Stanley Friedman was right.

When he brought the outlet-mall concept here 25 years ago, he boldly called it "an idea whose time has come."

Friedman was the optimistic developer of Lancaster Outlet City, the county's first outlet mall.

It opened in 1982 with much fanfare but few stores, just 16 merchants on the site of the former Sky-Vue Drive-In theater on Lincoln Highway East.

Though some outlet centers here have come and gone since then, including Friedman's, his declaration has proven true.

The Outlet City site is now home to Tanger Outlet Center, a bustling property.

If viewed together with Rockvale Outlets, another thriving center just down the road, they'd be the second-largest outlet center in the United States.

The two major outlet centers boast 1,500 full- and part-time employees, more than 160 stores and 900,000 square feet of retail space — roughly the size of five Wal-Mart superstores.

Besides changing the look of one of the county's busiest stretches of highway, they've become a major part of the local economy, as an employer, taxpayer and tourist attraction.

"(The Amish) are our best lead story. But at the same time, over the years, everybody now knows that this is a mecca for outlet shopping," said David Ober, general partner at Rockvale Outlets.

As Lancaster's outlets took hold here in the 1980s, they were on the leading edge of a national retailing phenomenon, becoming an established part of consumer buying habits even as the initial outlet concept — buying discounted goods directly from manufacturers — was being diluted.

"It goes back to the old thesis that everybody loves a bargain," said Eugene Fram, a marketing professor at Rochester Institute of Technology, who has studied the development of outlet centers.

'Savings to the customer'
Outlet stores originally acted as clearinghouses, selling goods that came from a manufacturer's excess and slightly damaged inventory, or had been returned from department stores.

In 1936, men's clothing manufacturer Anderson-Little pioneered the concept by opening several "factory-direct" stores that weren't directly adjacent to its factories — as was common practice then.

But when the outlet center building boom reached its zenith through the 1980s and into the mid-1990s, the stores exhausted the supply of excess or slightly damaged merchandise.

"As outlets grew, there wasn't as much stuff to put in them," said Tom Kirwan, senior editor of Value Retail News, a trade publication that tracks the industry.

To fill the shelves, stores eventually began stocking merchandise made especially for them, often by slightly cutting corners.

Today, goods specially made for the outlet dominate outlet store shelves, but a May 2006 Consumer Reports comparison found that some outlet-made clothing was put together with cost-saving features like lower thread counts or less stitching.

Back when outlet centers were clearinghouses, nearby Reading became a draw for local shoppers.

Reading's VF Outlets, which opened in 1974, was the nation's first multi-tenant outlet center.

It became a magnet for Lancaster County shoppers seeking deals on discounted merchandise like Lee and Wrangler jeans, as well as an inspiration for Lancaster's own initial outlet center.

Rich Welkowitz, who partnered with Friedman to open Outlet City, said he got the idea for the project after visiting the VF Outlets.

"The outlet concept made sense to me," said Welkowitz, adding his belief that Lancaster's Amish-inspired tourist industry would help support an outlet center here.

Faced with record high interest rates in the early 1980s, the developers of Outlet City got a crucial assist from the East Lampeter Industrial Development Authority, which gave them a low-interest loan for $3 million of the center's $3.5 million cost.

The Sept. 30, 1982, grand opening was highlighted by the ascent of an orange, red and black hot-air balloon.

Welkowitz said the first stores — which included a VF Outlet store and several discount retailers — were "nice, but not palatial," adding that their somewhat austere displays emphasized the discount prices.

The late Friedman, a former aluminum window company owner and World War II bombardier turned real estate developer, voiced confidence that the center would fly.

"The reason these centers have been successful can be summed up in four words — savings to the consumer," he said as the center opened.

Market changes
Friedman's prediction about outlet centers in general proved correct, but he was less prescient about his own.

After Friedman and Welkowitz sold Outlet City in 1986, the market changed drastically and the mall's sales tumbled.

In 1991, the mall was sold again. A year later it closed, the victim of a recession, poor visibility and competition from Rockvale, which opened the same year Friedman and Welkowitz sold Outlet City.

Then in 1993 Outlet City was resurrected as MillStream Factory Shops, after a $13 million transformation.

The next year it was sold to Tanger Outlet Centers, a publicly-traded company and one of the nation's largest factory outlet shopping center developers and owners.

"We felt that with the growth opportunity in Lancaster, coupled with our marketing, it would be successful. And we were proved correct," said Steven Tanger, president and COO of Tanger Outlet Centers.

The Quality Center at the northwest corner of Routes 30 and 896, which opened in 1987 as an outlet center, is today a mix of outlet stores and traditional retail, anchored by an Adidas store. It has lost outlet stores over the years to Rockvale.

"The problem with the center from an outlet perspective is that it is only 60,000 square feet," said Kenneth P. Balin, president and CEO of Philadelphia-based AMC Delancey Group, which bought the center in 1998.

In Lancaster, the largest outlet center is still Rockvale, which opened in 1986 with 11 stores but today ranks as the 10th largest outlet center in the United States with 565,000 square feet of space.

Ober, Rockvale's general partner, called the major outlets Lancaster's "only 12-month attraction."

Both Tanger and Rockvale work to market their centers outside the area, which includes making sure bus tours to Lancaster County include a stop at the outlets.

Those efforts have paid off, with Tanger and Rockvale drawing 1,000 and 4,800 buses respectively each year.

"There are folks that definitely visit just for shopping and folks that package that with other things in the area," said Chris Barrett, president and CEO of the Pennsylvania Dutch Convention & Visitors Bureau.

Such visitors include Angela Haskett-Smith, of Surry, Va.

She was on a recent bus tour that included a show at Sight & Sound and a stop at Rockvale. The trip, which she made with several of her sisters, has been an annual tradition since 1994.

"We eat dinner and then we see a show, stay at a motel. We always stop to shop," said the 44-year-old hospitality supervisor at William & Mary College. "It is the fun of being able to stop somewhere different: go different places and it is nice prices."

No guarantee
While outlet store prices are still nice — an average of 26 percent lower, according to Consumer Reports — they are no longer a guaranteed savings.

Mike Gumpper, a Millersville University professor of economics and director of the university's Center for Economic Education, said that from his own perspective as a shopper, the prices at the Route 30 outlets are often not worth the inconvenience from his house in Millersville.

Fram, the Rochester Institute of Technology professor, said that since the outlet boom, traditional stores have ridden their own discount trend, becoming "a sea of sale signs."

"From a customer's point of view, going to an outlet store does not assure you of a bargain," he said.

Pete Mucher, a 68-year-old missionary from Atlanta who stopped at Rockvale last week with his wife, agrees.

"You go to a regular store and you'll find the same things for about the same price," said Mucher, who saw a show at Sight & Sound and planned to speak at a local church during his visit.

Also, some of the outlets' local economic benefits may also be elusive, one local economist said. Gumpper said most of the jobs are low-skilled retail and the majority of the revenue goes to out-of-state companies.

"To have (the outlets) here makes sense and it does work and there are a lot of synergies with other parts of the economic landscape in Lancaster County, and that is good ... but realize what you're going to be getting," he said.

CONTACT US: cumble@LNPnews.com or 481-6031