CHAPTER I INTRODUCTION 1.1 Background Luxury goods products can be defined as social status of the people or a customer in society. On other hand, usually people are motivated to purchase luxury goods to impress others through proving their ability to pay a high price for a product (Atwal & Williams ,2017). Luxury goods market shows positive growth especially in Europe, Japan, and the United States (Abdullah et al, 2019). Figure 1.1 Global Luxury Goods Sales and Real Growth Source: (Euromonitor, 2015) According to Figure 1.1, the real value of sales of luxury goods market had reached more than $300 Billion in 2015 and kept growing. Soh (2017) also stated that the emerging markets have some of the fastest growing demands for luxury brand products. In Asia, sales of the luxury goods in Indonesia are expected to increase. Because of the growing demand for luxury goods, luxury goods brands 1 are considered to have an important point in affecting consumer’s lifestyle and identity. Luxury fashion goods industry has several kinds of sectors such as apparel, beauty product, accessories and also shoes or footwear. Based on Grand View Research (2019), Leather shoes are considered as premium or luxury product and has a significant share of the market, and convenient and comfortable footwear is primarily attributed to the high demand and the market growth. Figure 1.2 Global Footwear Market Growth 2009-2018 Source: (Euromonitor, 2018) According to Figure 1.2, Euromonitor (2018) stated that global footwear market grew from 2009-2018 kept growing, with women’s footwear still dominating the sales growth with 53% share of the global footwear category or market in 2013-2018. On the other hand, the shoes or footwear trend in global 2 market is lead by performance of shoes with 44% and sport shoes with 41%, and the rest is outdoor shoes with 15%. Geox is one of the luxury goods retail companies with shoes as its main product, and was established in 1990 by Mario Moretti Polegato. As a company, Geox has 30 years of experience in luxury goods industry, Geox has become a brand leader in the International lifestyle footwear market because of its innovative solutions and technologies for its shoes that guarantee an impermeability and breathability system. Geox also already expanded with up to 1,015 stores around the world, including Indonesia. In Indonesia, Geox is located in Jakarta, Surabaya, Bandung and Makassar. Table 1.1 Geox Stores Jakarta Sales Target 2019 MONTH GANCIT KOKAS January Rp. 346.006.888 Rp. 552.200.028 February Rp. 400.280.386 Rp. 676.401.621 March Rp. 434.946.909 Rp. 588.786.759 April Rp. 447.768.026 Rp. 719.691.539 May Rp. 596.995.079 Rp. 729.660.651 June Rp. 613.318.282 Rp. 760.712.046 July Rp. 391.009.765 Rp. 576.881.741 August Rp. 466.560.466 Rp. 482.364.553 September Rp. 522.490.646 Rp. 592.134.306 October Rp. 767.553.803 Rp. 743.295.905 November Rp. 624.715.523 Rp. 619.575.394 December Rp. 746.277.129 Rp. 1.219.577.377 Source : Internal Data, 2020 3 SALES PERCENTAGE OF GEOX STORE IN JAKARTA 2019 140.00% 120.00% 100.00% 80.00% 60.00% GANDARIA CITY 40.00% KOKAS 20.00% 0.00% Figure 1.3 Sales Percentage of Geox Stores in Jakarta 2019 Source: Internal data, 2019 Based on Table 1.1 and Figure 1.3, the highest sales percentage is from Geox Store in Gandaria City, with average performance of 98.4%, and the lowest score for sales percentage is from Geox Store in Kota Kasablanca Jakarta with average performance of 68.2%. While Geox Stores in Jakarta have good sales performance in 2019, even the lowest sales performance is still more than 50% of sales target per month, Geox Store in Surabaya faced the opposite. Table 1.2 Geox Surabaya Sales Target 2019 MONTH PKW TP5 January Rp. 137.126.642 Rp. 348.868.803 February Rp. 165.436.506 Rp. 346.668.564 March Rp. 208.750.000 Rp. 399.000.000 April Rp. 200.000.000 Rp. 290.000.000 May Rp. 365.000.000 Rp. 320.000.000 June Rp. 300.000.000 Rp. 585.000.000 July Rp. 328.533.359 Rp. 472.489.398 August Rp. 331.914.557 Rp. 383.215.292 September Rp. 482.831.298 Rp. 422.220.076 October Rp. 729.917.158 Rp. 498.651.252 November Rp. 570.055.913 Rp. 475.412.117 December Rp. 623.109.934 Rp. 730.491.314 Source : Internal Data, 2020 4 SALES PERCENTAGE OF GEOX STORE IN SURABAYA 2019 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Pakuwon Mall Tunjungan Plaza Figure 1.4 Sales Percentage of Geox Stores in Surabaya 2019 Source: Internal data, 2019 According to Figure 1.4, Geox Sales Performance in Surabaya did not achieve