Mexican national cross-border shopping: Exploration of retail tourism

Journal of Retailing and Consumer Services 19 (2012) 596–604

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Mexican national cross-border shopping: Exploration of retail tourism Pauline Sullivan a,n, Mark A. Bonn b,1, Vertica Bhardwaj c, Ann DuPont a a

School of Family and Consumer Sciences Texas State University-San Marcos 601 University Drive, San Marcos, Texas 78666, USA The Robert H. Dedman Professor in Services Management, College of Business, Dedman School of Hospitality, 1 Champions Way, UCB, Room 4104, Florida State University, 32306-2543 FL 32306, USA c Department of Textiles and Apparel University of Texas at Austin, TX 78712, USA b

a r t i c l e i n f o

a b s t r a c t

Available online 9 August 2012

This exploration of cross-border shopping by Mexican national shoppers at a regional discount outlet mall studies the: (1) economic impacts of their expenditures on the local and regional economies, and (2) activities they engage in while at the outlet malls and benefits received from shopping there. Spending by cross-border shoppers varied by accommodation type; hotels or motels/friends and family spent approximately $800 (U.S.) on clothing daily and condominiums/day visitors between $400 and $475 (U.S.). The multiplier for cross-border spending at the local level ranged from 1.27 to 1.45. Top cross-border shopper activities were shopping and buying, followed by eating, and visiting. & 2012 Elsevier Ltd. All rights reserved.

Keywords: Cross-border shopping/outshopping Retail tourism Economic impact

1. Introduction The topic of shopping as a leisure activity is the subject of exploration in travel research (Law and Au, 2000; Tosun et al., 2007). It is evident that consumers willingly combine shopping with vacations, holidays, and trips during their work-related travel (Ghaddar and Brown, 2005; Timothy and Butler, 1995). Tourists choose to travel outside of their usual environment for leisure activities (Govers et al., 2008). Specifically, tourists who travel to another country’s border for the explicit purpose of shopping are known as cross shoppers. Cross border shopping (i.e., shopping that is done outside a geographic location) has occurred for centuries and gained popularity (Oh et al., 2004; Robertson and Fennell, 2007). Henceforth, research confirms that cross border shopping and major leisure activities are an important part of travel (Law and Au, 2000). Previous literature on cross border shopping has also pointed out characteristics of cross border shoppers and identified them as consumers who belong to higher income groups, have fewer children living at home, and have negative attitudes towards the products sold in their local area (Herrman and Belk, 1968; Rosenbaum and Spears, 2005). It is important to understand if and how cross-border contributes to the vitality of U.S. retail sector and communities. Given the close proximity of Mexico and the U.S., cross border shopping has become a notable feature. Literature on cross border shopping has been interchangeably used as the phenomenon of

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Corresponding author. Tel.: þ1 512 245 2448; fax: þ 1 512 245 3829. E-mail addresses: [email protected] (P. Sullivan), [email protected] (V. Bhardwaj). 1 Tel.: 850 644 8244 (office) 850 567 1826 (cell). 0969-6989/$ - see front matter & 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.jretconser.2012.07.005

‘outshopping’ (Guo and Wang, 2009). Outshopping occurs when consumers leave their local community to purchase goods or services (Sullivan and Savitt, 1997). When consumers leave a community to shop, retail sales leakage occurs in the communities where consumers live (Burns et al., 1999; Sullivan and Savitt, 1997). In their recent study, Guo and Wang (2009) refer to outshopping as shopping outside one’s local community for various reasons such as to obtain better quality merchandise at relatively competitive price points and pleasant shopping environment. Although research stream on cross border shopping or outshopping has eventually matured, there remains a need to understand comprehensive relationships associated with crossborder ‘‘visitor’’ shopping behavior. This study attempts to focus on various relationships associated with travel and shopping. The advantages of this study are two-fold. First, information discovered in this exploratory study will generate additional constructs to examine an in-depth study of visitor cross-border shopping. Second, this exploratory probes geographically focused consumer spending and its contribution to economic development at the local and regional level. This exploratory study specifically examines the topic within the context of cross-border shopping which occurs when consumers cross an international boundary into a geographically adjacent country for the purpose of shopping (Sullivan and Kang, 1997; Timothy, 1995). Mexican national shoppers at a regional discount outlet mall were used to understand the proposed research objectives in this study. The Mexican shoppers were interviewed regarding information about: (1) economic impacts of their expenditures on the local and regional economies, and (2) activities they engaged in while at the outlet malls and benefits received from shopping there.

