Customer perceptions of factory outlet stores versus traditional department stores

Abstract

Purpose

The purpose of this paper is to compare customers' perceptions of factory outlet stores (FOS) versus traditional department stores (TDS), and their purchasing preferences, related to demographic profiles.

Design/methodology/approach

Data were collected by a mall intercept survey from 205 shoppers in a New Zealand city across a range of demographics. Factor analysis measured their perceptions of factory outlets and TDS with respect to a number of variables, and one‐way ANOVA and t‐tests were used to investigate the nature and significance of the observed differences.

Findings

Four key factors exert critical influences on customers' perceptions: in‐store customer service, brand images, physical features, and price and promotion. FOS are perceived to have comparatively lower prices and more attractive promotions than TDS, which in turn have competitive advantages in terms of the other three factors. Gender, education and income also affect store choice, but age has no discernible effect on perceptions of the two types of outlet.

Research limitations/implications

TDS should maintain their competitive position by continuing to offer attractive physical features, good in‐store customer service and reputable branded products, while FOS need to learn from the competitive disadvantage of TDS and enhance their current perceived competitiveness on price and promotions.

Originality/value

Previous research studies have tended to pay little attention to demographics and to focus on large economies; this paper addresses both deficiencies.

Citation

Shergill, G.S. and Chen, Y. (2008), "Customer perceptions of factory outlet stores versus traditional department stores", Marketing Intelligence & Planning, Vol. 26 No. 1, pp. 77-96. https://doi.org/10.1108/02634500810847165