An outlet store or factory outlet is a brick and mortar or online retail store in which manufacturers sell their stock directly to the public. Traditionally, a factory outlet was a store attached to a factory or warehouse, sometimes allowing customers to watch the production process like in the original L.L. Bean store. In modern usage, outlet stores are typically manufacturer-branded stores like Gap or Bon Worth grouped together in outlet malls. The invention of the factory outlet store is often credited to Harold Alfond, founder of the Dexter Shoe Company.
Outlet malls first appeared in the Eastern United States in the 1930s. Factory stores started to offer damaged or excess goods to employees at a low price. After some time, the audience expanded to non-employees as well. In 1936, Anderson-Little (a men's clothing brand) opened an outlet store independent of its existing factories. Until the 1970s, the primary purpose of outlet stores was to dispose of excess or damaged goods.
In 1974, Vanity Fair opened up the first multi-store outlet center in Reading, Pennsylvania. Throughout the 1980s and 1990s, Outlet malls experienced strong growth. The average outlet mall is opened with between 100,000 to 200,000 square feet of retail space. This can gradually increase to up 500,000 to 600,000 feet. The average outlet mall has an area of 216,000 feet. In 2003, outlet malls generated $15 billion in revenue from 260 stores nationwide.
The number of malls in the 90s increased from 113 in 1988 to 276 in 1991 and to 325 in 1997.
Outlet malls are not an exclusively American phenomenon. In Europe, retailer BAA McArthurGlen has opened 13 malls with over 1,200 stores and 3 million square feet of retail space. Stores have also been emerging in Japan since the mid to late 1990s.
Surveys have shown the large proportion of people shopping at outlet malls were women. The median household income for shoppers was $57,000 in 2002. Forty-two percent are college graduates, and 62 percent are less than 50 years old. The average reported distance to outlet malls was given between 30 and 80 miles (one way), with a travel time of 54 minutes.