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2. Literature review 2.1. Cross shopping Cross-border shopping occurs when consumers travel outside their local area and cross a national boundary into an adjacent country primarily to shop (Dmitrovic and Vida, 2007; Mogab et al., 2005; Sullivan and Kang, 1997). Around the world, cross-border shopping is a common activity (Timothy, 1995) that is increasing (Nijssen and van Herk, 2009). The number of times consumers cross a national border or leave their local area to shop in a year is a measure of both outshopping and cross-border shopping (Dmitrovic and Vida, 2007; Piron, 2001; Sullivan and Kang, 1997). Products, lifestyle brands, and images from other cultures now become attractive and exciting to consumers willing to travel in search of unique goods and services. Cornwell and Drennan (2004) assert that the similarities among consumers across the globe are increasing due to media, exposure to global communications, and mobility which results in increasing homogeneity amongst consumers. At the same time, it is also believed by researchers that consumers, especially from Mexico, are motivated to perform outshopping activities in the U.S. for various reasons. These reasons include having a better perception of quality and wider options of the merchandise at more competitive prices, reliable after-sales service, warranties, access to latest products, and a safe and pleasant shopping environment (Dawson and Garland, 1983). Guo et al. (2006) proposed psychological factors for outshopping by Mexican consumers in the U.S. by using Hofsede’s cultural dimensions; however, the relationships were found to be not significant. Also, country of origin influences the types of products purchased during a cross-border shopping trip. Cross-border shoppers tend to be less ethnocentric than other consumers (Nijssen and van Herk, 2009). Relationships between cross-border shoppers and service providers develop. These relationships have a transactional dimension present. Product authencity can also be considered an important reason for cross shopping. For example, in a Turkish study, Tosun et al. (2007) described visitors’ satisfaction with shopping attributes, store features, sales staff service and quality. The study documented the activity of shopping as the third most important reason for visiting Turkey, while product authenticity was reported as the most important motivation for shopping. Burns et al. (1999) suggest visitor sensation with different experiences may affect the visitor’s choice of shopping destination. Visitors with different levels of need for sensation, or different experiences will vary in their propensity to outshop. Education, income, credit, gender and number of children under 18 living at home positively predict the money spent outshopping, while age negatively predicts dollars spent on shopping (Sullivan and Savitt, 1997). A study of international outshopping, when consumers cross a country border to shop, indicates about two thirds of outshoppers shop with family members and about one- quarter do so with friends (Piron, 2001). The primary mode of transportation in Piron’s study of outshopping in Singapore was an automobile, followed by public bus. Travel costs ranged from $3 to $30 (U.S.). Pleasure and vacation were given as secondary reasons for visiting the international outshopping location, suggesting these psychological benefits sought during the travel experience are closely connected with shopping. About 27% of outshoppers’ purchases were for food and beverages, 24% for groceries, and 17.5% for fashion products. Products sold outside of their local community were perceived by frequent outshoppers as having superior quality. Both frequent and infrequent outshoppers view product prices at the outshopping location as more competitive than in their home market. Apparently, Mexican

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cross border shoppers’ expenses on travel, dining, and shopping contributes to the regional area and the local community of the retail outlet. International outshopping and cross-border shopping satisfy consumers’ needs and provide them with benefits sought including value, relaxation, pleasure, variety seeking, sensation seeking or a learning experience (Moscardo, 2004; Burns et al., 1999). One study found that consumers crossing borders for the purpose of shopping are motivated and influenced by dissatisfaction with local market conditions, currency rates, and government policies, such as excise taxes (Cornwell and Drennan, 2004). 2.2. Travel Travel activities include transportation, accommodations, dining, shopping, and other activities (Mossberg, 2007). Tourists are defined by both distance and amount of time spent away from home (Timothy, 1995). Masberg (1998) questioned visitor bureau professionals to explore the definition of a ‘‘tourist.’’ The criteria used most often to define a tourist reported by respondents was distance traveled (65.3%), followed by purpose of the trip (56.9%), residence of the traveler (54.25%), and length of stay (45.8%). Furthermore, the concept ‘‘usual environment’’ in the definition of ‘‘tourist’’ helps differentiate visitors from residents or others, such as commuters or students in a given location (Govers et al., 2008). However, the more frequently an attraction is visited, the more likely the consumers perceive that location as a part of their ‘‘usual environment,’’ rather than a tourist destination. Timothy (1995) suggests the definition of the tourist is operationalized through recognition that travel includes crossing some political boundary, such as municipality, county, state, region and country. For international travel, the actual border may function as a visitor attraction with common activities that include dining, shopping, sightseeing and night life entertainment. Recent literature on cross border shopping indicates a relationship between travel destination related activities and culture (Kongsompong, 2006; Rosenbaum and Spears, 2005; Lehto et al., 2004). In general, consumers shopping outside their home country visit the United States in search of bargains and often report their economic savings from purchasing certain items at a deep discount (Jackson, 2007). In this regard, various companies sell shopping trip packages and promote U.S. malls in foreign markets. In their promotion, the United States is frequently positioned as an ‘‘inexpensive and varied shopping destination’’ (Jackson, 2007, p. W1). Besides shopping for inexpensive items, one of the fastest growing segments of visitor shoppers is the group that travels for the purpose of ‘‘attending conferences and meetings’’. Shopping activities are included in conference itineraries as they help generating conference attendance. Research documents that business visitors typically spend more than leisure visitors (Robertson and Fennell, 2007). Moscardo (2004) found away-from-home visitors, those staying at a travel location at least one night, ranked shopping relatively low (21 out of 28) as an important criterion for visiting a destination. This same study categorized visitors into four distinct groups with respect to shopping: (a) serious shoppers, (b) arts and crafts shoppers, (c) not so serious shoppers, and (d) non-shoppers. Serious shoppers had visited the area before, spent the most amount of money, and remained in the area longer than the other groups. Serious shoppers stayed in expensive accommodations or with family and friends. Serious shoppers found features such as beach style holiday resort experience, fashionable place, wellknown nightlife and entertainment places, and places to talk about at home more important than other groups of shoppers. Serious shoppers also showed a high level of participation in most

