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CHAPTER 2

THEORITICAL FOUNDATION

2.1. Second-Hand

A second-hand is one that is previously used or owned by others (Princeton University,

2003). Second hand do not always refer to used good, second hand can also mean that the good is still new but being sold or given to other person. On this research, the word second-hand refers to the meaning of used item.

2.1.1. Second-Hand Shoppers’ Motivations

Denis Guiot and Dominique Roux consider motivations for second-hand shopping to be abstract attributes with a reflective nature (Guiot & Roux, 2010)Critical motivation, economic motivation, and hedonic/recreational motivations are the factors from a hierarchical structure characteristic which is confirmed by the analysis.

From the interview that they had done, critical motivations express the possibility of avoiding conventional channels, supporting ethical and ecological concerns about recycling and combating waste, and avoiding ostentation (Guiot & Roux, 2010)Second- hand shopping is one of the ways to escape from the traditional retailing. They do smart shopping (Haim Mano, 1997) which means that taking intelligent advantage by reusing products that other people do not want any longer. Moreover, critical motivation is also lead people to escape themselves from mass consumption and anything related to become fashionable, it is all about the value of the product itself rather than its function as a symbol or a sign.

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While critical motivations are about the distance from the traditional system and the ethics and ecology, economic motivations are about price so that it include four motives that relate to price which are the wish to pay less, the search for a fair price, bargain hunting, and the gratification role of price (Guiot & Roux, 2010)People in this group think that by buying second-hand, they pay for the fair price comparing to when they buy new product with much higher price. They also love to do some bargain hunting in order to fulfill their primary needs, means that they can get more things by buying second-hand rather than new products.

On the other hand, hedonic and recreational motivations are including treasure hunting, originality, social contact, and nostalgic pleasure. The activity when buying second-hand products is perceived as an adventure so that the consumers feel like a treasure hunter.

Furthermore, one of the motives of buying second-hand is to get products that no one has, e.g. when they buy antique jewelry or vintage bags. Their other motive is also to get the pleasure by meeting and talking with others whose interests are similar. These kinds of people are the ones who enjoy social interaction and it is not always about finding and buying the second-hand product itself. Some people who have an attraction to old and or vintage products, they have an intention to buy second-hand products because of the history of the products and it reminds them from the past.

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Denis Guiot and Dominique Roux, regarding to their prior study, found four antecedents which are related to economic motivation, critical motivation, and hedonic and recreational motivations. These antecedents are becoming a global determinant of all motivations, they are frugality, materialism, need for uniqueness, and nostalgia.

Frugality is one’s thriftiness toward the spending that he or she does. Therefore, they are really price sensitive and anti-materialism, while materialism is the reverse of anti- materialism which means that a person who cares more about the brand that a product carries or the perceive value of the products in other eyes rather than the function of the product itself.

Furthermore, some people buy second-hand because they want to have items that other people do not have since some of the second-hand items are one-of-a-kind. As what the author has mentioned above, for people who love to find vintage items, they will also really love to go to second-hand store or market to find vintage items. Even though not all of vintage items are used, but the majority of them are second-hand or used items.

2.1.2. Second-Hand Accessories in Jakarta

Second hand clothing and accessories are popular in Jakarta to low economic class people. Pasar Senen which is located in Central Jakarta is the most popular place for people to find second hand accessories, some of them are also vintage items. Another location in Jakarta to find second hand accessories are SOGO Jongkok (located in South

Jakarta), Pasar Melawai Blok M (located in South Jakarta), and near railway in Pasar

Kebayoran Lama (located in South Jakarta).

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On the other hand, there are boutiques that sell second hand clothes and accessories in

Kemang (located in South Jakarta), Dharmawangsa Square (located in South Jakarta), and Kebon Sirih (located in Central Jakarta).

Internet is one of the most potential channels for people to do trading, including selling and buying second hand accessories. Ebay, Kaskus, Multiply, Femaledaily, Facebook, and Twitter are the most used channels for trading. They do the trading in two ways, first, they do the trading via internet and send the items through TIKI or Pos Indonesia, and second, they meet in a place that they both agree and do the trading.

Figure 2.1.2.1. Online Shopping Using Facebook as The Medium to Sell Second-Hand Bags

Source : http://www.facebook.com/#!/album.php?id=100001918072202&aid=21873

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2.2. Retailing

Retailing is a set of business that adds value to the products and services sold to consumers for their personal or family use (Levy & Weitz, 2004). On the other hand, a retailer is a business that sells products and/or services to consumers for personal or family use (Levy & Weitz, 2004).

