The information below is derived from a Wikipedia article that can be seen at the following address: http://en.wikipedia.org/wiki/Outlet_store
The following text explains outlet stores / factory shops from a North American point of view.
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.
Outlets 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 up to 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.
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.
Difference between factory outlet and outlet store
Outlet store and factory outlet is almost the same. In factory outlets are sold products from one brand. Manufacturers who sell only their own products for better prices run factory outlets. On the other hand retailers run outlet stores and various brands are sold there.
Factory outlets are older than outlet stores. They used to be next to factories where products were manufactured.
The definition of a Factory Outlet- Recently we have seen a huge growth in the number of factory outlets in South Africa and in fact internationally, so much so that it has now become a trend to use the term 'outlet' on promotional material and advertising.
A factory outlet is a manufacturer-owned store selling that firm's closeouts, discontinued merchandise, irregulars, cancelled orders, and, sometimes, in-season, first-quality merchandise.
Having said that, in more recent times, some manufacturers have consolidated into mega companies that own many labels and sell via factory outlets that offer many brands. Alternatively we find companies that provide Factory Outlet distribution for several manufacturers.
Definition of Factory Outlet Centre: Outlets centre are shopping centre that groups more retailers in one location and where most of the centre tenants are the manufacturers of the brand name product they sell. The majority of stores offer all year discounts ranging from 25% to 75%.
All merchandise sold is stock surplus to the high street or special buys and is typically sold through stores run by the brands themselves. Merchandise includes fashion, home wares, electrical goods, cosmetics, toys, books, CDs and videos.
The concept allows retailers an opportunity to sell surplus stock direct to the public via a branded shop. Brand equity is safeguarded, while market share and brand awareness increase.
The above definition is used courtesy of http://www.factoryoutletshopping.com.au/