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CONSUMER ATTITUDES TOWARD TRANSPARENT RETAIL PRACTICES

by
ELISABETH MARIETTI

RESEARCH PROJECT

Submitted to Dr. Rayneld R. Johnson

In partial fulfillment of the requirements
For AFA 7850
Fashion Design & Merchandising
Wayne State University
Oct., 2015
Table of Contents:

1 Abstract p. 2
2 Introduction p. 3
3 Review of Literature p. 4
a Cusp Generation; A mix of Millennial & Generation Z

4
5
6
7
8
9

Consumption Behaviors p. 4
i Cusp: Peer Affirmation p. 5
ii Cusp: Value Oriented p. 6
iii Cusp: Brand Engagement p. 6
iv Cusp: Corporate Responsibility p. 7
b Transparent Labor Practices p. 7
c Transparent Pricing Strategies p. 8
d Everlane p. 9
e Research Question p. 10
Methodology p. 11
Results p.12
Discussion p. 15
a Conclusion p. 17
Limitations p. 18
Appendix p. 19
References p. 20

Abstract:
With the boom of technology retailers are constantly thinking of new
ways to capture customers attention; specifically, the idea of using
transparency as a marketing model. This study seeks to examine Cusps
attitudes toward transparency in retail practices; explicitly examining
transparent production and transparent pricing strategies. The research
presented within the study defines the Cusp Era (a mix of millennials and
Generation Z), their purchasing habits, outlines transparent production and
transparent pricing, and examines Everlane (an online retailer who currently
uses both). A Likert scale survey was administered to twenty-five participants

from the Metro-Detroit area born between the years 1990-1996. The survey
was used to determine if transparency models lead to increased brand equity
and purchases. Furthermore, the survey examined which was a larger
consideration when purchasing. The results determined that Cusps favor
transparency models, but overall transparent pricing plays a larger role in
Cusps purchasing habits. The result linked back to Cusps value oriented
nature which was defined under their purchasing habits. This study discusses
the results and suggests retailers adapt transparency models to increase
brand trust and sales.

Introduction:
Transparent; able to be seen through, easy to notice or understand,
honest and open, and not secretive (Merriman). The birth of the internet, and
access to unlimited information, have changed retail practices. Customers
are now able to conduct unlimited research prior to buying a product. Now
new age consumers are not only interested in product reviews, but they want
to know if the product is sustainable and the brand is acting for the good of

the public, 55 percent of them have a better impression of a company that

engages in programmers that support causes or charities (Fromm, Butler &
Dickey, 2014, p. 33). Retailers who do not practice corporate responsibility
could quickly fall out of favor with new age consumers.
The act of being transparent in the retail market is a new concept
attached to corporate responsibility, One best-practice strategy is to act as
a conscious capitalist in all facets of the business (Fromm, Butler & Dickey,
2014, p. 33). Instead of hiding how a retailer conducts business, they present
the information forthright to the consumer; some retailers provide this
information through their webpage for example, the e-tailing brand
Everlane. Millennials and Generation Zs changing consumption patterns
have made this new retail practice extremely relevant in the age of digital
information, They want to understand why the company does, what it does,
not just what the company wants to sell (Fromm, Butler & Dickey, 2014, p.
31).
Millennials and Generation Z, digital natives, expect access to
information. If the information is not readily available, they become
determined to find it. Generation Z is so smart at researching, Gen Z cares
about provenance. Where does the product come from? Where are you
sourcing your ingredients? says Davanzo in a Womens Wear Daily article
(Fine, 2015, p. 76). The internet makes it increasingly harder for retailers to
hide negligence, which has prompted some retailers to adopt a transparent
business model, Companies that are candid about their supply chain, labor

