A Study on Selection Attributes of Luxury Goods in Online Stores of MZ Generation: Focusing on the Moderating Effects of Consumer Value

Abstract

Purpose: This research aims to study the selection attributes influencing the purchasing decisions of the MZ generation in online luxury stores and explores the moderating effects of consumer value. The research aims to validate the impact of reasonable pricing, brand reliability, product variety, comprehensive product information, and user-friendly interfaces on customers' decision to purchase products from online luxury stores. Research design, data and methodology: A survey was conducted with 101 participants, and data analysis included exploratory and confirmatory factor analysis, as well as covariance structure model analysis. Results: The findings reveal that brand trust, product variety, and information sufficiency significantly influence brand affect, which in turn influences purchase intention. Additionally, the study identifies that consumers prioritizing hedonic value are more influenced by brand trust and information, while those prioritizing utilitarian value are more responsive to factors like reasonable price, product variety, and ease of use. Conclusions: The study provides insights into the preferences and behaviors of the MZ generation, highlighting their digital proficiency, mobile-centric lifestyle, desire for product variety, price-consciousness, social media influence, and the availability of personalized shopping experiences as factors contributing to their preference for online luxury stores. These findings contribute to understanding consumer behavior and decision-making processes in the context of online luxury shopping.

1. Introduction

There has been a seismic shift in the luxury goods market, which has been monopolized by department stores, outlets, and duty-free shops. Of course, there are still people who visit department stores to buy luxury goods, but the number of people who buy luxury goods costing millions of won through online luxury platforms is increasing rapidly. In particular, the MZ generation (Millennials + Generation Z) is leading this change. There are several reasons why online platforms are becoming the primary channel for luxury goods consumption (Lee & Kwon, 2022).

First, parallel revenues increase price competitiveness. The biggest advantage of online luxury platforms is their price competitiveness, with an average discount of 10-20% compared to department stores. The biggest factor that allows them to sell at discounted prices is their distribution structure. There are three main types of distribution methods for luxury platforms in Korea: 1) contracting with European luxury boutiques that own brand distributors, 2) entering the open market of domestic parallel import sellers, and 3) sourcing from overseas retailers. For example, more than 60% of the distribution of global luxury fashion brands worth $40 trillion is done through boutiques, which are wholesalers of luxury brands. Boutiques purchase luxury goods at a much lower price than regular stores and then supply them to domestic parallel importers or online platforms. This distribution method allows for lower online prices. If you coordinate the timing of discounts by luxury brands and platforms, you can save more than 20% on the basic price. As the sales of the "big three" Korean online luxury platforms, including Balan, Trenby, and Mustit, increase, their purchasing power improves, which can lead to higher discount rates (Jain, 2022).

Second, they have more inventory than department stores. It's been said that you can expect to be stampeded into a store for six months before you can get the product you want from a luxury brand. This means that it's not easy to get the most popular products. This is due to the limited availability and high demand. Online stores are relatively well-stocked and have a wider variety of brands and products than local boutiques in Europe. Even Chanel, Hermes, and Rolex, which are often considered unattainable, are relatively easy to find at resale prices. This means that Gen MZ shoppers no longer distinguish between online and offline to get the products they want (Son et al., 2023).

Third, in order to receive after-sales service (AS) for some luxury brands, you have to line up at department stores early in the morning. It is a reality in Korea that you have to queue up in an 'open run' to receive after-sales service for products you paid for. As a result, they are often labeled as "unfriendly luxury goods.

Online platforms, on the other hand, provide everything from payment, shipping, returns, and refunds conveniently in the app. The advantage is that customers can have the same experience as regular shopping, including live consultation with the customer center. But online platforms don't just have advantages over brick-and-mortar stores. One of the biggest challenges for online luxury platforms is the authenticity issue. Platforms are stepping up their efforts to weed out fakes with their own inspection teams and offering 200% compensation if they are found. However, the occasional fake is still a source of frustration for consumers. In order to catch the fake controversy, companies have set up inspection teams in Europe and are strengthening their domestic monitoring by being more stringent on the conditions for parallel importers to enter the market (Liao & Yang, 2020).