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commercial visitor activities, with the exception of nature-based menus. Although many respondents? In Moscardo’s study reported shopping is unimportant in their tourist destination choice, results from her study show quite a few actually shopped during their vacation. There are various programs that encourage international visitors for shopping in foreign locations. For example, Louisiana’s tax-free spending program, which began in 1988, was developed specifically for international visitors with a valid passport and round-trip ticket (Dimanche, 2003). This program provides sales refunds for sales taxes on tangible goods purchased in Louisiana that will be removed from the state. There is no minimum spending requirement for visitors in order to be eligible for this program. Total expenditures recorded by the Louisiana tax-free shopping program reported by category are as follows: apparel products 53.1%, small electronic appliances 9%, jewelry 8.6%, computer equipment 8.5%, photographic equipment 8.2%, and give/souvenirs 7.1%. Data indicates that a majority of visitor shoppers from Mexico are aware of Louisiana’s program and use it.

Assumption 1. Tosun et al. (2007) find half of tourist respondents in in the Cappadocia region of Turkey intended to spend approximately $240 (U.S.) and shopping. They identified reasons why respondents visited this region as to experience new cultures and places (63.8%), meet new people (31.2%), shopping opportunities (23.3%), and taste local foods (22%). Michalko and Varadi (2004) reported 27.3% of foreign tourists in Hungry went there to shop. As well, Tasci and Denizci (2010) found Chinese and other international tourists in Hong Kong hotels prefer to see a restaurant, coffee shop, spa, and retail, souvenir, arts and craft, and jewelry shops on the premises. Fodness (1994) suggested visiting friends and family, having fun, experiencing indigenous cultures, and shopping are dimensions influencing tourists’ travel decisions and consumption. Timothy and Butler (1995) argued that shopping is significant leisure activity. Past studies support the assumption travel and international outshopping or cross-border shopping are not mutually exclusive. International outshoppers or cross-border shoppers’ expenditures provide economic benefits to the local and regional economy (Tasci and Denizci, 2010; Tosun, et al., 2007, Michalko and Varadi; 2004; Timothy and Butler, 1995; Fodness, 1994).

3. Theoretical framework for cross-border shopping

Assumption 2. Mok and Lam (1997) found Taiwanese visitors to Hong Kong allocated about 60% of their budget for shopping. Michalko and Varadi’s (2004) study discovered Croatian tourists visit Hungry at least once monthly for shopping tourism. Their study revealed 55.1% of retail business in the central Bracs region of Hungary was attributed to foreign tourists. Timothy (2000) suggested Canadian cross-border shoppers’ expenditures provide economic benefits to the U.S. economy when currency exchange benefits exist. Charney and Pavlakovich-Kochi (2001) discovered Mexican visitor direct spending of $962.9 spending in Arizona created almost 35,2000 jobs, $628.4 million (U.S.) in wages, and $1.584 billion (U.S.) in direct and indirect sales (money circulating through the economy). In Texas, Ghaddar and Brown (2005) found Mexican cross-border shoppers annually contributed more than $3 billion to the Texas economy. An analysis of 1994 U.S. Travel Center Data for Washington, D.C. revealed visitors spent $296.4 million (U.S.) on shopping (Frechtling and Horva´th, 1999). Frechtling and Horvath used an input–output model on the data to construct a Regional Industrial Multiplier System (RIMS), Type II tourism multiplier that yielded a retail trade Output Multiplier of 1.35 and Employment Multiplier of 10.6 (per $1 million of delivery to meet final visitor demand). Previous research supports the second assumption international outshoppers or cross-border shoppers’ expenditures provide economic benefits to the local and regional economy (Tasci and Denizci, 2010; Frechtling and Horva´th, 1999; Ghaddar and Brown, 2005; Michalko and Varadi, 2004; Charney and Pavlakovich-Kochi, 2001; Timothy, 2000; Mok and Lam, 1997).

A framework to holistically examine cross-border shopping is proposed based upon two assumptions: (1) travel and international outshopping or cross-border shopping are not mutually exclusive but rather are interdependent (Tasci and Denizci, 2010; Tosun et al. (2007), Michalko and Varadi, 2004; Timothy and Butler, 1995; Fodness, 1994) and (2) international outshoppers or cross-border shoppers’ expenditures provide economic benefits to the local and regional economy (Tasci and Denizci, 2010; Ghaddar and Brown, 2005; Michalko and Varadi, 2004; Charney and Pavlakovich-Kochi, 2001; Mok and Lam,1997). Furthermore, consumers’ purchase decisions are subject to the perceived benefits associated with their cross-border shopping experiences (see Fig. 1).