practices and ingredients are more popular than those who arent (Fine,
2015, p. 76). Understanding why Millennials and Generation Z are interested
in corporate responsibility could be vital to the success of future retailers.
Understanding consumer attitudes towards transparency will help new
or current retailers shape future business practices. This paper seeks to
understand consumer attitudes towards transparent business models, and if
transparency in a companys labor practices or their pricing strategies plays
a larger role in consumer purchases.
Review of Literature:
Cusp Generation; A mix of Millennial and Generation Z Consumption
Behaviors: 1
Millennials and Generation Z are described as digital natives, because
they were born around or after the introduction of the internet (The internet
was introduced to the public in 1991, as the World Wide Web (History,
2010)). First, it becomes important to differentiate between Millennials and
Generation Z; some discrepancy lies between when the Millennial Generation
ends and the beginning of Generation Z.
Generally, Millennials are described as those, born between 19781996 (Fromm, Butler & Dickey, 2014, p. 27). They make up 25 percent of
the US population roughly totaling 80 million individuals (Fromm, Butler &
Dickey, 2014). Between them, they hold 21 percent of the consumer

discretionary purchase power, which is estimated at more than 1.3 trillion

(Fromm, Butler & Dickey, 2014, p. 27).
Generation Z is, Roughly defined as those born since 1996 (Dupont,
2015, p. 2). They make up approximately 25 percent of the US population,
totally 60-80 million people (Fine, 2015). Their spending is, Estimated to be
at $44 billion dollars annually, but when combined with parental spending
that number, swells to $200 billion annually (Fine, 2015, p. 74).
However, for the purpose of this study, it will explore the cusp era
(Cusp is described by Merriam-Webster as a point of transition); this includes
the tail end of the Millennial Generation and the beginning of Generation Z
(1990-1998). Both the Millennial Generation and Generation Z share similar
consumption patterns, these similarities become even closer related within
the cusp era. Multiple sources point to four major themes in their
consumption patterns; Peer affirmation (connectivity), value oriented
merchandise, engagement with the brand, and corporate responsibility.
Cusp: Peer Affirmation: 1.1
In their research, Fromm, Butler and Dicky state, individuals within the
cusp era seek peer affirmation (2014). They not only seek their peers
opinions, but also rely on those of family members (Jain, Vatsa & Jagani,
2014). The internet created the ability to not only be well informed, but the
ability to constantly connect. Additionally, Jain, Vatsa & Jagani, state they feel
a need to talk, be connected, and align to a specific peer group (2014).

Through multiple social mediums such as, Facebook or Twitter, they are able
to build their individual personality and participate with friend groups; They
want to impress their friends and share what interest them (Fromm, Butler
& Dickey, 2014, p. 29). They choose to share content that fits their selfimage, Fromm, Butler, and Dickey theorize that, Sharing is rooted in peer
affirmation (2014, p. 29). Online content that gains likes is the most
successful, and reaffirms Cuspers lifestyle.
Cusp: Value Oriented: 1.2
Those within the cusp era grew up experiencing the Great Recession of
2007. During that time, Roughly 15 million people were out of work
(Dupont, 2015, p. 4). They remember the stress of parents being out of work
and trying to make ends meet (Dupont, 2015). Coming of age in the Great
Recession has shaped their consumption habits, Based on their experience
with the Great Recession, New Realists (Cusp Era) want to know they are
getting a good value (Dupont, 2015, p. 14). In order to determine value
most Cuspers, Research products prior to purchasing (Zaczkiewicz, 2015,
p. 11). They also appreciate off-price retailers as opposed to traditional
department stores, These shoppers are the new permanently frugal, and
are transforming the market by also making bargain hunting for quality
products hip (Zaczkiewicz, 2015, p. 11). In a Womens Wear Daily Study,
53% of participants stated price was very important and 47% conduct
research prior to purchasing (Zaczkiewicz, 2015, p. 11).

