Customer Perceptions of Factory Outlet Stores vs. Traditional Department Stores

CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES

Dr. G. S. Shergill* Department of Commerce, Massey University, Albany Campus, Private Bag 102 904 NSMC, Auckland, NEW ZEALAND Ph: 0064 9 414 0800 x9466, Email: [e-mail]

&

Y. Chen Department of Commerce, Massey University, Auckland, NEW ZEALAND, Email: [e-mail]

CUSTOMER PERCEPTIONS OF FACTORY OUTLET STORES VERSUS TRADITIONAL DEPARTMENT STORES

Abstract
This paper examines customers’ perceptions of two different types of retail stores; factory outlet stores and traditional department stores; as well as their purchasing preferences. In addition, the paper compares these preferences across demographics. It explores four critical factors which significantly influence customers’ perceptions of both types of retail store. Findings are base on a mall intercept survey with 205 respondents across a range of demographics. The results indicate that factory outlet stores are perceived as having comparatively lower prices and attractive promotions in comparison to traditional department stores, while traditional department stores have competitive advantages in terms of the other three factors. Also it is found that different demographic characteristics play an important role in influencing differences in customer perceptions regarding the different types of stores. The main implication of these findings is that factory outlet stores are perceived favourably and that they need to build more positive marketing strategies accordingly. Keywords- Factory outlet stores, Traditional department stores, Customer preferences.

Nowadays, an increasing number of customers choose factory outlet stores as their alternative shopping places, rather than continuing to shop at traditional department stores. Since customer loyalty is becoming more important for marketers in achieving sales performance goals (Kulpa, 1998), this increase in the use of factory outlet

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