During the past few years, there has been considerable increase in the number of factory outlets bringing about several advantages to consumers as well as manufactures. Discussing how factory outlets function vis-à-vis regular retail outlets in the context of today's retail environment, Pallavi Majha's exploration looks into a number of aspects of the issue

Besides usual retail outlets positioned on high streets and malls, another place where shoppers can buy products is the premises of factory, which is fast turning into another retail format. This format offers branded goods at a reasonable price, ranging from 30 to 70 per cent lesser than the normal retail price. Brand-craving consumers prefer these outlets as they get products with brand tags at an affordable price range. Factory outlets are equally important for the companies as they serve as media of clearing excess stock and unsold stuff. Factory outlets are profitable because of low operating costs, limited services, low rents, and elimination of the distributor or retailer links in the distribution chain. Manufacturers have supreme control of their outlet, and can run the store in their own way with respect to visibility, prices, promotion and inventory.

Inception of the concept in India
It hardly matters where you are and which brand you want to buy! If you can not afford going to a regular retail outlet, the solution lies in factory outlets. Factory outlets have become another business for major retail brands. While explaining the concept of factory outlet, Mr Venkatachalapathy, Business Head, Megamarts, Arvind brands says, “Factory outlets primarily means a store wherein branded apparels are sold at a discount on the MRP price. These apparels are predominantly closed outs. This means goods that do not get sold at full price from their main stores during its season.  The discount per cent varies from brand to brand, starting at 20 per cent and goes up to 50 per cent on its MRP.”
Factory outlets have products ranging from apparel, accessories, sportswear, footwear, luggage, children's clothing to wide variety of men's and women's clothing. The concept of factory outlets came to India from overseas markets like Singapore, Hongkong, Thailand, Europe and US. Fashion is all about sizes and styles and changes within a short span of time and this is where factory outlet serves as a way of selling the overrun products. Mr Acharya R R, head of Value Channel, Madura Garments opines, “Value concept through factory outlets is catching up like wild fire with consumer flocking to the 'Value' destination across industries in India. Janatha Bazar, Co op societies, Margin free shops, End of season SALE is the origin.”
Regarding the inception of the concept of factory outlets in India, Mr Venkat explains, “Factory outlets originated in India once the apparel majors such as Arvind, Madura, and Raymond wanted to get rid of their old inventory to keep the working capital under control.  This concept is in fact prevailing across the globe where there are huge malls of factory outlets outside the city.  In branded apparel business, globally and in India approximately 15 to 20 per cent of the business comes from the factory outlet business.”