Cusp: Brand Engagement: 1.3

The biggest change from previous generations, is their need to be
involved with the brand. Cuspers, Do not just want to buy a brand; they
want to be a part of it (Fromm, Butler & Dickey, 2014, p. 31). With the
excess of information available, society has transformed into a content
culture, and individuals crave entertainment. The first thing the cusp era
expects is interactive communication (Jain, Vatsa & Jagani, 2014). This comes
through an in store experience or retailers multiple new media platforms
(blogs, social networks, webpage). The second thing they want is to be
entertained. It has transformed traditional advertising into content
advertising, they Want to participate with the brands marketing (Fromm,
Butler & Dickey, 2014, p. 28).
Cusp: Corporate Responsibility: 1.4
Constant connectivity and unlimited access to information has changed
the way people view retailing. Like the American Government, people have
the ability to check corporate practice and voice their opinions to keep
them in balance. The new generation of consumers are more motivated by
this, because they grew up with the ability to communicate to corporations
via the web. Along with the web, they grew up in a swell of social causes;
they dont believe in discrimination and are motivated to be a part of
something bigger than themselves. They, Want to make a difference and be
involved in organizations that add goodness into the world (Fromm, Butler &

Dickey, 2014, p. 33). So, it comes to no surprise they, Embrace authentic

cause marketing and align to brands that have a higher purpose (Fromm,
Butler & Dickey, 2014, p. 28). Individuals in the cusp era want to, Support
brands that stand for more than just the bottom line (Fromm, Butler &
Dickey, 2014, p. 32). The web offers billions of product options, Cuspers
want, Authentic and honest brands (Fromm, Butler & Dickey, 2014, p. 35).
Transparent Labor Practices:
One aspect of transparency within the retail industry is disclosing
information to the public about suppliers, labor force, and factories. Labor
transparency is, How transparent a brand is in addressing labor conditions
and sweat shop issues (Kang & Hustvedt, 2013, p. 299). Dickson (2013)
states that providing information regarding human rights practices is an
integral aspect of corporate responsibility. It is well known that many apparel
industry companies participate in the use of sweat shops (Kang & Hustvedt,
2013). They often try to hide their production practices from the public, but
Doorey (2011) has found that many businesses benefit from making the
information of their suppliers and factories public. At its core, labor
transparency is, How honest a company is being specifically about labor
issues in its production and manufacturing processes, how easily the
consumer can find relevant information, and how actively a company will
make an effort to address sweatshop issues once it gets involved (Kang &
Hustvedt, 2013, p. 299). Transparent labor practices add to consumers
overall trust of the brand, which can lead to an increase in sales (Kang &

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Hustvedt, 2013). Transparent labor practices increase consumers perceived

attitudes toward a brand, increases the perceived value of the product, and
can lead to premium pricing (Kang & Hustvedt, 2013). From their study, Kang
and Hustvedt (2013) determined that transparent brands held higher brand
equity and brand value, leading to a positive image and trust with
consumers. Furthermore, The results suggest that it is critical for a brand,
especially one within a labor-intensive industry, to be transparent about
labor issues, addressing sweatshop issues, and providing consumers with a
venue where they can easily and at any time find information about labor
conditions in the brands supply chains (Kang & Hustvedt, 2013, p. 307).
Transparent Pricing Strategies:
The other, less recognized practice, in a transparency model is
transparent pricing. Formally defined by Carter and Curry as, Information
revealing the allocation among agents in a supply-chain of proceeds from the
sale of a product or service (2010, p. 760). Many factors affect the success
of price transparency models including product characteristics and consumer
characteristics (Carter & Curry, 2010). A key factor behind price transparency
is consumers perceived ideas of price fairness, believing that transparent
models are more honest. A study conducted by Carter and Curry (2010)
proved that consumers were occasionally willing to pay more for a product if
they saw and perceived the pricing model as fair. When a retailer provides,
Information on the allocation of the retail price among supply-side agents,
transparent pricing provides clues about the price-setting process. Even such

