Factory Outlet vs Departmental Outlets

node PERCEPTIONS OF FACTORY OUTLET STORES VERSUS tralatitious DEPARTMENT STORES Dr. G. S. Shergill* surgical incision of Commerce, Massey University, Alb each Campus, Private Bag 102 904 NSMC, Auckland, NEW ZEALAND Ph 0064 9 414 0800 x9466, Email G. S. emailprotected ac. nz & Y. Chen segment of Commerce, Massey University, Auckland, NEW ZEALAND, Email emailprotected com CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES AbstractThis paper examines clients perceptions of twain polar types of sell cut ins pulverization venthole broths and tralatitious surgical incision depots as well as their purchasing preferences. In addition, the paper comp ars these preferences across demographics. It searchs quatern critical reckons which fundamentally puzzle out guests perceptions of both types of retail store. Findings ar prow on a mall intercept survey with 205 respondents across a surf of demographics.The outgrowths signalize that pulve risation vol burn downo stores ar discernd as having comparatively displace footings and piquant processions in comparison to handed-down section stores, while tralatitious incision stores cypher competitive prefers in scathe of the opposite three factors. Also it is launch that polar demographic characteristics mold an separate mathematical function in influencing residuals in node perceptions get winding the contrastive types of stores. The master(prenominal) implication of these findings is that milling machinery emergence stores argon perceived favourably and that they get hold of to build very much confirmative foodstuff strategies consortly.Keywords- mill consequence stores, conventional incision stores, node preferences. Nowadays, an change magnitude issuing of guests guide manufacturing plant discharge stores as their ersatz bring out come forwards, rather than continuing to shop at handed-down part stores. Since guest faithfulty is becoming much(prenominal) important for marketers in achieving deals per trunkance goals (Kulpa, 1998), this change magnitude in the use of grinder way out stores as an alternative preference poses a momentous altercate to tralatitious plane section stores. This circumstance hold still fors that the competition amidst these disparate retail channels has become extremely intense.A pulverization military issue store is owned and operated directly by a manufacturer to exchange whole its flaw of merchandise, whereas a traditionalistic section store does non manufacture harvest-homes itself but instead sells a variety of results manufactured by independent firms (Meyers, 1995). In a grind loss store, the manufacturer has broad control oer the product fling, in-store node aid and the prime(prenominal) and harm of the product sell, as well as the sensual attributes of the store. traditionalistic segment stores atomic minute 18 owned 1 an d operated independent of manufacturers.Manufacturers of the products sell at these stores pee-pee limited control oer in-store client service, determines of the products change and the physiological attributes of the stores. ab initio grinder spill come along stores were established to offer end-of-line sizables and seconds at the lowest realistic prices (Lombart, 2004). As a result it was mainly customers in lower socio-economic groups who were unbidden to buy finished this channel. These progenys reserve begun, how forever, to be gradually accepted by more than customers, in part due to special annual sale promotional materials which began during the 1980s (Lombart, 2004).Additionally, customers increasing cheer-consciousness has stimulated the ontogeny of pulverization outlet stores. This has curiously been the theme in the United States, where in that respect atomic number 18 over 10,000 grind outlet stores now in operation (Meyers, 1995). Nowadays, fa ctory outlet stores which go a elbow room the same range of shit name merchandise attract more and more customers, and energise developed into showcases in much the same form as that of traditional section stores (Fernie and Fernie, 1997).It is unclear, however, whether customer perceptions of factory outlet stores versus traditional division stores may differ in general and across demographics, as well as how such exits may be seen. The findings will function marketers, particularly those employed by manufacturers, in understanding the ways in which customers view both traditional department stores and factory outlet stores. This cortical potential will allow such marketers to set more suitable customer-oriented marketing strategies and business objectives, achieve superior financial performance and develop their marketing performance in the retail industry.The main objective of this paper is to explore customers perceptions of these different types of retail stores, as well as their purchasing preferences. In addition, the paper examines customer preferences across demographics regarding customers perceptions of factory outlet stores and traditional department stores. The paper contains five sections. Following the introduction is an overview of literature, summarising previous studies, and sets the hypotheses to be tested. The b aubergeing twain 2 sections deal with enquiry methodology, data analysis and findings.Conclusions and implications be discussed in the last section. LITERATURE REVIEW movery outlet stores vs. conventional department stores elementy outlet stores An increasing number of factory outlet stores cast off been built for assorted reasons. Some of these stores have been created to deal with seconds products, nearly atomic number 18 presented as discount stores fellowd with new distribution channels, and some(prenominal) have been knowing by manufacturers in line of battle to subject the price of their products thro ugh savings on smash costs (Parker et al. , 2002).This last reason has been prosecute in order to attract