4. Hypotheses development

Fig. 1. A framework for cross-border shopping and its outcome.

Mexican national cross-border shoppers in the United States are of particular interest to this study. This study aims to explore consumers’ expenditures to determine how they are distributed amongst tourism or shopping related expenses. Specifically, this study examines the validity of the proposed theoretical framework by framework by (1) examining cross-border shopper visitors’ activities and tourism and shopping related expenditures, (2) identifying the economic impact cross-border shopping provides to the local and regional economy, and (3) describing crossborder visitors perceived benefits obtained from shopping. Hypotheses 1, 2, and 3(H1, H2, and H3) are concerned with the time spent away from home, influence of distance on expenditure, and frequency of shopping visits by Mexican cross border

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shoppers, respectively. Travel literature establishes a strong link between travel and shopping, nights away from home (Moscardo, 2004; Timothy, 1995), travel distance and visit frequency (Govers et al., 2008; Masberg, 1998). A study on Texas attractions indicates the most popular visitor destination for Texans, and the eighth most popular for Texas non-resident visitors, are the San Marcos Outlet Malls (Shifflet, 2006). In an attempt to understand the cross shopping behavior of Mexican consumers, it has been found that their expenditure varies based on their length of the stay in the U.S. (Ghaddar and Brown, 2005). More specifically, the study estimates about 60% of the Mexican cross border shoppers in Texas as day visitors who return back the same day. However, the rest 40% of the shoppers stay overnight for up to seven nights. As compared to other areas of the U.S. that are closer to the U.S.–Mexico border such as Arizona and California, Mexican cross border shoppers stay for relatively longer time in Texas due to the distance they have to travel to reach to the retail outlets (Ghaddar and Brown, 2005). Based on this, it is apparent that cross shoppers who stay for longer time tend to spend more in expenses which could include lodging, dining, and entertainment, in addition to shopping. Thus, H1. Mexican national cross-border shoppers spend at least one night away from home H2. Distance negatively influences the amount of Mexican national cross-border shoppers’ expenditures during a visit to an U.S. outlet mall H3. Frequency of shopping visits to the United States influence Mexican national cross-border shoppers’ expenditures positively during a visit to an U.S. outlet mall

4.1. Regional impacts of cross shopping Hypotheses 4 and 5 (H4, H5) are concerned whether expenditure by Mexican cross border shoppers generates income and jobs in the local community and regional areas where retail outlets are located. Consumers’ expenditures on travel and shopping bring revenues into the local area and therefore contribute to economic development (Bonn and Bell, 2003). It is evident that the economic impact of expenditures by cross border shoppers varies based on several factors such as the distance to the border, size of the city, and the type of retail outlet (Ghaddar and Brown, 2005). Mexican crossborder shoppers contribute over $3 billion (U.S.) annually to the Texas economy (Ghaddar and Brown, 2005). These shoppers’ spending in McAllen, Texas, a border town, reportedly contributed to a decrease in unemployment from18% in 1997 to 5.7% in 2007 (Sadovi, 2007). Mexican cross-border shoppers traveled hundreds of miles to buy products that were cheaper in the United States or not available in Mexico, although the Mexican peso was devalued 30% against the U.S. dollar during the 2008 holiday shopping season of late November through early January (Thanksgiving through New Year’s week) (Daugherty, 2008). In study of Ghaddar and Brown, (2005) clothing items accounted for more than 40% of cross-border shoppers’ expenditures, food related expenses were between 20% and 35%, and lodging costs about 8%. Visitors traveling by air spent on average ten times more shopping ($1000.00) than those arriving by automobile ($100.00). One study of Mexican cross-border visitors to the United States found that a 1% in change in visitor revenues results in a.23% change in expenditures (Davila et al., 1999). This suggests Mexican visitors’ shopping expenditures are income inelastic or fluctuate little as a result in changes in currency rates. Thus, it is apparent that

