The Difference Between a Factory Outlet Store and a Company Retail Store

by Craig Berman ; Updated September 26, 2017
Woman passing card to shop assistant in shop

Companies may use both factory outlet stores and branded retail outlets to display and sell their products. The difference between the two boils down to the different niche markets that each facility attracts. Decisions on merchandise and sales strategies are based on the customer expectations for those who enter each store.

Company Stores

As its name suggests, a company retail store sells its own branded products exclusively, rather than -- like a department store -- offering a selection of merchandise from several different brands. An electronics company store, for example, would sell only that company’s televisions and music players. A clothing store would sell its own t-shirts -- not a collection of best-sellers for other brands.

Factor Outlets

A factory outlet store also exclusively sells products from a single company and its vendors -- but not necessarily the same products as are available in its other retail outlets. Historically, outlet stores sold excess or flawed merchandise at a discount, getting rid of otherwise unsellable items. That’s changed over time, however. Instead, companies are making products strictly designed for outlet sales.

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Shopper Motivations

From a company’s perspective, the big difference between an outlet store and a company store is the shoppers they attract. A company store might serve customers simply browsing with no intention of making a purchase, or one looking to test out merchandise before completing the purchase online. The store therefore is designed to showcase products, with displays and lighting geared toward making everything look its best. Sales staff members focus on answering questions, touting the products and persuading the customer to make a purchase. Because outlet stores are generally clustered together, often miles from a city center, they tend to be more of a destination. Shoppers go there expecting to buy, so the task becomes stocking products that meet their needs and expectations.

Price Points

A company store likely will sell the best merchandise the business has to offer but will offer a variety of price points. Shoppers enter a clothing store perhaps motivated by an affinity for the brand, or a search for a little black dress, with price perhaps a secondary consideration. In contrast, because customers enter outlet stores to get good deals, merchandise there will likely be priced in a way to offer the perception of value. High-end merchandise at regular prices is unlikely to appeal to shoppers expecting great deals.

Different By Design

Increasingly, a difference between company stores and outlet stores is that they stock different merchandise by design. To give customers at outlet stores the price points they want, companies may offer products with cheaper fabrics or less-elaborate detail. Instead of a shirt with flawed stitching, for example, an outlet store might have cotton shirts resembling a higher-end wool shirt sold in a company retail store.

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