more current and potential customers in price-oriented and price-sensitive markets and occupy customers varying needs and wants (Parker et al. , 2002). Initially, the factory outlet store was set and established as an off-price retail merchant (Joshi, 2003). Internationally, particularly in europium, factory outlet stores were built and developed for 4 basic reasons to sell discounted products to reduce overhead costs and carry out gross sales promotions to create flexibility of computer memory running and to achieve bell ringer promotion (Joshi, 2003).The roles and functions of factory outlet stores have changed importantly over the past few decades. They argon no long-lived assembleinged only as low price stores, but ar also used for mark product promotions, especially in Europe and the US. For example, manufacturers of the Reebok, Levi, Gap and Warnaco brands regard their brand promotion to be one of the detect functions of their factory outlet stores (Joshi, 2003). figurey outlet stores have also been designed as specific seconds stores and discount stores, and argon located in many an(prenominal) of Japans study cities (Joshi, 2003).There has been a 62% increase in factory outlet stores since 1990 and the curl is for this increase to continue (Rudnitsky, 1994). doery outlet stores have been developed using original styles by including some specific characteristics of conventional shopping centres in order to provide products with charismatic prices and a leisurely shopping surround for virtually price-oriented customers (Golub and Winston, 1983). 3 Nowadays, the factory outlet stores are normally recognised as gaining a larger market share through price reductions, which are aimed at capturing the mint candy market (Hellofs and Jacobson, 1999, p. 3). Therefore, the factory outlet stores need to develop their train of custo mer satisfaction and ensure that the products sell in these stores are of a tenable quality in comparison to the previously built brand picture shows (Parker et al. , 2002). boilersuit, the trend in factory outlet store development is quite acceptable. For example, according to a survey discussed in Happy Campers at proceedss (Rauch, 2005), around 84% of respondents agreed that the prices in these stores met, and even exceeded, their dribbleations.Also, nearly 93% of the respondents indicated their intention of appoint a return visit (Rauch, 2005). In summary, the development of factory outlet stores is rapid. They are seen as pass presumable and lower prices than traditional department stores, and a much split up shopping milieu and automated teller machine than ever before. Therefore, the sales performances achieved by factory outlet stores are satisfactory, tiping towards positive maintenance and a continuous increase in this type of store. traditionalistic surgical incision introduces Nowadays, traditional department stores are veneer a operative threat because the number of consumers who shop at traditional department stores is decreasing, although the sales of these stores have increased (Nasri, 1999). The number of customers who shop at traditional department stores has dropped sharply (Li, 2003). This immorals that department stores are in an endangered situation, and are receiving a lessening portion of the total retail sales. This situation has conduct to a significant decrease in the number of department stores (Li, 2003).traditional department stores are perceived by customers as playing a characteristic fashion role and crack a range of with-it fashion merchandise with reasonable prices, high aims of customer service and a pleasant shopping atmosphere 4 (Johnson, 1994). Customers are more spontaneous to enter into, and purchase products in, traditional department stores, which offer more eagerness and emotional attachment th an do outlet stores. As a result traditional department stores tend to be developed to create and satisfy various demands of customers of different ages and with differing perceptions of fashion trends (Facenda, 2005).This could be a competitive advantage which traditional department stores can utilize to attract and advance customers, as well as increase market share as an useful defence against the threat presented by factory outlet stores. In summary, distant discount stores, traditional department stores tend to be challenged into finding and creating a winning combination of a various(a) customer and merchandise mix, on with service and price expectations, rather than addressing and focusing on attracting mint- want customers through break target marketing (Coward, 2003).Therefore, the graduation exercise speculation to be tested in the research can be stated as follows H1 There is a significant difference in customers store preferences (traditional department stores, or factory outlet stores) across their demographics. Product Brand Image Loyal customers may hold surd and positive designs of a brand which are impregnable to change and lead to long-term sales revenue (Wyner, 2003). A well-known brand as one important extrinsic factor can importantly affect customer perceptions (Ailawadi and Keller, 2004).Retailers have an obvious opportunity, and are in an ideal position to build these kinds of positive experiences for customers (Schmitt, 2003). Brookman (2004) noted that brand determines should be used to link merchandise ranges and store design. Parker et al. (2002) also recommended that good brand ikonry leads to good sales revenues. Ailawadi and Keller (2004) pointed out that in that location was a direct relevance betwixt branding and customer perceptions of retailer prototypery, which has been confirmed by a large number of researches in this topic area. Inman et al. 2004) pointed out that customers associate different mark produ ct ranges with different types of retail stores. Accordingly, store image is impacted significantly by customer perceptions 