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H4. Mexican national cross-border shoppers’ expenditures during a visit to the U.S. outlet malls will generate income for the local and regional area. H5. Mexican national cross-border shopper expenditures will create jobs for the local and regional economy. About 40 million Mexicans visit Texas for leisure activities annually and spend approximately $3 billion (U.S.) on merchandise (Chozick, 2006). A 2004 study of Mexican cross-border shoppers described them as mostly middle-aged, wealthy, and college educated (Mogab et al., 2005). In that study, 92% of respondents came to the United States by automobile and planned to spend more than $500 on their shopping trip. Almost three quarters of respondents had previously shopped at the mall where the study was conducted and almost 42% intended to file for a sales tax rebate. Ghaddar and Brown (2005) suggest more than two-thirds of Mexican nationals enter the United States for the purpose of shopping. Mexican nationals also cross over the U.S. border for social reasons, such as to visit family and friends, and for work related activities. Guo et al. (2006) find the frequency of Mexican nationals shopping in the United States is related to product quality, quality of retail services, consumers’ fashion consciousness, shopping enjoyment, as well as a desire for rule of law, egoism, and masculinity. Enjoyment is more of an influence on outshoppers’ selection of retail destination than on inshoppers (Blakney and Sekely, 1994). As well, the consumer’s need for uniqueness affects their choice of shopping destination (Burns and Warren, 1995). Outshopping is a social experience; as 65% do so with family and 25% with friends (Piron, 2001). About 60% of outshoppers identify a reason for outshopping as pleasure or vacation. Merchandise and Service Quality and Economic are important motivational attributes for cross-border shoppers (Sullivan and Kang, 1997). In addition, Guo and Wang (2009) find fashion consciousness influences outshopping enjoyment and frequency. Our framework suggests international outshoppers or cross-border shoppers seek both tourism and shopping related benefits from their visit to the U.S. Thus, H6. Mexican national cross-border shoppers’ primary reason for visiting the discount outlet malls was for shopping. H7. Mexican national cross-border shoppers’ receive social benefits while visiting discount outlets. 5. Research methods 5.1. Input–output analysis The proposed framework considers both travel and shopping as components of the cross-border shopping experience. The unique combination of travel with shopping creates an experience that is very desirable from an economic development perspective because of its contribution to local and regional economies. An input–output model (IMPLAN) one of the most commonly used methods for evaluating the economic impacts of tourism for the region (Frechtling and Horva´th, 1999; LeSage, 2007; Chang, 2001). This input–output model framework allows categorization and analysis of data that indicates the relationship, money transfers, between one industry and another, as well as interdependencies between them in a regional economy (Frechtling and Horva´th, 1999; LeSage, 2007; Chang, 2001; Salsgiver, 1997). The direct, indirect, and induced impacts from a final demand change through input–output analysis can be calculated. The input–output analysis provides a methodology that allows examination of direct, indirect, and induced economic impacts of international outshoppers or cross-border shoppers’ expenditures

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on the regional economy In particular, this type of analysis is well-suited for international outshoppers or cross-border shoppers’ expenditures because the regional variation of the Type II multiplier is 6% for the retail sector and 5% for amusement and recreation (Chang, 2001). Baaijens and Nijkamp (2000) suggest in concentrated areas where a large amount of activity is devoted to selling products that consumers, multipliers will be higher than in areas less efficient in producing things that tourists want to buy. The framework for this study uses a demand-related approach, which uses an international outshoppers or cross-border shopper survey to directly estimate expenditures. This paper examines the validity of the theoretical framework by (1) examining cross-border shopper visitors’ activities and tourism and shopping related expenditures, (2) identifying the economic impact cross-border shopping provides to the local and regional economy, and (3) describing cross-border visitors perceived benefits obtained from shopping.

5.2. Data collection Data were was collected via the mall intercept method at the San Marcos Outlet Malls during the 2008 Christmas shopping season (Michon and Chebat, 2004; Bush and Hair, 1985). The outlet malls are located between Austin and San Antonio, Texas; between 3 and 4 h and at least driving 180 miles from the Mexican border,. The San Marcos outlet center site was selected, over other locations, because they regularly serve cross-border shoppers and also are a top visitor destination. Respondents were interviewed at two locations in the outlet malls. Previous Mexican cross-border research could not explain reduced visitation spending as a result of normal seasonality or extraordinary circumstances (Charney and Pavlakovich-Kochi, 2001). Data was collected during the Holiday season, after Thanksgiving in November until Three Kings Day in January, 2008–2009. Seasonally this usually was a busy time at the mall, especially for Mexican visitors. A mall intercept method was used to interview respondents about visit to the U.S., expenditures, and personal information (Michon and Chebat, 2004; Bush and Hair, 1985). This method uses a convenience sampling method and provides high quality and accurate data (Bush and Hair, 1985). The sample was stratified because we examined Mexican Nationals who crossed the border to shop. Trained experts systematically approached every third person and ask the for an interview respondents in English or Spanish. Data were collected from 108 Mexican crossborder shoppers which yielded 103 useable surveys.

5.3. The survey Surveys from past previous studies about travel visitor spending were used in the development of this study’s survey (Govers et al., 2008; Mossberg, 2007; Robertson and Fennell, 2007; Tosun et al., 2007; Moscardo, 2004; Bonn and Bell, 2003; Masberg, 1998; Timothy, 1995). Additional literature pertaining to outshopping (Piron, 2001; Burns et al., 1999; Sullivan and Savitt, 1997) and cross-border shopping (Daugherty, 2008; Dmitrovic and Vida, 2007; Mogab et al., 2005; Ghaddar and Brown, 2005; Sullivan and Kang, 1997) also contributed to this study’s survey development. Respondents recorded their group’s expenditures during the last 24 h in different categories (Bonn and Bell, 2003). The categories used allowed respondents to record both tourism and shopping expenditures (Bonn and Bell, 2003; Frechtling and Horva´th, 1999) Respondents’ expenditures were categorized as transportation; lodging; restaurants; groceries;