The objective of this research is to validate that reasonable pricing, brand reliability, a diverse range of product options, comprehensive product information, and user-friendly interface can be regarded as optional factors that influence customers' decision to purchase products from online luxury stores, as suggested by prior studies. By examining the findings of previous researchers, it is inferred that these attributes related to the selection of online luxury brand stores will have an impact on the brand's overall effect, ultimately influencing customers' purchase intentions.

2. Theoretical Background

2.1. Reasonable Price

Luxury brands approach pricing differently than other industries. Rather than providing a rational explanation for the price, luxury products symbolize intangible attributes such as a rich history, legendary status, and the prestige associated with the brand. The primary goal of luxury managers is to build a customer base that values these qualities over price considerations. By not prominently displaying prices, luxury brands aim to create a clientele that becomes passionate and loyal supporters of the brand. This strategy is believed to be more effective in fostering brand devotion and reducing price sensitivity among consumers. (Kapferer et al., 2014).

2.2. Brand Trust

Brand trust refers to the belief held by customers that a brand will fulfill their needs and aspirations, leading to repeated purchases and the establishment of a relationship between the brand and the consumer. When customers have confidence in a product, they are more likely to trust the brand. Gupta and Ramachandran (2021) argue that building brand trust requires a deliberate approach, and it is crucial for shaping an individual's mindset within a corporate relationship (Ozdemir et al., 2020).

2.3. Product Variety

While fashion trends are important in the luxury goods market, successful luxury brands often balance their offerings by combining riskier and perishable ready-to-wear items with the sales of less fashion-intensive products such as leather accessories in timeless designs and classic colors. For example, a Gucci store may showcase its latest fashion accessories in the display window but generate most of its sales from black and brown handbags and conservative silk ties. Maintaining a balanced product portfolio is crucial for profitability. Ready-to-wear items typically account for less than 25 percent of sales for most luxury brands, with the majority of revenue coming from fragrances, leather accessories, and home furnishings. (Nueno & Quelch, 1998).

2.4. Information Sufficiency

Luxury brands pose fresh challenges for marketing strategists as they transition from being exclusive to wealthy and affluent consumers to becoming more widely available in the mass market. To maintain their appeal to luxury consumers, these brands must continuously seek innovative methods to meet their evolving demands. Establishing effective communication and fostering strong connections with luxury consumers through brand-related experiences are crucial. In this context, the accuracy and reliability of information related to luxury brands have gained significant importance (Atwal & Williams, 2017).

2.5. Easy Use

A concept, of ease of use, introduced in Davis' (1989) Technology Acceptance Model (TAM), refers to the perception that utilizing a specific system requires minimal exertion. Social media platforms like Facebook and Instagram are commonly regarded as user-friendly, simplifying user engagement by minimizing cognitive, emotional, and behavioral efforts. When comparing a brand's website and Instagram page, the experience on Instagram tends to be more captivating. Navigating through Instagram is effortless, enabling users to easily browse through products, observe how they are worn, and gain an overall visual understanding, unlike websites. (Bazi et al., 2020).

2.6. Brand Affect

Brand affect refers to a brand's ability to elicit positive emotional responses from customers (Chaudhuri & Holbrook, 2001). This concept is particularly important in the context of luxury brands, where emotions play a significant role (Pozharliev et al., 2015). Engaging with fan pages and online communities can enhance customers' familiarity with a brand and strengthen their emotional connection to it (Kang et al., 2015). This is in line with construal level theory, which suggests that repeated interactions with a luxury brand through fan page participation reduce the psychological distance between followers and the brand. As the psychological distance decreases, customers develop a stronger personal connection with the brand, leading to reinforced emotional bonds (Jahn & Kunz, 2014).