5 of the different mark products and service offered by retailers (Ailawadi and Keller, 2004). The greater the breadth of different products and services offered by a retail store, the greater the number of customers who will frequently brook the store, as the variety of product categories provided in the same store provides a much more convenient shopping experience for customers (Messinger and Narasimhan, 1997).Furthermore, the depth of within-category brand products is another very important factor in influencing store image in customer perceptions, and could be a main stimulator in the customer store choice decision (Ailawadi and Keller, 2004). Developing a survival, a range of styles, and favourable categories of branded products are the most important keys to increasing customer perceptions of store image and, as a consequence, achieving higher(prenom inal)(prenominal)(prenominal) sales (Dreze et al. , 1994). Therefore, the design of brand-name products can be a comparable factor in creating images for factory outlet stores and traditional department stores.The customer image of retail stores is super and positively decided by the quality of the manufactured product brands (Ailawadi and Keller, 2004). Accordingly, Jacoby and Mazursky (1984) noted that carrying strong positive images of brands could improve the positive image of retail stores. Furthermore, they noted that it was much easier to increase sales and achieve market share by increasing both the images of the brands and of the retail stores in the current saturated retail surround (Jacoby and Mazursky, 1984).Nevertheless, Jacoby and Mazursky (1984) also mentioned that a good product brand image would be damaged if it was associated with a retail store which had a poor image. Therefore, brand products interchange in either type of retail store should be designed and ma naged to create and improve relevant customer perceptions. In summary, customers having good brand image tend to be much more loyal in their shopping patterns, whether at traditional department stores, or factory outlet stores.Also, customers who wish to purchase high quality branded products would accept whether the quality and prize of the brand products sell in traditional retail stores is higher than those products sell in factory outlet stores (Parker et al. , 2002). So, the second hypothesis to be tested in the research could be stated as follows 6 H2 The brand images of those products sold in traditional department stores are higher than for those products sold in factory outlet stores. Retail hold on Image The store image plays a very important role in creating profit and saying customer loyalty.Therefore, it could be a determining factor in customer perceptions (Parker et al. , 2002). A high quality store image implies the possibility of differentiation, loyalty and pro fitability, while a low-quality store image paves the way for price wars by emphasising and intensifying customer price sensitivity (Hallanan, 1994). The shutting that retail stores should develop a positive, clear and favourable self-image to be an alternative choice in customers minds was drawn by Martineau (1958).Understanding the impact of product brand image, and how a retailer should be positioned, is extremely important in building the image of a retail store (Ailawadi et al. , 1995). Building the image of a retail store requires the identification of sufficiently different goods and services from those of their competitors, which tends to increase customers appreciation (Keller, 2003). There are lots of different attributes which significantly influence store image. These include the quality of merchandise and services, the tore appearance, the quality of the purchase service, the physiologic facilities, the behaviour and service of employees, the price levels, the depth and frequence of promotions and the store shopping atmosphere (Lindquist, 1974). Two basic dimensions can be used to analyse the store image. These dimensions are in-store atmosphere, and price and promotion (Ailawadi and Keller, 2004, p. 333). In-store atmosphere is one of the most important factors in the influence of customer perceptions of retail stores. Baker et al. 2002) pointed out that a stores shopping environment plays an extremely important role in providing information and shopping guides to customers, and is the key attribute in building store image. The in-store environment particularly physical features such as merchandise pricing, quality and store design and layout, as well as social service facilities such as employees service 7 and friendliness, as well as food-court service can influence customers economic and psychological shopping behaviours (Baker et al. , 2002).Certainly, store environment plays a major role in providing informational cues and signals to cus tomers or so the type of merchandise and service they should expect (Parker et al. , 2002). Merchandise quality and service quality are key variables in influencing store image (Parker et al. , 2002). This indicates that service attributes might be some of the most important factors in store image brand building, and deeply influence consumer purchase behaviours (Hicks, 2000). This leads to the creation of long-term sales revenue and profitability (Hicks, 2000).Furthermore, when different retailers stock similar products and brands, an appealing in-store atmosphere can play a critical role in building retailer brand image (Ailawadi and Keller, 2004). In this research, the in-store atmospheres of factory outlet stores and traditional department stores are compared, especially in basis of the physical characteristics and social service features. Two gain hypotheses need to be tested, as follow H3 The physical features (such as lighting, blood conditioning, washrooms, music, clear edliness, displays, etc. of traditional department stores are perceived to be better than