entertainment; admission attractions; spectator sports; apparel shopping; other shopping; and other purchases (see Appendix A for SIC classifications). Ethnographic interview questions (Flynn and Foster, 2009) collected information about the benefits cross-border shoppers received while shopping at the U.S. outlet malls. Scale items were used to find out where cross-border shoppers found information about shopping in the United States (Sullivan and Kang, 1997). Semi-structured and structured questions were used to collect expenditure and demographic information. The study methodology employed collecting information from Mexican cross-border shoppers which necessitated development of both English and Spanish versions of the survey instrument. When Spanish surveys were used, those responses were translated into English and back translated for accuracy (Sullivan and Kang, 1997). Both English and Spanish versions of the survey instrument were pre-tested. A Coefficient Alpha is used to compare English and Spanish responses for Likert Scale items. A Coefficient Alpha of .9 was similar to results in the study of Sullivan and Kang 1997. A t-test was used to determine if significant responses differences existed in English and Spanish responses to other questions. No significant differences were found between responses in the English and Spanish versions of the survey instrument. Data were analyzed in English. 5.4. The sample Most cross-border shopping respondents entered the United States by automobile, while fewer numbers arrived via other travel modes. Cross-border shopper visitor origins varied greatly throughout Mexico, but were primarily located along border areas such as Nuevo Laredo and Monterrey. More distant inland locations, such as Mexico City and Veracruz were also significant visitor origin sources. Respondents were 53.7% male and 46.3% female, with an average age of 41 years. The average respondent age of 41 years in this study was consistent with the age distribution in another study about Mexican visitors to the U.S. (Charney and Pavlakovich-Kochi, 2001). About 65% of respondents were employed and the others were homemakers, students or retired. Their average annual household income reported was between $50,000 and $79,000 (U.S.). The average respondent in this survey came to the outlet malls with five people, including one child under 18, and stayed in the area three nights during their 2008 holiday season shopping trip. Average party size in this study was greater and stayed overnight more than in Charney and Pavlakovich-Kochi’s study. However, length of stay in this study supports Ghaddar and Brown (2005) observation that Mexican visitors to Texas stay overnight more than those visiting other states. These results suggest our sample included shopper tourists. The average travel group respondent reported spending $1568 per trip day and visited the San Marcos outlet mall 2.45 times per year. Per party expenditures were greater than in study of Charney and PavlakovichKochi 2001, but similar to Ghaddar and Brown (2005) findings for shoppers that travel to the U.S. by air. Respondents were classified according to accommodation type (including day trippers); 79% stayed in hotel and motels, 10% with family and friends, 1% in RV camps, 5% in condos, and 8% were day visitors (see Table 2). Most overnight visitors in this study stayed in hotels and motels; consistent with what Charney and Pavlakovich-Kochi (2001) found.

6. Results 6.1. Travel and cross-border shoppers The average cross-border shopper stayed in the study area three nights. This finding confirms the first hypothesis that Mexican

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national cross-border shoppers will spend at least one night away from home. Least squares regression was used to examine the relationship between distance and the amount of money spent by crossborder shoppers. There was no significant relationship at p r05 between distance and the frequency and number of shopping trips to the United States on the amount of money spent by Mexican national cross-border shoppers. Therefore the second and third hypotheses are rejected. Distance and frequency of shopping visits to the United States did not positively influence Mexican national cross-border shoppers’ expenditures.

Table 1 Cross-border shoppers’ average expenditures by accommodation type. Spending Category Transportation Other shopping Groceries Apparel shopping Entertainment Other purchases Admission Attractions Spec sports Lodging Restaurants Total

Hotels/ motels

Friends/ family

Condos

Day visitors

All visitor spending

88.64 164.59 76.37 827.82

63 270 21.5 795.2

88.64 164.59 76.37 471.71

43.7 231.25 23.12 405.12

283.98 830.43 197.36 2499.85

26.7 220.5 11.21

45 50 4.5

42.86 116.43 0

11.25 125 0

125.81 511.93 15.71

5.58 167.02 127.51

5.4 19.4 81

5.71 137 97.86

0 0 58.87

16.69 323.42 365.24

1201.17

898.31

5170.42

1715.94

1355

Table 2 Cross-border category expenditures by accommodation types. Number of visitors

N (sample)

%*

Length of stay

Party size

Spending (day)

