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Lean times could be good news for outlets

The Baltimore Sun

As the housing market collapsed this year, so did Meghan Sullivan's salary - by about $25,000.

The 38-year-old Centreville woman, who works for a builder, is on a tight budget this holiday season, and thought what better place to find a deal than an outlet mall.

Yesterday, she joined thousands of shoppers with the same idea at Prime Outlets in Queenstown, where the parking lots were so full that people had to park in the median of the nearby highway.

"With the economy this year, I thought it was worth it to come here and get better deals," said Sullivan, who works partly on commission. She saved about $70 at the PacSun clothing store, where everything was discounted 50 percent.

Cheap is in this year, which could put outlet malls at an advantage as penny-pinching consumers are reluctant to spend big on brand names.

Often located miles from traditional shopping malls, outlet centers typically sell merchandise at a discount, sometimes featuring clothing and shoes that didn't move as well in full-price stores. And given that gas prices are down about half from levels seen this summer, some retail experts believe the outlet centers might draw more shoppers this year looking for bargains because the longer drive won't cost as much.

"It may give them a slight advantage," said Randy Allen, associate dean for corporate relations at Cornell University's Johnson School of Business.

To be sure, traditional malls and retailers are discounting heavily this year, too, given that the holiday shopping season is shaping up to be the worst in years. Competition for consumer dollars is even more fierce, given that many analysts predict that shoppers will spend less compared with past seasons.

Outlet mall companies such as Baltimore-based Prime Retail are hoping to capitalize more on the trend by highlighting their discount status. The mall owner, which also owns a center in Hagerstown, has created a marketing and public relations campaign around this year's "chic-onomics" movement.

Workers for Prime Retail made a point this week to describe how people can still look good in a down economy, with cheap finds from stores at its 21 centers across the country.

They suggested frocks for under $30 from BCBGMAXAZRIA, Banana Republic Factory Store and the discounted clearance racks at Neiman Marcus Last Call. They recommended clutches and oversized wallets from Nine West Outlets and kate spade. And they highlighted designer shoes such as Salvatore Ferragamo wedges for $29 and Christian Louboutin slides for $30 that they found on the clearance rack of other stores.

"What the outlet sector does is allow you to get those brand names, but at a lower price," said Karen E. Fluharty, Prime Retail's senior vice president of marketing. "You can be that frugal fashionista, not sacrifice style and still stretch that dollar."

Fluharty said sales at its center are on par with last year, while many other retail centers are seeing declines.

The National Retail Federation is estimating sales will increase 2.2 percent overall this holiday season, well below the 10-year average increase of 4.4 percent. Others say sales could decline.

Besides discounted merchandise from its mainstream stores, some retailers also make lower-end brands of their goods to sell at their outlets for lower prices. And outlets are often located so they won't compete with the department stores, maybe 40 or so miles away from many major malls.

Arundel Mills mall in Hanover doesn't have "chic-onomics" promotions, but Wendy Ellis, director of mall marketing and business development, said the outlet center can't help but benefit from a slow economy.

"We certainly think that positions us very well," Ellis said.

But how big of an advantage outlet centers will have depends on the discounts full-priced retailers offer, said Cornell's Allen. Some shoppers may not feel the need to head to an outlet, she said.

"If the close-end retailers cut enough, I think they'll get the business," Allen said.

Yesterday, it appeared the outlet malls were enjoying a brisk business. People packed the stores for midnight openings at both Arundel Mills and the Prime Retail outlet centers in Queenstown and Hagerstown. At Queenstown, the lots were still full by midafternoon.

Sisters Tori Joel, 23, and Allison Hannah, 31, said they find themselves spending a little more frugally this year. And they say the outlet mall is definitely an advantage in that quest.

The pair, who live in Connecticut but were visiting their hometown of Bel Air for Thanksgiving, came to Arundel Mills for the midnight opening after getting e-mails about sales at J. Crew and Banana Republic.

"I'm working harder to find better deals," said Joel, a graduate assistant.

"My $50 will go a lot further" here, said Hannah, who is a fundraiser.

Angie Crafton said she likes to dress nicely but not spend a lot. So she visited Queenstown yesterday to hit the Michael Kors store. The shop was offering 25 percent discounts on all orders and some items were already discounted up to 50 percent.

Crafton said she has been able to weather the current economy because she budgets well, including for Christmas gifts. She said the outlets help her control spending, too.

"This is where the deals are," said Crafton, who works in human resources and lives in Washington.

The move to pare spending is part of an overall trend for cost-conscious consumers who are expected to trade down this year.

Target Corp. announced recently it was cutting its prices to better compete with Wal-Mart, for instance. And discounters have fared better than high-end stores like Saks Fifth Avenue and Bloomingdale's, which have watched their sales plummet.

But that doesn't necessarily mean all discount-oriented stores are safe. Local institution C-Mart recently went out of business. The owners said that shoppers were no longer buying designer names because of the economy.

Sentell Barnes, 29, isn't giving up shopping because of the shaky economy. He's watching his spending a little more closely. And the outlet mall is a good place to do that, he said. He shopped at Queenstown yesterday with his brother, who was visiting from Alabama.

"I'm thinking more about saving and less about frivolous spending," said Barnes, of Washington, who does policy work for a trade group. "I look for deals a lot more now."

Baltimore Sun reporter Marcia Cephus contributed to this article.

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