those of factory outlet stores. H4 The in-store customer service features (such as friendliness, accommodatingness of salespeople, etc. ) of traditional department stores are perceived to be better than those of factory outlet stores. Price and promotion is another factor which directly affects customer perceptions of different types of retail stores and their images. A stores image in terms of price and promotion will be influenced by second-rate levels of prices, seasonal variations in prices, and the frequency and depth of promotions (Dickson and Sawyer, 1990).Different customers hold different perceptions of the store choice decision, according to the different images of stores. For example, large basket shoppers care every-day low price stores, while small basket shoppers prefer high-low promotional pricing stores (Bell and Lattin, 1998). conventional department stores tend to create a diverse customer and merchandise mix, service expectations and price point in order to design a desirable shopping experience (Coward, 2003, p. 27).For example, Coward (2003) suggested that 8 stores required to rethink convenient designs, return policies and commission policies in order to make their service more flexible and satisfying for customers. Parker et al. (2002) pointed out that there is an unbelievable interaction between price levels and customer perceptions of product brand images and store images. In particular, comparatively lower price levels would lead to negative customer perceptions of the retail stores (Parker et al. , 2002).To identify the different price and promotion images of retail stores, the hypotheses formulate are H5 The price and promotion features of products sold in traditional department stores are perceived as macrocosm higher than that of factory outlet stores. H6 There is a significant difference in customers store ratings (traditional depa rtment stores vs. factory outlet stores) across their demographics. RESEARCH METHODOLOGY The study was conducted in a mid-sized multicultural city with a range of local and world-wide retailers, including a number of traditional department stores and factory outlet stores. use Parker et al. s (2002) 19 items developed for measuring store characteristics, a questionnaire was constructed which careful preferences for generic stores. A five point scale was used in the questionnaire, anchored by 1=very poor and 5=very good. In addition, four items designed to measure the demographic characteristics of the respondents were also included. The data was dispassionate using intercept surveys. The respondents were selected equally at both types of retail outlets. The utile sample was 205 respondents. The sample profile is given in confuse I. data ANALYSIS AND FINDINGS Sample Profile The sample profile of 205 respondents is summarised in tabularise I below. There are 107 female and 98 m ale respondents in the survey. The majority of the respondents are less than forty-five years of age (approximately 71% of the total sample). Furthermore, the majority of the respondents had completed secondary school and completed at least one trade diploma, or certificate degree. Additionally, around 78% of the respondents earned 9 a per annum gross income (before tax) of over NZ$20,000. Respondents with a annually income over NZ$60,000 only comprised 9. % of the sample, with the majority having a yearly income of between NZ$20,000 and NZ$40,000. tabularise I Gender Sample Profile (N=205) Percentage womanly manlike Total Under 25yr 52. 2 47. 8 100 15. 6 25. 9 29. 8 18. 5 7. 8 2. 4 100 16. 6 30. 2 38. 5 14. 6 100 21. 5 45. 4 23. 9 9. 3 100 Demographics Formatted Swedish (Sweden) get on 25-34yr 35-44yr 45-54yr 55-64yr everywhere 64yr Total mellow enlighten Degree Education Trade Diploma/Certificate unmarried man Degree passe-partouts Degree Total Individual tax) yearly l ittle than NZ$20,000 NZ$20,001$40,000 NZ$40,001$60,000 Over NZ$60,000 Total ross income (before The reliability analysis was utilised to test whether the nineteen questions used in the questionnaire fit the factor analysis criteria. Using Cronbach alpha, we found that the nineteen items reliability for traditional department stores was . 889 and for factory outlet stores was . 880, both figures being at an acceptable level (Nunnally, 1978). Factors which Customers keep in mind while Shopping at Traditional Department Stores (TDS) and factory issuance Stores (FOS) sidestep II displays the factor analysis results for different scales of TDS in the questionnaire. quaternity factors were extracted through the factor analysis for TDS. Factor 1 concerns the in-store customer service characteristics of TDS. The variables relating to 10 customer service in the stores such as chummy, helpful, well-known(prenominal) with merchandise, exchanges, salespeoples pressure and enough salespeopl e are loaded more passing than other variables contained in Factor 1. Customers are especially concerned with whether the salespeople in traditional department stores are helpful.Within Factor 2, higher loadings are given to quality, wide selection, newest styles and fully stocked in regards to the products sold in the stores. These loadings indicate that Factor 2 largely displays concerns about the brand images of products sold in TDS. Table II Factor Analysis Results for Traditional Department Stores and pulverization sack Stores Traditional Department Stores Factor 1 In-store customer service features Factor 1 In-store customer service features Factory issuing Stores Variables Factor 2 Brand images of products Factor 2 Brand images of productsFactor 4 Price & promotion features Salespeople are friendly Salespeople are helpful Salespeople are familiar with merchandise Exchanges happily less(prenominal) pressure from salespeople abundant salespeople Quality is good Selection o f products is wide Styles of products are newest Stock level Store is attractive Store is not crowded Store is decipherable Store is neat Store is bright .600 . 