Outlet Stores: Do They Really Sell Wholesale to the Public?

Outlet: (n) a store, merchant, or agency selling the goods of a particular wholesaler or manufacturer.

Interestingly the definition does not define such stores as having the ability to sell wholesale to the public. It does not say that they have the ability to save you even a small amount of money. Furniture outlets, clothing outlets, what ever kind of outlet you can think of it is one of the most ingenious marketing inventions ever put in to action.

Here in St. Louis there are a number of outlet stores that sell mattresses and furniture that make claim to cut out the middleman therefore saving you money. Some of the stores and salespeople claim to sell their products for “wholesale cost to the public”. I personally do not have a problem with that, if that was what they were really doing. I believe these businesses and their sales staffs are intentionally implying direct savings to you the consumer by means of a factory direct to the customer (you) wholesale pricing.

I can assure you this is rarely if ever the actual case and is one of the easiest marketing methods to put into plain words for the retail buying consumer. Factories design and build items like mattresses and furniture in large volume. They then hire territorial sales representatives to locate retail stores and distribution centers who are willing to sell and market their goods in large quantities. Ultimately those products like the mattresses and furniture are then sold at wholesale cost to a retail store, chain, or distribution center.

These loyal and committed retail stores often enter a working arrangement and act as the liaison between the manufacturer and the customer. They set up showroom locations to see product selection, get product information, and take care of all service related issues. The dealer is expected to uphold the manufacturers standards and even calls upon the manufacturer for help when needed. This authorized dealer in essence enters an agreement or contract for exclusivity or obligatory minimum purchase amounts in order to buy from the manufacture at wholesale prices. Distribution centers are required to purchase greater volumes and then at the end of the day sell their products to retail stores who may not be able to make manufacturers’ purchase minimums.

I get frustrated when I see ads like the ad I saw on line doing research for this blog. Company X claimed their item was on sale for 50% off their already wholesale to the public price. It’s my opinion that outlet stores should have to answer to the various State Attorney Generals with ridiculously high fines or even closure if such deception persisted after a warning and steep fines. It is important that the public can trust what they read and hear on signs and in ads. Just as important customers need to be able to believe what sale associates tell them to be good and trustworthy information. Retail establishments need to stop trying to gain a competitive business edge with claims of wholesale pricing to the public which are often untrue. My ongoing opinion, if state attorney generals would crack down hard on such ads and deceitful claims of selling wholesale to the public it would put an end to such bad retail business practices, but I guess that is wishful thinking.