete against them," complains association president William Boettge. For small stores, outlets are "making a tough business all the tougher," says John Cox, a recently retired shoe-shop owner in Lawrence, Kans., who saw his business drop more than 15% after a Bass outlet opened nearby and undercut his prices 20% to 30%. The 21,000-member National Sporting Goods Association also discourages manufacturers from opening outlets, though their protests have had little effect. Leonard Berry, head of Texas A&M University's Center for Retailing, sees a big risk in the "factory-to-you" approach: "Manufacturers must be careful not to cut their own throats. They run the risk of alienating their biggest accounts." The manufacturers take that warning to heart. Most outlets and malls are miles from department-store turf. Women's apparel manufacturer Liz Claiborne placed its 22 outlets 45 minutes to an hour from retailers selling its label. "We are very sensitive to our department stores, since they are the nucleus of the business," says Harvey Jones, ad manager at West Point Pepperell, who won't even divulge the number of outlets the brand operates. Others go to some lengths to disguise their outlets: Izod Lacoste sportswear is sold at Fashion Flair outlets, Escada at First Choice outlets, and Dior and Hathaway at Warnaco. Established discounters like K Mart and Wal-Mart say they are not threatened by the new invaders, partly because they perceive the discount centers as out-of-the-way places, suitable mainly for tourists or big-haul shopping. Luxury department stores like Bloomingdale's and Saks Fifth Avenue take an elitist approach--at least publicly--and shrug off the challenge from outlet malls. "The competition in retail is always fierce, but our customer is not attracted to an outlet mall," says Carol Sanger, vice president of the Federated and Allied Stores chain, which includes Bloomingdale's, Burdine's, A&S and Jordan Marsh. She may be wrong about that. "I'd much rather go to a fancy mall and shop a sale," admits Sheryl Rolnick, 39, of Coral Springs, but one day recently she drove out to Sawgrass to do a little bargain hunting. "The discount malls are having an effect," she says. "Lately, my local Lord & Taylor and Jordan Marsh are dead." Then there's the "if you can't beat 'em join 'em" approach. Sears and J.C. Penney have placed catalog outlet stores at the new discount malls. Upscale Ann Taylor has two clearance centers at megamalls. Even Saks opened its first outlet in Philadelphia's Franklin Mills. "Like it or not, it's the wave of the future," says Sid Mayer, Saks' senior vice president of merchandise liquidation. "Traditional department stores were in trouble anyhow. Discount malls are a necessary evil." For shoppers, of course, they are a blessing, but not without some pitfalls. Service can be spotty to nonexistent. At Bass shoe outlets, for instance, the customer himself must find the right size shoes. Often the latest styles and fashions are not offered at outlets, and there may be a limited selection of sizes. Nor is getting a bargain guaranteed. Prices have edged up as yesteryear's bare-bones outlet stores full of seconds and irregulars have given way to today's fancy discount malls full of first-quality goods. "You need a good eye or you can still get ripped off," observes Mark Trainor, an Austin computer salesman browsing for clothes at San Marcos Factory Shops, one of two outlet malls off the interstate highway between San Antonio and Austin. "There are good buys at the discount malls but not great buys," warns consumer advocate Mona Doyle at the Consumer Network, based in Philadelphia. Indeed, as cut-rate malls turn themselves into theme parks, with frills and flourishes and higher overhead costs, their primary advantage--lower prices--just might start to disappear. For now, though, did we leave the car by the talking toucan, or was it the pink flamingo? </body> </article> </text>