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indirect evidence increases perceptions of procedural justice, price fairness,

and other components of social utility (Carter & Curry, 2010, p. 362). Few
retailers take part in transparent pricing, so little data has been able to be
collected on whether or not it is successful, or plays a large role into
purchasing decisions of consumers.
Everlane:
Brands have evolved to meet the lifestyles of new age consumers;
brands, Break away from focusing on the superficial benefits of a product
and offer consumers an authentic message that gets to the core of what the
company really stands for. This allows brands to establish stronger
relationships and build more loyalty with their brand partners (Fromm,
Butler & Dickey, 2014, p. 33). Everlane is an online retailor that promotes
both transparent labor practices and uses a transparent pricing strategy.
They function under what they deem Radical Transparency, using the
slogan, Know your factories. Know your costs. Always ask why. (Everlane,
2015). Everlane was founded by Michael Preysman in, 2011 (Ransom, 2014).
Based out of San Francisco, they sell American Basics at just double cost, by
cutting out the middle man; retail store space (Ransom, 2014). Hillerns
writes, their business model, Radical Transparency means sharing the
process and revealing the markup. That happens by sharing where each
product is made, what it costs to make, and why it costs what it costs
(2014, p. 7). It is important to note that Everlane has found major success

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with their transparent business model, Sales have grown 200 percent in
2014 over 2013 (Ransom, 2014, p. 12). For every product listed on the site,
there is a pricing model for that specific product and a detailed description of
the factory it was produced in. Additionally, customers have the opportunity
to look into their factories by clicking the factory tab; where they have an
entire page devoted to their production. Since the companys inception in
2010, the company has been met with great success, and in 2013 generated
$12 million dollars in revenue (OConnell, 2015). However, is it their
commitment to ethical labor practices or the honesty behind their value
based merchandise that drives sales growth and success?
Research Question:
This study will assess the Cusp Eras attitudes toward transparent business
models. It will further examine which plays a larger consideration in
purchasing behavior; transparent production models or transparent pricing
models. According to the above research, this study hypothesizes that
transparent production models will play a larger role when cusps considering
purchasing; due to their need to align to honest brands, the amount of
brands available, and their demand for corporate responsibility. However, it
also hypothesizes both models will reflect positive attitudes and increase the
likelihood of purchasing.

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Methodology:
Researched was collected over a two week period in November of
2015. Twenty-five participants consisting of both males and females filled out
a survey in the form of a Likert scale. Due to limited time and resources this
study used a convenience sample model.
All participants evaluated were born between the years; 1990 and
1996. If the participant was not born within that time frame, their survey was
eliminated from evaluation. After elimination there were twenty-two
participants; five were male, seventeen were female. All participants are
currently residing in the Metro-Detroit area, and have or are pursuing a
bachelor degree. The majority are pursuing a degree in Fashion
Merchandising and Design from Wayne State University. Other degrees
include, communication, software engineer, political science, and finance.
Although, the survey did not ask to identify with a race, the group was
diverse including a wide range of ethnicities; African American, Asian, Middle
Eastern, Hispanic, and Caucasian.
The survey was compiled of twenty questions. Once administered it
took participants five to ten minutes to complete. The survey began with
descriptions of transparent pricing and transparent labor models; this
included a diagram of transparent pricing model from Everlane.com. The first
four questions were multiple choice and used to find background information
such as, gender, age, and shopping preferences. The next fourteen questions

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were set up as a Likert scale and used to assess attitudes toward

transparency models. Participants could choose from, strongly agree, agree,
no opinion, disagree, and strongly disagree. It was split into three sections,
the first section addressed pricing, the second production, and the third
quality. Questions nineteen and twenty asked participants to rank
considerations when shopping in order of importance one was most
important, two was moderately important, and three was least important.
Question nineteen asked them to rank quality, price, and production, while
twenty focused on just price and production.
Once collected data was evaluated and put into graphs using Microsoft
Excel. All participants remained anonymous and their data was used solely
for the purpose of this research study. A sample of the survey can be found
in Appendix A.
Results:
The beginning of the survey began by asking general questions about
purchasing habits. All participants have purchased a fashion product online
and they all agreed or strongly agreed trust in a retailer is important when
shopping.
Graph 1:

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When considering purchasing a fashion product, ten people stated

style / aesthetics was the most important aspect, seven people quoted price,
and five people chose quality. Zero participants chose production as a
consideration.
Graph 2:

When ranking importance between price, production, and quality;

thirteen participants stated price was the number one consideration.
Graph 3:

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Quality was the number one consideration when thinking about

purchasing a more expensive product. It should be noted that between
transparent production and pricing models, participants were tied or were
not motivated to spend more.
Graph 4:

When choosing between transparency models participants stated that

price builds more trust between consumers and retailers.
Graph 5:

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Participants were more likely to purchase a product that used a

transparent production model, only differing from price by one. That being
said, transparency models plays a small role in purchasing as the majority
held no opinion or disagreed.
Graph 6:

Eighteen participants strongly agreed or agreed that they would feel

better about their purchase if they saw a transparent pricing model.
Discussion:
After reviewing the data, this study concludes that the original
hypothesis, which predicted Cusps would be more motivated by transparent

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production models, was incorrect. However, it was also predicted that Cusps
would hold positive attitudes when considering transparency models as a
whole, the results of the study support this notion.
It is agreed that trust in a retailer is important when buying; Kang and
Hustvedt write, Brand trust is significant in forming consumers intention to
purchase or repurchase from the brand in a direct of indirect way (2015, p.
299). Data from the survey supports the notion that increased brand trust
leads to more purchases, or the purchasing of more expensive products. The
data suggest if retailers use transparency models it will increase trust
between consumers and retailers, which could lead to premium pricing. It
was determined that while both models increase brand equity, pricing
models are more beneficial for retailers to adapt.
However, the study also concluded that quality was the number one
consideration when Cusps consider purchasing a more expensive product.
Only ten respondents agreed or strongly agreed that a transparent pricing
model would motivated them to purchase a more expensive good. The
majority of respondents stated they held no opinion on the matter, or
disagreed that this would cause them to buy a more expensive product. If
quality and pricing models were used in conjunction it could motivate more
consumers to purchase a more expensive good. Carter and Curry argue,
Price transparency is impacted by characteristics of the product and
characteristics of the consumer (2010, p. 759).

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Due to the value orientated nature of Cusps price has been shown to
be the number one overall factor when purchasing. In his article Dupont,
states retailers need to speak in terms of value, because with a variety of
products and brands available Cusps have unlimited options and are willing
to shop endlessly for the best deal (2015). If retailers adapt transparent
pricing models it could increase brand equity and help consumers feel better
post purchase. This links back to Kang and Hustvedt findings, that increased
brand equity could increase brand loyalty and lead to future purchasing
(2015). After viewing a pricing model consumers perceive they are getting a
fairer deal, but as Carter and Curry have suggested this relies heavily on
product attributes.
The study also found that production models promote brand trust and
increase overall post purchase satisfaction, but when Cusps consider
purchases it plays little to no role. This is contradictorily to previous research
that states Cusps align to honest brands (Fromm, Butler & Dickey, 2014).
While they agree with the idea of transparent production, it would not
motivate them to purchase a product or spend more. Finding a good deal
outweighs their demand for corporate responsibility.
Conclusion:
This study finds that Cusps attitudes toward transparent pricing
models are favorable. Overall, both transparent production and transparent
pricing increase trust in a brand. As outlined by previous studies, trust in a

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brand leads to repurchasing. Transparency models should be used in

conjunction with quality goods, as higher quality can motivate more
expensive purchases. If only choosing to adapt one model, retailers should
use transparent pricing models; the survey found that overall price is the
largest consideration when purchasing a product. Using transparent pricing
models could generate excitement as it is a very new concept within the
fashion industry, this will help create a sense of uniqueness for the brand.
Along with generating excitement, it builds trust with consumers creating
increased brand loyalty this could lead to an increase in sales for retailers.
Both transparency models create unique opportunities for retailers and could
lead to favorability with Cusps consumers.

Limitations:
Due to the interest of time and availability the research collected was
from a convenience sample and only tested a small group. Different
geographical locations along with different social economical standings may
react differently. As transparency models are a relatively new idea there was
limited prior research on the subject. Very few retailers provide true
transparent pricing models for their consumers. Further research should be
conducted in relation to this subject.

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Abstract: A

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implications for
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Doorey, D. (2011). The transparent supply chain: From resistance to implementation

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Dickson, M. A. (2013). Corporate responsibility in the global apparel industry: Toward

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