2.7. Purchase Intention

Purchase intention refers to the level of inclination individuals have in their minds to buy a specific product or brand. It is seen as a significant objective of brand engagement on social media. The impact of social capital theory on purchase intention has been examined as a distinct concept (Cha & Seo, 2019; Cha, 2019) and is recognized as a valuable resource for enhancing consumer purchase intention (Tajvidi et al., 2020). Within a virtual community, elements such as familiarity in the community's structure, perceived similarity among members, and trust in relationships can contribute to consumers' sense of belonging online and subsequently affect their purchasing choices (Lu et al., 2016). Based on the above studies, the following hypotheses are proposed.

H1: The reasonable price of the online luxury mall for the MZ generation will positively influence brand affect.

H2: The brand trust of the MZ generation's online luxury mall will positively influence brand affect.

H3: The product variety of the MZ generation's online luxury mall will positively influence brand affect.

H4: The information sufficiency of the online luxury mall for the MZ generation will positively influence brand affect.

H5: The ease of use of online luxury malls for the MZ generation will positively influence brand affect.

H6: Brand effect of the MZ generation's online luxury mall will positively influence purchase intention.

2.8. Moderating Effect of Consumption Value

2.8.1. Hedonic Value

The hedonic motive, referred to as perceived pleasure, significantly influences the adoption of products (Venkatesh et al., 2012). Studies have indicated that individuals are more inclined to adopt a specific technology or service if they find it enjoyable. Consumer research has demonstrated that hedonic motives drive individuals to seek pleasurable and festive experiences in their shopping activities, which can provide entertainment and emotional benefits (Cha, 2020; Bazi et al., 2020).

2.8.2. Utilitarian Value

Utilitarian or functional value refers to the extent to which a product meets desired characteristics, usefulness, or performs a specific function (Tynan et al., 2010). While hedonic consumption focuses on providing emotional experiences, utilitarianism emphasizes rational purposes. Consumers of luxury products expect them to be usable, of high quality, and unique enough to fulfill their desire for differentiation. The usability of a product is considered one of the key factors influencing purchasing decisions (Han et al., 2000). Luxury goods are distinguished by their superior product quality, craftsmanship, and performance compared to non-luxury goods (Vigneron & Johnson, 2004). Based on the above studies, the following hypotheses are proposed.

H7: When the reasonable price of the MZ generation's online luxury mall influences brand effect, consumer's consumption value will have a moderating effect.

H8: When the brand trust of the MZ generation's online luxury mall influences brand effect, consumer's consumption value will have a moderating effect.

H9: When the product variety of the MZ generation's online luxury mall influences brand effect, consumer's consumption value will have a moderating effect.

H10: When the information sufficiency of the MZ generation's online luxury mall influences brand effect, consumer's consumption value will have a moderating effect.

H11: When the ease of use of MZ generation's online luxury malls influences brand effect, consumer's consumption value will have a moderating effect.

Figure 1: Study Model

3. Methodolog

The questionnaire items used in previous studies were adjusted to align with the specific research goals of the current study. From March 1 to April 25, 2023, the questionnaires were administered through online survey platforms such as Google survey and Naver survey. A total of 128 questionnaires were collected, and after excluding 27 incomplete or unreliable responses, 101 questionnaires remained for further empirical analysis.

In terms of the analysis methodology adopted for this study, several steps were undertaken. Initially, exploratory factor analysis was conducted using Amos 22.0 to evaluate the convergence validity and discriminant validity of the measured variables. In this process, any factors that did not meet the necessary criteria were eliminated. Subsequently, a confirmatory factor analysis was performed again using Amos 26.0. Finally, a covariance structure model analysis was utilized as a statistical method to test the hypotheses put forward in the study.

