Factory outlet stores represent an integral part of a dual distribution channel strategy, in which products are sold through two different channels: (1) factory outlets and (2) traditional store formats. However, there are potential risks, including cannibalization and brand dilution. Our research considers perceived quality of the item from each channel. Through two experimental studies, our findings suggest that without any pricing information, consumers spontaneously assign products from outlet channels to be of lower subjective quality than those from the traditional channel. However, when both products in each channel are discounted, then this reduction in quality perception is attenuated, following the belief in the price-quality relationship.

While many marketing researchers conceptualize the binary split between luxury and non-luxury consumers, this paper takes the more refined approach of the heterogenization of the luxury consumer segment by exploring the progressive stages of luxury consumer maturity, reflected by diverging luxury consumption behavior. An argument for a progression of maturity is presented here in terms of making purchases of well-known luxury brands (e.g., Louis Vuitton or Prada) versus more obscure luxury brands (e.g., Marni or Ann Demeulemeester). As brands continue to be acquired by conglomerates (e.g. LVMH, Kering Group, Richemont, etc.), a perspective from luxury holding companies was a logical starting point. In each holding company’s portfolio, brands represent different positions, with the well-known brands occupying the flagship positions within the conglomerate. These brands capitalize on overt usage of branding and logo (which we term as Stage 1 brands). More obscure companies within the major conglomerates or independent fashion houses tend to rely less on branding and have a greater focus on savoir faire and technical applications of material and cut, requiring a higher degree of fashion knowledge (termed here as Stage 3 brands). Stage 2 brands represent the cohort of fashion houses that exist as non-flagship brands within the context of a larger conglomerate. To categorize each participant based on their shopping patterns, we calculate a metric termed here as a “maturity ratio” that falls between 1 and 3 and is used to assign each consumer to a stage. Therefore, we put forth the following hypotheses: Fashion knowledge is the mediating variable that drives progression of consumer maturity. That is, the higher a consumer’s knowledge about fashion, the more mature and discriminating the consumer’s tastes and shopping patterns will be [H1]. Materialism works to encourage consumers to learn more about fashion and therefore have higher fashion knowledge [H2]. A high consumer need-for-uniqueness (CNFU) will lead consumers to learn more about fashion in order to discover ways to stand out from the norm [H3]. Consumers who are self-conscious will have high fashion knowledge due to the pressures of social anxiety to have a socially acceptable outward appearance [H4].