the monthly targets that were given in 2019 (table 1.2). The lowest is in Geox Store Pakuwon Mall Surabaya with average sales performance of 47.8% in 2019. Compared to the lowest sales performance of Geox Official Store in Jakarta, which was Geox Store in Kota Kasablanca, Geox Store in Pakuwon in Surabaya still had the lowest performance in 2019. In the fashion and luxury goods market, there is strong competition among the brands. Creating values in the customer perception are good brand strategies in the luxury industry. According to (Zarlish et al, 2017), when the customer wants to purchase a certain product, the recognition of brand will still be the most important and influential factor in a customer’s purchase decision-making. A product that has higher brand awareness will definitely perform better in the market and help the company gain more income. Most of Geox’s customers in Surabaya are new 5 customers that are not familiar with the brand. The researcher has already distributed a pre-survey to determine the factors that really influence customer’s purchase intention in Geox Official Store in Pakuwon Mall Surabaya. FACTORS INFLUENCING CUSTOMER PURCHASE INTENTION IN GEOX SURABAYA PERCEIVED QUALITY PRODUCT COMPLETENESS PRICE BRAND AWARENESS OTHER 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Figure 1.5 Pre-Survey Result Source: Conducted Survey,2020 The pre-survey was distributed to 15 customers in Geox Official Store in Pakuwon Mall Surabaya, who have visited Geox Store and give the intention to Geox’s product as a respondent. From the 5 factors that the researcher gave in the pre-survey, Brand Awareness and Perceived Quality are the highest factors that were choosen by the 15 customers/ respondents. Brand Awareness tends to affect the customer’s purchase intention to the product. If the customer knows the brand well, then the customer’s purchase intention will increase (Zarlish et al, 2017). Most of Geox’s customers are not really aware of Geox’s Brand because this brand is a new comer in Surabaya. 6 Perceived Quality is more about the customer’s personal opinion about the product. Perceived quality is also one of the brand dimensions that can affect brand image (Zarlish et al, 2017). Most of Geox customers’ perception towards the quality of Geox’s product in the official store is better than online official store, but the official store do not have many stock and lack size completeness. Based on the background stated, for this research we know that customer’s purchase intention towards luxury fashion goods can increase with the support of good brand awareness, brand image and perceived quality of the product. Therefore, the researcher is interested in doing this research titled: "Analysis of the Influence of Brand Awareness and Perceived Quality towards Customer Purchase Intention in Geox Pakuwon Mall Surabaya” 1.2 Problem Statements Based on the background discussed, the research questions to be addressed are as follows: 1. Does brand awareness have a significant impact towards customer purchase intention in official store of Geox Pakuwon Mall Surabaya? 2. Does perceived quality have a significant impact towards customer purchase intention in official store of Geox Pakuwon Mall Surabaya? 1.3 Research Objectives Based on the problem statements discussed, these are the research objectives: 7 1. To find out whether brand awareness has a significant impact towards customer purchase intention in official store of Geox Pakuwon Mall Surabaya. 2. To know whether perceived quality has a significant impact towards customer purchase intention in official store of Geox Pakuwon Mall Surabaya. 1.4 Research Benefits 1.4.1 Theoretical Benefit 1. This research is theoretically expected to be a reference for further research on the impact of factors that influence customer purchase intention for luxury fashion goods. 1.4.2 Practical Benefit 1. This research can be an addition of insights and reference for anyone who wants to learn more about factors that influence customer purchase intention for luxury fashion goods . 2. This research can be used as additional information for Geox to evaluate and improve Geox’s performance. 1.5 Scope of Research This research is focused on analyzing impact of brand awareness and perceived quality towards customer purchase intention in official store of Geox Surabaya. The researcher also focused on the reseach sample, which are the customers who visited Geox Official Store in Pakuwon Mall in Surabaya. 8 .