Out of the total 101 participants, 38 (38%) were identified as males, while 63 (62%) were females. The majority of respondents fell within the age groups of 30s (42%) and 40s (28%). In terms of their professions, the largest proportion consisted of office workers (32%) and business persons (27%).

Table 1: Demographic Characteristics of the Respondents

4. Results

4.1. Evaluate Metrics

The initial step involved conducting validity analyses on the constitutional concept items, as measured through multiple items. To assess reliability and validity, exploratory factor analysis was performed, and Cronbach's alpha coefficient was examined. Principal Component Analysis was utilized for factor extraction, with factors extracted based on an Eigenvalue of 1. To rotate the factors, the VARIMAX method was applied (Shrestha, 2021). The analysis results can be found in Table 2 and Table 3.

Table 2: Exploratory Factor Analysis

RePri = Reasonable Price, BrTru= Brand Trust, PrVar = Product Variety, InSuf = Information Sufficiency, EaUse= Easy Use

Table 3: Exploratory Factor Analysis

The reliability of the measures used in the study was confirmed, as shown in Table 2 and Table 3, where all Cronbach's alpha coefficients were above 0.9, as recommended by Nunnally et al. (1967).

The exploratory factor analysis indicated the presence of discriminant validity and convergence validity, and the validity factor was analyzed using Amos 20.0.

Regarding the measurement model, the results in Table 4 revealed that the chi-square value was statistically significant (p = 0.00). However, it is important to consider that the chi-square value can be influenced by factors such as model complexity and sample size. Therefore, additional evaluation of the model fit was conducted using the NFI (normed fit index) and CFI (comparative fit index) (Bearden et al., 1982; Bagozzi & Yi, 1988). The overall model fit was deemed satisfactory, with NFI = 0.945, CFI = 0.961, and RMSEA = 0.074.

Table 4: The Result of Confirmatory Factor Analysis

Chi-square = 1154.763 (p=0.001, df=449)

RePri = Reasonable Price, BrTru = Brand Trust, PrVar = Product Variety, InSuf = Information Sufficiency, EaUse = Easy Use, BrAff = Brand Affect, PuInt = Purchase Intention

Furthermore, the composite reliability (CR) and average variance extracted (AVE) met the criteria proposed by Bagozzi and Yi (1988). The CR values exceeded 0.6, and the AVE values exceeded 0.5, indicating good reliability and internal consistency. Additionally, the loadings were statistically significant at a level of p < 0.01, confirming the convergent validity of the measurement model.

The results of the confirmatory factor analysis can be found in Table 4. In order to evaluate the discriminant validity of each factor and ensure that they measure distinct constructs, the square root of the average variance extracted(AVE) was calculated. As demonstrated in Table 5, the square root of AVE values exceeds 0.5, indicating that they are greater than the correlation values outside the diagonal line in the corresponding rows and columns. This confirms the validity in distinguishing between different conceptual constructs, as evidenced by the differences in the measurement results.

Table 5: The Result of Discriminant Validity through Correlation Analysis

The values presented at the diagonal are the square root of AVE RePri = Reasonable Price, BrTru = Brand Trust, PrVar = Product Variety, InSuf = Information Sufficiency, EaUse = Easy Use, BrAff = Brand Affect, PuInt = Purchase Intention

4.2. Verification of the Hypothesis

The research hypotheses were analyzed using Amos 26.0. The fitness index of the study model was deemed satisfactory, with a chi-square value of 512.550 (df = 283, p = 0.001), IFI = 0.845, CFI = 0.841, and RMSEA = 0.080. The results of testing the hypotheses for the main effects, from Hypothesis 1 to Hypothesis 6, are presented in Table 6.

Table 6: Results of Research Hypothesis

* p < 0.05, ** p < 0.01, *** p < 0.001

Through the hypothesis testing on the main effects, it was found that brand trust, product variety, and information sufficiency significantly influenced brand effect. Furthermore, the path coefficient from brand effect to purchase intention was also found to be significant. The findings from the analysis are depicted in Figure 2.