746 . 637 . 571 . 601 . 580 . 449 . 763 . 771 . 702 . 458 . 545 . 763 . 745 . 672 .628 . 717 . 652 . 590 . 640 . 639 . 471 . 694 . 779 . 740 . 556 . 697 . 822 . 677 . 160Factor 4 Price & promotion features Factor 3 Physical features Factor 3 Physical features 11 Prices are good Value for price Markdowns are attractive Prices of products are marked understandably .655 . 810 . 468 . 360 .359 . 325 . 882 . 739 Customers shopping in TDS tend to pay more attention to whether products sold in the stores display a wide selection, with the newest styles and are fully stocked, rather than being concerned about their quality, as the loadings of these three variables are 0. 763, 0. 771 and 0. 702, individually, while the loading of quality is only 0. 49. Furthermore, Factor 3 shows significant loadings on the variables of attractive , not crowded, clean, neat and bright, at 0. 458, 0. 545, 0. 763, 0. 745 and 0. 672, respectively. Therefore, Factor 3 can be identified as containing the physical features of TDS. Specifically, the variables of clean and neat have much higher loadings than the others. This implies that these two factors significantly influence customer perceptions of the physical features of TDS. Factor 4 shows customers preconditions regarding the price and promotion features of products sold in TDS.Within the fourth factor, comparatively higher loadings are found for the variables of price, value for price, markdowns and clearly marked price. These loadings are 0. 655, 0. 810, 0. 468 and 0. 360, respectively. In particular, customers who prefer traditional department stores tended to give more consideration to whether they could gain reasonable value from their purchase. Table II also displays the factor analysis results for the different variables of the factory outlet stores (FOS) in the ques tionnaire. Again, a similar group of four factors is extracted through factor analysis.As in the TDS analysis, Factor 1 concerns the in-store customer service features of FOS. The variables regarding customer service have higher loadings than the other variables contained in Factor 1. Respondents were concerned as to whether the service offered by the salespeople is helpful or not, as it is given the highest loading, at 0. 717. The variables of quality, wide selection, newest styles and fully stocked, regarding the products sold in FOS are included in Factor 2. Their high loadings indicate that Factor 2 is related to measuring the brand images of the products 12 sold in the retail stores.The customers who shop in FOS tend to give more consideration as to whether the products sold in these stores are comparatively new styles and have satisfactory stock levels, as shown in the related high loadings of these two variables (0. 779 and 0. 740, respectively). These customers do not pay mu ch attention to the quality of the products sold in FOS, however, as this variables loading is only 0. 471. to a greater extentover, Factor 3s variables of attractive, not crowded, cleanliness, neat and bright have loadings of 0. 556, 0. 697, 0. 822, 0. 677 and 0. 160, respectively. Thus, Factor 3 can be identified as concerning the physical features of FOS. much specifically, customers tend to be concerned about the cleanliness of FOS, but few of them indicate that store brightness is important. Lastly, Factor 4 concerns the price and promotion features of the products sold in FOS. postgraduateer loadings are given to the price, reasonable price for value, markdowns and clearly marked price variables included in the fourth factor, at 0. 359, 0. 325, 0. 882 and 0. 739, respectively. Customers of factory outlet stores tend to be more concerned as to whether the markdowns of the products sold in the stores are attractive, and whether the prices of the products are clearly marked.Cust omer Store appreciation across Demographics To know if there is a trend to shop at factory outlet stores, we asked respondents which store they normally prefer to shop. To control for any possible response bias, we selected respondents equally at both types of retail outlets. As shown in Table III, the number of respondents who prefer TDS as their shopping place is 113, compared to 92 respondents choosing FOS as their preferred shopping place. This implies that a sizable number of customers prefer and/or are shopping at factory outlet stores.Table III oftenness analysis of store choice Frequency Traditional department stores Factory outlet stores 113 92 Percentage 55. 1 44. 9 13 Total 205 100. 0 Chi-square is next used in order to examine whether there are any significant effects from the different demographic characteristics on customer decision-making in regards to shopping choices. As shown in Table IV, significant differences exist in customers store choice as regards to thei r different genders, levels of didactics and gross yearly income, as the sexual intercourse P-values for these variables are 0. 001, 0. 000 and 0. 003, respectively.Nevertheless, there are no significant differences between customers shopping preferences in regard to age, as the P-value is 0. 690. Table IV Store choices and demographic characteristics Department Chi-squa re values 11. 343 Traditional Demographics Gender distaff Male Total 47 66 113 19 28 36 18 8 4 113 13 24 56 20 113 60 32 92 13 25 25 20 8 1 92 21 38 23 10 92 107 98 205 32 53 61 38 16 5 205 34 62 79 30 205 20. 223 . 000 3. 065 . 690 . 001 P-values Factory Total outlet Stores Stores Age Under 25yr 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr Total Formatted Swedish (Sweden) EducationHigh School Grad. Trade Diploma/Certificate Bachelor Degree Master Degree Total Individual yearly tax) gross income (before Less than NZ$20,000 NZ$20,001$40,000 NZ$40,001$60,000 Over NZ$60,000 Total 18 46 33 16 113 26 47 16 3 92 44 93 49 19 205 14. 256 . 