Originally posted 2014-06-20 11:00:48.
By Christina Severino | amdlawgroup.com
The advent of outlet malls during the 1980s once primarily served as a depository for surplus and blemished merchandise of manufacturers. However, consumer demand for luxury brands in a lackluster U.S. economy has soared in recent years. There are currently over 13,000 outlet malls in the U.S. alone, each covering roughly 200,000 square feet. The demand has gone up so much that some brands are producing discounted lines specifically for outlet shops. For example, companies such as J. Crew and Ralph Lauren have designed lower-quality lines which mimic pieces found in their traditional store fronts and high-end department store chains. J. Crew has recently announced plans to open its own line of discount stores, “J. Crew Mercantile.” Retailers such as these will surely go toe-to-toe with “fast fashion” brands such as Forever 21, who rapidly produce low-priced replicas of lines fresh off the runway. They will also create another profitable channel for luxury brands, in order to reach cost-conscious consumers. On the other hand, will doing so threaten the command of the most sought-after labels?
Although the production of “made-for-outlet” apparel has become increasingly profitable for luxury brands, the U.S. Federal Trade Commission (FTC) has been on alert of such practices. One of the major selling points of outlet malls and other discount retailers is their unique price tags. Oftentimes, the tag includes a discounted price, along with phrasing such as “Compared to” or “Marked down from” a higher “Retail” or “Manufacturer’s Suggested Retail Price.” This will give the consumer the illusion of a good deal and create an incentive for them to make the purchase, without realizing that the product was never intended to be sold in premier shops, or even at such premium prices. As a result, short-changed consumers are literally left paying marginally high prices for sub-par merchandise.
In an effort to further delineate between their outlet and premium lines, brands have begun using unique marks and embellishments on their merchandise labels. For example, Gap has been known to use a 3-dot mark on its tags to indicate an outlet item; whereas, J. Crew’s outlet-specific merchandise dons two white diamonds on its tags. Even though consumers have increasingly begun to catch on to these nuances, the ever-present risk of losing brand presence at the luxury tier for some of these labels is still imminent; because what lies underneath that glistening, embossed label is a clandestine impostor.
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