Figure 2: Results of research hypothesis

4.3. The Moderating Effect of Consumption Value Verification

To investigate the impact of consumer consumption value on luxury online malls, the study initially divided the total sample (n = 101) into two groups: hedonic value and utilitarian value. The path coefficients between these groups were compared. Based on the average values, participants were further categorized into four groups: high hedonic, low hedonic (utilitarian), high utilitarian, and low utilitarian (hedonic) groups. The consumption value of luxury online malls was classified into hedonic value and utilitarian value. The reliability of the measurement scales was assessed using Cronbach's alpha, yielding values of 0.871 for hedonic consumption value and 0.921 for utilitarian consumption value. Consequently, consumers who prioritize hedonic value tend to be more influenced by brand trust and information when selecting luxury products from online malls. On the other hand, consumers who prioritize utilitarian value are more influenced by factors such as reasonable price, product variety, and ease of use of the online mall. This suggests that individuals in the hedonic groups are more responsive to the impact of online mall attributes on brand affect in the context of luxury products.

Table 7: Comparison of Consumption Value Groups

* p < 0.05, ** p < 0.01, *** p < 0.001

5. Conclusion

Hypothesis H1, which suggests that a reasonable price has a positive effect on brand affect, was rejected with a path coefficient of 0.265 at a significance level of 1.512. This implies that a reasonable price does not significantly impact brand affect. Hypothesis H2, which proposes that brand trust has a positive effect on brand affect, was supported with a path coefficient of 0.255 at a significance level of 2.106. This indicates that brand trust plays a significant role in influencing brand affect. Hypothesis H3 states that product variety has a positive effect on brand affect, and this hypothesis was supported with a path coefficient of 0.352 at a significance level of 2.959. The findings suggest that a diverse range of products positively influences brand affect. Similarly, Hypothesis H4, which suggests that information sufficiency positively affects brand affect, received support with a path coefficient of 0.375 at a significance level of 3.204. This indicates that having sufficient information about the brand contributes to a positive brand affect. Hypothesis H5, which proposes that easy use has a positive effect on brand affect, was rejected with a path coefficient of 0.176 at a significance level of 1.839. This suggests that the ease of use of a product or service does not significantly impact brand affect. Lastly, Hypothesis H6 suggests that brand affect has a positive effect on purchase intention. This hypothesis was strongly supported with a path coefficient of 0.722 at a significance level of 4.208. These results indicate that brand affect strongly influences consumers' intention to make a purchase. Overall, these findings shed light on the relationships between different factors and their impact on brand affect and purchase intention, highlighting the importance of brand trust, product variety, and information sufficiency in shaping consumer behavior and decision-making processes.

The findings provide insights into the presence of moderation effects in the relationship between functional consumption value and emotional consumption value. The comparison of standardized regression coefficients reveals how the impact of independent variables differs based on the type of consumption value. When considering the effect of a reasonable price, the results indicate that it has a slightly stronger influence on utilitarian value compared to hedonic value. However, this difference is not statistically significant, suggesting that the type of consumption value does not significantly moderate the relationship between reasonable price and brand affect. On the other hand, brand trust demonstrates a significant moderation effect. The analysis shows that brand trust has a greater positive influence on hedonic value compared to utilitarian value. This implies that consumers who prioritize hedonic value are more influenced by brand trust in their perceptions and evaluations. The statistical analysis confirms this difference to be significant, suggesting that the type of consumption value plays a role in moderating the impact of brand trust on brand affect. In terms of product variety, the results indicate a slightly stronger effect on utilitarian value than on hedonic value. However, similar to the reasonable price, this difference is not statistically significant, implying that the type of consumption value does not significantly moderate the relationship between product variety and brand affect. Information sufficiency also shows a slightly stronger influence on hedonic value compared to utilitarian value.