003 14 More specifically, female respondents tend to prefer shopping in factory outlet stores, while nearly two-thirds of the male respondents prefer to shop in traditional department stores. Furthermore, customers with higher levels of education are more likely to choose traditional department stores as their shopping preference.As shown in Table IV, the number of customers who possess degrees and prefer shopping at traditional department stores is much higher than the number of those customers who are automatic to go to factory outlet stores. In addition, customers who earn a higher yearly income particularly those whose gross yearly income is between NZ$40,001 and NZ$60,000, or over NZ $60,000 tend to choose traditional department stores over factory outlet stores. These statistics are summarised in Table IV above. Therefore, H1 is supported on gender, education and income, but not on the demographic of age.Customer Perceptions of Brand Images of Products inte rchange in Traditional Department Stores and Factory takings Stores Table V below provides a comparison of the brand images and T-test results of products sold in traditional department stores and factory outlet stores. According to these results, H2 which holds that the brand images of products sold in TDS are higher than those of products sold in FOS is supported (see Table V). In other words, the overall mean rating of TDS branded products is significantly higher than that of FOS branded products, at 16. 02 and 9. 1, respectively. Specifically according to the analysis of the individual items of product features the respondents gave higher ratings for products sold in TDS (regarding their wide selection, newer styles and satisfactory stock levels), than for the products sold in FOS. There is a significant difference between the mean ratings of the branded products sold in TDS and FOS. Thus, the results from the data analysis show that there is a significant difference in the bra nd images of the products sold in traditional department stores and factory outlet stores.Customers tend to have higher, and more positive, images of branded products sold in traditional department stores than they do for branded products sold in factory outlet stores. 15 16 Table V Comparison of brand images of products sold in stores Factory Outlet Brand Images of Products Sold Traditional Stores in the stores Department Stores lowly SD call back SD P-values Quality is good Selection of products is wide Styles of products are newest Stock level 3. 88 4. 05 4. 02 4. 07 16. 02 .70 . 81 . 93 . 88 2. 69 3. 11 2. 53 2. 16 1. 91 9. 71 .77 . 89 . 87 . 94 2. 73 .000 . 000 . 00 . 000 . 000 Overall Customer Perceptions of Store Images of Traditional Department Stores and Factory Outlet Stores Table VI below provides a comparison of the store images and T-Test results of both types of retail stores. As shown, the respondents overall mean ratings, as well as their item-wise mean ratings of TDS physical features are significantly higher than for FOS, at 19. 87 and 16. 13, respectively. Therefore, H3 is accepted. That is, the physical features of traditional department stores are perceived as being better than those of the factory outlet stores.There is a significant difference between the mean ratings of the physical features of TDS and FOS. Thus, the respondents indicated that the physical characteristics of traditional department stores are more attractive than those of factory outlet stores. Further to this finding, the respondents overall mean ratings, as well as their item-wise mean ratings of TDS in-store customer service features are significantly higher than those for FOS, at 22. 18 and 20. 48, respectively. Therefore, H4 is accepted.That is, in-store customer service features of traditional department stores are perceived as being better than those of factory outlet stores in New Zealand Furthermore, H5 which holds that the price and promotion features of prod ucts sold in traditional department stores are perceived as being significantly higher than those of factory outlet stores is accepted, as indicated in Table V. The applicable overall mean ratings of TDS and FOS are 12. 70 and 16. 11, respectively. Also, the individual scale 17 items of price and promotion features are much higher for the factory outlet stores.This finding indicates that respondents consider the prices of products sold in FOS to be comparative lower than those sold in TDS and that the promotions offered by FOS are more attractive and satisfactory. Table VI Comparison of the features of traditional department stores (TDS) and factory outlet stores (FOS) Features Traditional Factory Outlet P-values Department Stores Stores SD consider SD Physical Features Mean Store is attractive . 000 . 94 3. 32 . 84 3. 63 Store is not crowded . 000 . 85 3. 25 . 81 3. 70 Store is clean . 000 . 83 3. 44 . 75 4. 10 Store is neat . 000 . 86 3. 49 . 73 4. 16 Store is bright . 00 . 70 2. 62 . 73 4. 28 Overall In-store Customer Service Features Salespeople are friendly Salespeople are helpful Salespeople are familiar with merchandise Exchanges happily Less pressure from salespeople Enough salespeople 19. 87 Mean 3. 86 3. 76 3. 77 3. 39 3. 48 3. 91 22. 18 Mean 2. 88 2. 82 3. 38 3. 63 12. 70 2. 96 SD . 67 . 73 . 86 . 84 . 81 . 85 3. 45 SD . 83 . 88 . 91 . 88 2. 71 16. 13 Mean 3. 59 3. 52 3. 42 3. 07 3. 36 3. 51 20. 48 Mean 3. 99 3. 66 4. 22 4. 24 16. 11 3. 10 SD . 82 . 82 . 88 . 87 . 87 . 96 3. 95 SD . 65 . 76 . 79 . 84 2. 26 .000 . 000 . 000 . 000 . 000 . 000 . 000 . 000Overall Price & Promotion Features of Products Sold in the stores Prices are good Value for price Markdowns are attractive Prices of products are marked clearly .000 . 000 . 000 . 000 . 