2.2.1. Retail Channel

Retail channel is divided into three channel, they are including brick and mortar, internet, and catalog.

• Brick and Mortar

Brick and mortar channel is a channel for retailers to display and to sell their

products through stores where customers can see and feel the products using

their five senses (sight, hearing, smell, taste, and feeling). Brick and mortar is

one of the channel that people usually see and experience. This type of channel is

known to be convenient to the customers since they can experience the products

before they finally make a decision whether or not to purchase the products.

Figure 2.2.1.1. Second-Hand Boutique in Dharmawangsa Square

Source : Raisa Jovanie Private Pictures. (March, 2011).

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• Internet

Online shopping is popular as it has no borders to promote and to sell products to

anyone in this world. Moreover, it has unlimited space to display products

through websites. Internet has been becoming a medium for retailers to sell their

products. Other than websites, online shopping is done through social

networking sites (i.e. Facebook, Friendster, Twitter), forums

(Fashionesedaily.com, Kaskus.us, Femaledaily.com), and other sites i.e. Ebay,

Multiply.com, Tokopedia.com.

• Catalogue

Retailers are also using catalogues as a medium to sell their products. Usually, on

the catalogues, retailers will put the telephone number and the letter that will be

used to write down the items that customers order to be sent back to retailers.

Some retailers that do catalogue shopping are Victoria’s Secret, IKEA, Sophie

Martin, and Oriflame.

2.2.2. Retail Industry in Indonesia

According to a banking practitioner, Marina R. L. Pandin, retail business in Indonesia is classified into two groups, Modern Retail and Traditional Retail (Pandin, 2009). The first modern retail in Indonesia was established in 1962, it famously known as Sarinah

Department Store. This concept was growing from 1970 until 1980. Since 1990 foreign retailers have started to enter Indonesia market. ‘Sogo’ was the first foreign retail chain from Japan who entered Indonesia.

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Today, many types of modern retail chains are exist in Indonesia, i.e. Department Store

(‘Sogo’, ‘Debenhams’, ‘Ramayana’), Boutique (‘Zara’, ‘Topshop’, ‘GAP’),

Supermarket (‘Foodhall’, ‘Hero’, ‘Indomart’), Hypermarket (‘Giant’, Hypermart’,

‘Carrefour’), Specialty Store (‘Ace Hardware’, ‘Rumah Kita’, ‘Informa’), Mall (‘Pondok

Indah Mall’, ‘Mall Plaza Senayan’), Supermall (‘Supermall Karawaci’, ‘Pluit Village’),

Trade Centre (‘ITC Kuningan’, ‘ITC Mangga Dua’), Factory Outlet (‘Rumah Mode’,

‘Millenia’), etc.

Figure 2.2.2.1. Characteristics of Modern Retail in Indonesia

Source : The Portrait of Retail Business in Indonesia : Modern Market. (2009, March). Retrieved

March 25, 2011, from http://www.bni.co.id/portals/0/document/2009Marchritel%20business.pdf

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2.3. Consumer Behavior

Consumer behavior is ‘the actions a person takes towards purchasing and using products and services, including the decision-making process that precedes and determine those actions’ (McColl et al, 1994, p116). Consumer behavior is influenced by many factors i.e. cultural, economic, psychological, sociological, demographic, lifestyle, social class, past experience, etc. Consumer behavior is important because consumer behavior leads to a person’s purchasing behavior.

2.3.1. Decision Making Process

There are 5 stages of decision making process according to Richard Sandhusen

(Sandhusen, 2008), they are :

• Problem Recognition

On the first stage, people start to realize something do not run as it should be.

People recognize that they are facing problems and therefore they need to find

out solutions to overcome the problems. For example, Jack is feeling thirsty in

the middle of his walk in the sunny day.

• Information Search

On the second stage, people try to find alternatives to solve the problem. People

are searching information needed in order to find the solutions. The information

gained is based on how deep a person being involved with this problem. The

higher the risk, the more information a person will search. For example, Jack is

going to a mini market to purchase some drink, he will look what are the options

he has.

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• Evaluation of Alternatives

On the third stage, people will establish criteria of evaluations. All of the

information gained will be evaluated to finally can match for one’s need and

want. For example, Jack starts to think that it is impossible for him to buy hot

drink since the weather is extremely hot, but he also cannot buy soft drink and

energy drink since he suffers diabetes, so a plain mineral water most likely is the

one that he can consume.