Nevertheless, the statistical analysis reveals that this difference is not statistically significant, indicating that the type of consumption value does not significantly moderate the relationship between information sufficiency and brand affect. Regarding easy use, the findings suggest that it has a slightly stronger impact on utilitarian value compared to hedonic value. However, similar to the previous variables, this difference is not statistically significant, indicating that the type of consumption value does not significantly moderate the relationship between easy use and brand affect. In conclusion, while no significant moderation effects were observed for reasonable price, product variety, information sufficiency, and easy use, brand trust demonstrates a notable moderation effect. The findings highlight that brand trust has a stronger positive influence on hedonic value compared to utilitarian value, indicating that the type of consumption value plays a role in shaping the impact of brand trust on brand affect.

6. Implications

The MZ generation, comprising individuals born between the mid-1990s and early 2010s, has demonstrated a higher propensity for using online luxury malls compared to previous generations. This increased frequency can be attributed to several factors that have shaped the unique shopping behaviors and preferences of this generation. One significant reason behind the MZ generation's preference for online luxury malls lies in their innate digital proficiency. Unlike previous generations, the MZ cohort has grown up immersed in a world defined by technology and the internet.

From an early age, they have become well-versed in navigating digital platforms, making online shopping an intuitive and natural choice for them. Their familiarity with technology enables them to effortlessly browse online luxury malls, explore product offerings, and make purchases with ease (Gwak & Lee, 2022). Moreover, the MZ generation's mobile-centric lifestyle has further contributed to their increased usage of online luxury malls. This generation is highly connected through smartphones and tablets, relying on these devices for various aspects of their daily lives.

Online luxury malls, designed with mobile-friendly interfaces and often accompanied by dedicated apps, align perfectly with the MZ generation's preferences for seamless and on-the-go experiences. The ability to access luxury products at their fingertips, no matter the time or location, greatly appeals to their desire for convenience and instant gratification. In addition to convenience, the wide range of products available on online luxury malls is another enticing factor for the MZ generation. Unlike traditional brick-and-mortar stores with limited physical space, online platforms can showcase a vast array of luxury items from different brands and designers. This abundance of options caters to the MZ generation's inclination for individuality and self-expression (Chisholm, 2006).

They can explore various styles, trends, and brands, enabling them to curate their unique identities through the luxury products they choose. The MZ generation's affinity for online luxury malls is also influenced by their price-conscious nature. Growing up in a time marked by economic uncertainty, they have developed a keen awareness of value for money. Online luxury malls provide them with price transparency and the ability to easily compare prices, discounts, and promotions across different platforms. This empowers them to make informed purchasing decisions, ensuring they get the best possible deal on their luxury purchases. Furthermore, the MZ generation's strong reliance on social media plays a significant role in their frequent use of online luxury malls. Social media platforms, such as Instagram and YouTube, are integral parts of their lives, shaping their aspirations, preferences, and purchasing behaviors. Influencers and peer recommendations on these platforms often highlight luxury products and endorse online luxury malls, exerting a significant impact on the MZ generation's shopping choices. The social nature of online luxury malls, where customers can share their experiences, reviews, and recommendations, resonates with the MZ generation's desire for social validation and community engagement (Kim & Sullivan, 2019).

Lastly, online luxury malls offer a range of features that cater to the MZ generation's need for personalization and customization. These platforms utilize data-driven technologies to personalize the shopping experience, recommending products based on individual preferences, past purchases, and browsing history. This tailored approach enhances the MZ generation's shopping journey, making it more engaging, relevant, and enjoyable. In conclusion, the MZ generation's frequent usage of online luxury malls is a result of their innate digital proficiency, mobile-centric lifestyle, desire for a wide product range, price-consciousness, social media influence, and the availability of personalized shopping experiences. These factors have collectively contributed to a shift in their shopping behaviors, making online luxury malls their go-to destinations for accessing and purchasing luxury products.