As a teacher, I can't wait for summer. But, then there's that day -- the day when Back to School specials start to appear in stores. This summer I was especially surprised when I saw new backpacks, notebooks and folders, and pens and pencils featured on sale in some stores. I guess it should be no surprise then that K-Mart has already begun its Christmas sales. And, as consumers begin to create their holiday shopping lists, investors turn to the retail space.

One area that is especially frenzied during the holiday season is factory outlet centers. Although it will not be ready for this holiday season, Simon Property Group (NYSE:SPG) and Tanger Factory Outlet Centers, Inc. (NYSE:SKT) broke ground last week on Charlotte Premium Outlets. Opening in summer 2014, the outlet center will feature Saks Incorporated's Saks Fifth Avenue OFF 5th, in addition to over 90 other high-end stores. The project is a 50/50 joint venture between the two companies. Simon Property Group, a S&P 100 company and REIT, currently owns or has an interest in over 325 real estate properties in North America and Asia. Tanger Factory Outlet Centers, meanwhile, is a REIT with a portfolio of 43 upscale outlet shopping centers in 26 states and in Canada.

Two companies that get a charge out of the outlets

This move represents one step in Simon's efforts to develop a pipeline of new development and redevelopment projects, in which the company is looking to invest $1 billion annually through 2016. Simon has experienced success recently, and for investors who are looking for exposure to the retail space yet who are reluctant to choose specific retailers, Simon offers a compelling pick. With a dividend yield of 3.10%, Simon is slightly below the S&P 500 REIT average yield of 3.40%; however, since 2008, it has grown its dividend 28%, or 5.6% per year. Additionally, Simon's compound annual return of 21.4% has beaten the S&P 500's return of 7.1% by 14.3% since 2003.

Tanger, ranked No. 1 in mall REITs for both its 5 year total return of 121% and its 10 year total return of 509%, has also performed well. Its dividend increased 7.1% in 2013 to $0.90 per share annually from $0.84. As of June 30, Tanger's average occupancy in its consolidated portfolio was 98.3%, and same center net operating income grew 4.5% for the quarter. Tanger's largest tenant is The Gap, representing 7.9% of its gross leasable area.

Tuned in to the factory channel

Some stores like Coach (NYSE:COH) are heavily reliant on factory outlets for sales. A recent Investors Business Daily article addressed the importance which retailers are placing on factory outlet stores. According to Andrea Shaw Resnick, approximately 85% of revenue from factory outlet stores is from items made specifically for those stores.

In the fourth quarter of fiscal 2013, Coach opened three new retail stores in North America and two factory stores, including one dedicated solely to men. At the end of fiscal 2013, Coach had 193 factory stores and 351 regular stores. For fiscal year 2014, Coach plans to open 20 new stores, of which at least 15 will be factory outlets. During Coach's most recent earnings call, Victor Luis, President and COO, made specific reference to the significant opportunities that the factory channel offers; he stated that by the end of the first quarter, "about 80-85% of our factory handbags will be new, innovative factory exclusives." And, lest anyone thinks that the factory phenomenon is restricted to North America, Japan also has factory outlet stores—43 to be exact.

The Foolish Wrap-Up

Although I find companies like Simon and Tanger to be potential winners in the factory outlet space, I'm hesitant to invest in them so quickly due to the Fed's inevitable tapering of the stimulus program—at which point, REITs will be in jeopardy. Coach has had a rocky year as it has undergone some big personnel changes, but I find the company a more compelling play for investors interested in the retail space, specifically because of benefits from the growing trends in the factory outlet channel. With a 2.5% dividend, Coach, like Simon and Tanger, offers investors an attractive dividend which, unlike the other two companies, is in much less jeopardy when the Federal Reserve does begin its tapering.

Scott Levine owns shares of Coach. The Motley Fool recommends Coach. The Motley Fool owns shares of Coach. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.