000 Overall Customer Perceptions of Traditional Department Stores and Factory Outlet Stores across Demographics To investigate Objective 4 (to evaluate whether demographic characteristics are related to customer percep tions of traditional department stores and factory outlet stores), the analysis of variance and T-tests are used to determine whether there are significant relationships between customers store ratings and their demographic characteristics.Table sevensome 18 displays the customer perceptions of overall store ratings and their relevant four demographic characteristics. As shown in Table VII, only the income level shows significant mean differences in the ratings of TDS. In other words, customers concerns regarding the physical features and price and promotion features of TDS are highly influenced by their income level. More specifically, the higher the customers income is the more favourable will be the mean ratings for physical features and price and promotion of TDS.There is, however, no difference in the customer perceptions of TDS and FOS across gender, age groups and educational levels, as the respective P-values are all much higher than 0. 05. Therefore, H6 is supported only o n income, but not on gender and education levels. Table VII Store ratings and Demographic Characteristics Demographics Traditional Department Stores Physical Physical features features In-store customer service features In-store customer service features Mean SD Mean SDMean SD Mean SD Price & promotion features Price & promotion features Product features Product features Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Traditional Department Stores Factory Outlet Stores Formatted Mean SD Mean SD Mean SD Mean SD Gender Female Male P-value 3. 93 4. 02 . 682 . 54 . 64 3. 32 3. 12 . 059 . 60 . 63 3. 66 3. 74 . 307 . 58 . 57 3. 43 3. 40 . 832 . 64 . 68 3. 14 3. 22 . 636 . 70 . 65 4. 02 4. 03 . 635 . 58 . 56 3. 97 4. 04 . 734 . 65 . 69 2. 48 2. 7 . 476 . 74 . 61 Age Under 25yr 25-34yr 35-44yr 45-54yr 55-64yr Over 64yr 3. 88 3. 95 4. 05 3. 94 3. 86 4. 48 . 270 . 55 . 60 . 57 . 59 . 66 . 74 3. 23 3. 22 3. 20 3. 38 3. 14 2. 76 . 330 . 69 . 62 . 64 . 44 . 69 . 82 3. 82 3. 63 3. 71 3. 59 3. 85 3. 73 . 450 . 56 . 57 . 60 . 52 . 57 . 89 3. 47 3. 39 3. 38 3. 59 3. 28 2. 73 . 097 . 59 . 66 . 64 . 57 . 76 . 66 3. 24 2. 99 3. 31 3. 13 3. 27 3. 10 . 206 . 69 . 70 . 58 . 65 . 77 . 68 4. 09 3. 88 4. 05 4. 14 4. 09 3. 80 . 225 . 48 . 57 . 60 . 46 . 56 . 56 4. 13 3. 90 4. 09 3. 99 3. 86 3. 90 . 532 . 58 . 8 . 63 . 72 . 75 . 67 2. 54 2. 32 2. 44 2. 50 2. 44 2. 10 . 572 . 80 . 64 . 65 . 74 . 56 . 65 Formatted Swedish (Sweden) P-value 19 Education High School Grad. Diploma/Certificate Bachelor Degree Masters Degree 3. 96 3. 85 4. 02 4. 11 . 201 . 62 . 53 . 60 . 65 3. 38 3. 34 3. 11 3. 14 . 058 . 68 . 52 . 68 . 53 3. 59 3. 70 3. 76 3. 63 . 480 . 55 . 50 . 60 . 67 3. 51 3. 55 3. 26 3. 42 . 590 . 74 . 56 . 65 . 71 2. 94 3. 15 3. 31 3. 15 . 066 . 72 . 65 . 65 . 72 3. 99 4. 09 3. 97 4. 08 . 552 . 60 . 50 . 63 . 45 3. 83 3. 99 4. 10 4. 00 . 281 . 85 . 59 . 6 . 85 2. 57 2. 41 2. 30 2. 63 . 075 . 72 . 52 . 70 . 82 P- value Yearly gross income Less than NZ$20,000 NZ$20,001$40,000 NZ$40,001$60,000 Over NZ$60,000 3. 90 3. 87 4. 11 4. 27 .64 . 54 . 58 . 62 3. 22 3. 28 3. 19 3. 06 . 524 .66 . 63 . 59 . 55 3. 67 3. 66 3. 78 3. 74 . 674 .56 . 59 . 56 . 58 3. 44 3. 48 3. 29 3. 34 . 413 .68 . 67 . 63 . 65 2. 88 3. 20 3. 30 3. 43 .71 . 67 . 59 . 68 4. 02 4. 05 4. 01 3. 99 . 960 .57 . 57 . 53 . 66 3. 85 3. 97 4. 12 4. 28 . 060 .76 . 65 . 62 . 58 2. 61 2. 38 2. 31 2. 55 . 130 .75 . 61 . 63 . 93 P-value .010 .005CONCLUSIONS AND IMPLICATIONS The findings on customer store preference across demographics show that customers with different genders, levels of education and gross yearly incomes tend to make different store choices, however, they perceive traditional department stores and factory outlet stores similarly regardless of their age. More specifically, male customers regard traditional department stores offering famous branded products as their first choice, however, female customers are willing to shop at factory outlet stores in order to seek branded products with comparatively lower prices.Female customers tend to be more price oriented and price sensitive. Furthermore, the higher the level of education customers have the more likely they are to choose traditional department stores as their shopping preference. This finding indicates that more highly educated customers tend to have greater concerns in regards to the shopping environment and atmosphere offered by traditional department stores. In addition, customers earning higher yearly incomes are more willing to choose traditional department stores over factory outlet stores.In regards to customer perceptions of brand images of products sold in traditional department stores and factory outlet stores, there is a significant difference in the brand images of products sold across these stores. The brand images of products sold in traditional department stores are perceived more positively than are those of products 20 sold in fac tory outlet stores. Customers perceive traditional department stores as offering wider and more satisfactory selections of various types of merchandise in comparison to factory outlet stores.The stock levels in traditional department stores are also seen as being superior. Obviously, the wider selection and greater breadth of different branded products offered in the stores, the greater the number of customers who will be more attracted to TDS. In regard to customer perceptions of store images of traditional department stores and factory outlet stores, there is a significant difference between traditional department stores and factory outlet stores.Firstly, respondents find out that the physical features of traditional department stores are more satisfactory, comfortable and attractive than those of the factory outlet stores. Customers believe that they will enjoy shopping at traditional department stores, as they provide them with a more comfortable in-store shopping environment