Hotels/motels Friends/family Condo Day visitors All visitors

79 10 5 8 102

0.77 0.10 0.05 0.08

3 2.4 4 1 2.833

4.6 12.3 7 2.1 5.28

1715.94 1355.00 1201.17 898.31 1591

601

6.2. Quantitative analysis Cross-border shopper average expenditures were categorized and calculated by accommodation type; hotel/motel, friends/relatives, day visitors, and condominiums (see Table 1). The response rate as percentage of the total responses for each cell is consistent with percentages used in other studies (Chang, 2001) and thus appropriate for this exploratory study of crossborder shopping. Mexican cross-border shoppers that stayed in hotels or motels spent the most amount of money daily, while day visitors spent the least. Of the approximately two million shoppers who visited the study area, about 30% or 600,000 were Mexican Nationals. Mexican cross-border shopper daily expenditures were calculated by accommodation type. Cross-border shopper expenditures, regardless of accommodation type, were the greatest in the category of clothing product purchases. Crossborder shoppers who stayed in hotels or motels or with friends and family spent approximately $800 (U.S.) on clothing daily, while those who stayed in condominiums or were day visitors spent between $400 and $475 (U.S.). Contribution to the local and regional economies was measured by an input–output model (IMPLAN) (Bonn and Bell, 2003, Chang, 2001). IMPLAN tracks how visitors spend dollars in the local economy and resulting ‘‘ripple effects ‘‘which are region specific. IMPLAN also was used to study regional benefits of tourism (Frechtling and Horva´th, 1999; Bonn and Bell, 2003; Charney and Pavlakovich-Kochi, 2001) and retail sectors (Robertson and Fennell, 2007). The expenditure categories examined in this study were transportation, lodging, restaurants, groceries, entertainment, admission attractions, spectator sports, apparel shopping, other shopping, and other purchases (Bonn and Bell, 2003). IMPLAN measures indirect impacts which include sales, employment, and the value-added from other firms in the local and regional economy that support cross-border shopping travel (Bonn and Bell 2003). Employee expenditures generate additional sales and employment described as induced impacts. The economic values of changes in demand arising from cross-border shopping were calculated by using multipliers provided by IMPLAN and customized for this study region. For the crossborder shopping data, IMPLAN calculated a Type II multiplier; the amount of money brought into the area by direct spending by tourist shopping visits. Consumer demand was used to calculate

Table 3 Cross-border holiday shopping impacts at the county level by accommodation type. Accommodation type Hotel/motel sector Output ($mil) Labor income ($mil) Employment Friends/relatives Output ($mil) Labor income ($mil) Employment Day visitors Output ($mil) Labor income ($mil) Employment Condominium Output ($mil) Labor income ($mil) Employment All visitors Output ($mil) Labor income ($mil) Employment

Direct

Indirect

Induced

Total

Multiplier

$178,581,191.00 $58,328,862.00 3,111

$38,796,286.00 $12,818,164.00 437

$39,935,429.00 $11,974,032.00 463

$257,312,905.00 $81,121,058.00 4,010

1.44 1.39 1.29

$13,954,586.00 $4,553,063.00 266

$3,054,745.00 $1,017,684.00 35

$3,217,350.00 $964,674.00 37

$20,226,681.00 $6,535,420.00 338

1.45 1.44 1.27

$27,309,759.00 $8,770,911.00 485

$5,776,217.00 $1,925,894.00 65

$6,177,872.00 $185,234.00 72

$39,263,847.00 $12,549,146.00 621

1.44 1.43 1.28

$17,093,814.00 $5,499,502.00 301

$3,728,706.00 $1,225,812.00 42

$3,884,163.00 $1,164,607.00 44

$24,706,683.00 $7,889,921.00 388

1.45 1.43 1.29

$236,939,350.00 $77,152,338.00 4,163

$51,355,954.00 $16,987,554.00 536

$53,214,814.00 $14,288,547.00 616

$341,510,116.00 $108,095,545.00 5,357

1.44 1.40 1.29

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Table 4 Accommodation type

Direct

Indirect

(A) Cross-border holiday shsopping impacts at the regional level by accommodation type. Hotel/motel Output ($mil) $178,430,200.00 $53,032,909.00 Labor income ($mil) $58,802,045.00 $18,935,826.00 Employment 2,621 473 Friends/relatives Output ($mil) $13,959,428.00 $4,243,249.00 Labor income ($mil) $4,663,268.00 $1,524,800.00 Employment 221 38 Day visitors Output ($mil) $4,673,302.00 $1,381,690.00 Labor income ($mil) $1,869,368.00 $498,666.00 Employment 63 12 Condominium Output ($mil) $17,081,499.00 $5,116,019.00 Labor income ($mil) $5,771,472.00 $1,815,074.00 Employment 249 46 All visitors Output ($mil) $214,144,429.00 $63,773,867.00 Labor income ($mil) $71,106,153.00 $22,774,366.00 Employment 3,153 569 Multipliers (B) Cross-border Holiday Shopping Regional and County Level Multipliers. All visitors Output Labor income Employment Induced Effects All visitors Output ($mil) Labor income ($mil) Employment

Induced

Total

Multiplier

$66,901,670.00 $21,748,650.00 622

$298,364,779.00 $99,486,520.00 3,716

1.67 1.69 1.42

$5,325,488.00 $1,731,230.00 50

$23,528,165.00 $7,919,298.00 308

1.69 1.70 1.40

$2,037,944.00 $662,563.00 19

$8,092,936.00 $3,030,536.00 93

1.73 1.62 1.49

$6,529,027.00 $2,122,481.00 61

$28,726,545.00 $9,709,027.00 355

1.68 1.68 1.43

$80,794,129.00 $26,264,924.00 751

$358,712,425.00 $120,145,381.00 4,473

1.68 1.69 1.42

Regional (I35)

