Answer:
A Coach store will offer the very latest release items in mint condition for a retail price.
A Coach Factory Outlet will provide discounted stock: things they haven't managed to sell in the normal shops before the new items arrived; and irregular items: things that might be missing a zipper charm, be scuffed or marked in some way but at a lower price.
In the majority of cases, Factory Outlet items are in awesome condition and are brilliant value, but are usually a season old before they arrive - and if you are waiting for a specific item to make it to the Outlet, you have to keep a sharp eye out and be aware that if an item sells out in the ordinary stores, then there's nothing to send to the Outlet.