• Purchase Decision

On the fourth stage, people finally decide what they want to purchase based on

their evaluation from the previous stage. For example, Jack finally decides to

buy a cold mineral water.

• Post-Purchase Evaluation

On the last stage, people will evaluate whether they satisfied or dissatisfied with

their purchases. If they satisfied, they will later on purchase the products from

the same brand. But if they dissatisfied, they will not purchase the products from

the same brand. Satisfaction is not only linked to a brand but also with the

products itself. For example, Jack is quite disappointing with his own decision

since he finds out that he wants to drink something that has a favor and fresh

orange juice may bring him more energy on this hot weather.

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2.3.2. Shopper Behaviour

The level of involvement of purchasing is determined by the importance and intensity of interest in a product in a particular situation. Consumer level of involvement also influences a person’s motivation to seek information about certain products and brands but ignores others.

Generally, there are 3 type of shopper behaviour (Kerin & Rudelius, 2000), they are :

• Routine Response or Programmed Behaviour

The low involvement product which is frequently purchased and needs little

effort of information search and decision making is categorized as routine

response, i.e. toothpaste.

• Limited Decision Making

On limited decision making, you need more information search and more effort

before you decide to buy products from unfamiliar brand in a familiar product

category, i.e. clothes.

• Extensive Decision Making

On extensive decision making, you are about to buy a high involvement product

that needs high effort, high information search because the product is expensive

and has a high degree of economic, performance, and psychological risk, i.e.

house.

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2.4. Abraham Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs is a theory in psychology, proposed by Abraham Maslow in his 1943 paper A Theory of Human Motivation (Hegedus, 2002).Maslow divides the hierarchy into 5 points, which are self-actualization, esteem, love and belonging, safety, and psychological. Maslow puts rank in each point, from the highest to the lowest are self-actualization, esteem, love and belonging, safety, and psychological.

• The Physiological Needs

Water, oxygen, carbohydrates, proteins, vitamins, salt are some of needs which

are categorized as psychological needs. Moreover, these needs include need to

sleep, to eat, to rest, to have sex, to avoid pain, to get rid of wastes, etc. To

conclude, psychological needs are a basic urgent need that pressing one’s

satisfaction.

• The Safety and Security Needs

Protection, safe circumstances, and stability are what people need once they are

taken care of psychological needs. The needs of safety and security appear

because of their anxieties and fears. These needs will lead people to own a

convenient home, a safe neighborhood, a settle job, and a secure financial.

• The Love and Belonging Needs

Needs of love and belonging will appear after the completion of psychological

needs and safety and security need. People realize that they need affection in

love, friends, family, and children. Unconsciously, people are becoming more

susceptibility to loneliness and social anxieties. In their life, people will have

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desire to build a family, to have a child, to be accepted in a particular group, and

to be a part of others.

• The Esteem Needs

Basically, Maslow divided esteem needs into two versions, a lower one and a

higher one. A lower one self esteem refers to a need to be respected by others, a

need for status, fame, recognition, reputation, dignity, glory, and attention. While

a higher form, it refers to a need for self-respect including achievement,

confidence, mastery, independence, and freedom. Esteem needs arise because of

the condition of low self esteem and inferiority.

• Self Actualization

The highest need according to Maslow is self actualization. On this stage, people

are having a tendency to be actualized in the aspect where they are potential, they

also tend to be the best on their capability.

The motivations of women to buy second-hand accessories have a correlation with

Maslow’s hierarchy of needs which are love and belongings and self esteem. The needs of people to look different with others and to be perceived as someone who cares about waste is related to self esteem, while the needs to socialize and to be accepted with groups which consisted with people with same interest (second-hand accessories) is related to love and belongings.

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Figure 2.4.1. Abraham Maslow’s Hierarchy of Needs

Source : Theosophy and Self Identity.(2010, March). Retrieved March 25, 2011,

http://www.newtheosophynetwork.com/?p=678

2.5. Socio-economic Classification

‘Socio-economic classification is a classification made in the urban and rural sector, to identify the consumption pattern and the household purchase behavior’ (Gupta, 2005).

The classification for urban sector is divided into 5 sectors which are sector A, sector B, sector C, sector D, and sector E.

Based on the article, he divided the socio-economic class broadly into low, middle, and high. Sector A and sector B are classified into high segment, sector C is classified into middle segment, and sector D and E are classified into low segment. In this paper, people with shopping expenses more than 2 millions are categorized as C and above, while people with shopping expenses less than 2 millions are categorized as D and below.