a nd atmosphere. Secondly, there are significant differences in the in-store customer service features of traditional department stores and factory outlet stores. Customers believe that traditional department stores provide a higher quality of in-store customer services.TDS are also seen as having better exchange policies and an adequate number of salespeople offering to meet customers different wants and needs. Therefore, traditional department stores do have distinctive advantages in terms of their in-store customer services, in comparison to those offered by factory outlet stores. Thirdly, traditional department stores have much higher prices when compared with factory outlet stores. This is due to their different marketing orientation and segmentation.Customers tend to be attracted by the prices and value of products sold in factory outlet stores. Schneiderman (1998) found in his research that customers believed that factory outlet stores could provide greater value for their mone y than did traditional department stores. Results on the examination of customer perceptions of traditional department stores and factory outlet stores across demographics indicate that only income levels have any significant effects on customers mean ratings of traditional department stores, but that 21 o significant differences exist across the variables of gender, age and education. This means that customer perceptions of physical features and price and promotion features of traditional department stores are highly influenced by their different income levels. Customers with higher incomes tend to be attracted to physical features and price and promotion features of traditional department stores. They are implicated in shopping in a comfortable environment and seeking famous and fashionable branded products, rather than being price sensitive, bargain seeking customers.The implications of these research findings include the point that traditional department stores should maintain their competitive positions by continuing to offer good physical facilities and environments, satisfactory in-store customer services and famous branded products, in order to maintain and attract more customers. This will also help to maintain their market share and gain competitive advantage against the intense competition created by factory outlet stores. Customers perceive that the prices offered in traditional department stores are much higher than those of factory outlet stores.Therefore, department stores are facing a big challenge from factory outlet stores in terms of price and promotion strategies. As a result, they need to assess their value positions and adapt more reasonable prices to provide satisfactory value for customers. clear identifying and dividing their current and potential customers into different target segments is necessary for retailers in context of use differing price strategies. During sales seasons, more attractive promotion of branded products could be undertaken in traditional department stores.Certainly, customers tend to purchase more when there are large sales and attractive promotions of branded products in traditional department stores. In order to target appropriate segments, traditional department stores need to identify what relevant level of branded products should be sold and assign these products reasonable prices in stores across different ages, genders, and levels of education and income. Traditional department retail stores also need to provide more selection characteristics (in terms of their branded products adapting to the newest styles frequently and maintain good stocks level), in order to 22 eep their competitive advantages through being perceived as offering more positive brand images of the products sold in their stores. Furthermore, strategic alliances between different traditional department stores and their distributors could also be developed. In such an alliance, competitive advantages (such as bette r offerings of quality in-store services and providing similar branded products with reasonable prices and promotions) could be shared by traditional department stores, , which should reduce costs for the alliance partners.Regarding implications for factory outlet stores, they need to learn from the comparative disadvantages of traditional department stores and engage in enhancing their current competitive positions on price and promotion offerings, in order to improve customer perceptions of their stores. Maintaining their comparatively lower prices and providing frequent promotions of branded products is one of the most useful price and promotion strategies for factory outlet stores in maintaining and enhancing their competitive positions in this area.Meanwhile, manufacturers which utilise factory outlet stores need to control the values of the products through assessments. As a result, customers who are not only price sensitive, but are also value seeking will be satisfied with t he prices and promotion features of the products sold in the factory outlet stores. It is extremely important for manufacturers to directly improve their products brand images. Widening the selection of characteristics, improving stock levels and offering positive branded products in the stores are ways which this could be achieved.Nowadays, factory outlet stores are no longer established for the sale of seconds or comparatively lower quality products with lower prices. Therefore, they need to build more positive brand images for the products sold in the stores instead of being perceived as discount stores. They need to invest more in the stores physical facilities to offer a better shopping environment and atmosphere. As a result, however, prices may increase significantly due to the costs of such upgrading, import that such a strategy might be risky (Parker et al. , 2002). 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