County (Hays)

1.68 1.69 1.42

1.44 1.40 1.29

$80,794,129 $26,264,924 751

$53,214,814 $19,288,547 640

direct demand. Indirect demand was calculated to determine how direct demand affects producers in the supply chain in the sectors being examined. The overall induced effect measured benefits to local residents, including retail sector jobs and resulting consumer expenditures. The multiplier (p r.1) is an estimate of direct and indirect demand on the local economy (see Tables 3 and 4). For this study, the local area for the discount outlet malls was Hayes County. Regional analysis included five Texas counties (Travis, Hays, Comal, Guadalupe, and Bexar) between San Antonio, and Austin connected by interstate 35, a major interstate highway. Tables 3 and 4 provide information about the impact of crossborder shopper expenditures by accommodation type at the local and regional level. The multiplier for all respondents at the local level ranged from 1.29 to 1.45 which meant for every dollar spent by the Mexican national cross-border shopper between an amount between $1.29 and $1.41 was generated for the economy. Overall, the multipliers are slightly lower at the local level than for the region. At the regional level multipliers ranged from 1.40 to 1.73. Results from the input–output analysis confirm the fourth hypothesis; Mexican national cross-border shoppers’ expenditures during a visit to the U.S. outlet malls will generate income for the local and regional areas; and fifth hypothesis; Mexican national cross-border shoppers expenditures will create jobs for the local and regional economy. 6.3. Qualitative study A qualitative research component was used to increase overall knowledge of cross-border shopping behaviors. Content Analysis

Table 5 Cross-border shoppers activities at the outlet malls Word

Number of times appears

Shopping Eating Experience Stores Visit/social activity Christmas shopping Clothing shopping

83 16 14 13 12 6 6

Table 6 What cross-border shoppers liked best about the outlet malls. Word

Number of times appears

Prices Stores Variety Clothing Shopping Brands

66 17 13 13 8 7

is an appropriate method for objective and systematic description of consumer comments (Flynn and Foster, 2009; Kassarijian, 1977). In this study unit of analysis was the word. Words were counted in order to determine how many times the same term appeared in answers to the qualitative interview questions.

P. Sullivan et al. / Journal of Retailing and Consumer Services 19 (2012) 596–604

Respondents were asked to describe their activities at the outlet malls and their responses are shown in Table 5. Responses indicate cross-border shoppers top activities were shopping and buying, followed by eating, and visiting. The descriptive good appeared 13 times in responses to the open-ended question and was used in conjunction with the words ‘‘quiet,’’ ‘‘relax,’’ ‘‘sales,’’ ‘‘deals,’’ and ‘‘shopping.’’ The Hypothesis 6 (H6) is accepted, Mexican national cross-border shoppers’ primary reason for visiting the discount outlet malls was for shopping. The words used the most by the respondents to describe what they like best about shopping at the outlet mall are shown below in Table 6. Prices and stores were listed most frequently as reasons for visiting the outlet malls. The descriptive term good was used in association with brands, prices, clothing, fashion, sales, and shops. Although the words ‘‘visit’’ or ‘‘visiting’’ were not a primary activity at or a benefit liked best about the discount outlet malls, these words were mentioned over 10 times by respondents. Content analysis did not support acceptance of the seventh hypothesis; Mexican national cross-border shoppers’ receive social benefits while visiting discount outlet.

603

are benefits cross-border shoppers’ value. However, the framework should be explored and its generalizability tested within the broader context of international visitor outshopping. This study should be viewed as preliminary due to sample size and geographic limitation of the study. Additional research is required to see if and how widespread international visitor outshopping impacts the United States economy, as well as economies around the world. Retail marketers and shopping centers can use information from this study to develop campaigns that target the benefits sought by cross-border, and other international shoppers. Economic benefits of shopping in the United States are important to visitors who come here to shop, as well as the communities that benefit from their expenditures. An open border allows income to be generated from visitor shoppers and this contributes to the vitality of U.S. retail sector and communities. The fact that a large number of Mexican cross-border shoppers answered the survey in Spanish underscores the need for a bilingual retail workforce.

Appendix A. Expenditure Category Included SIC Numbers Transportation

7. Discussion Results from this study reveal cross-border shoppers are visitors as defined by distance and amount of time spent away from home outside their ‘‘usual environment (Govers et al., 2008; Masberg, 1998; Timothy, 1995). Respondents reported shopping as their primary activity at the discount outlet malls. In general, they are infrequent outshoppers (Piron, 2001; Burnset al., 1999; Sullivan and Savitt, 1997) or cross-border shoppers (Dmitrovic and Vida, 2007; Mogab et al., 2005; and Sullivan and Kang, 1997) because they visited the outlet malls 2.45 times a year. Distance and trip frequency were not significant predictors of visitor cross-border shopping, in contrast to the findings of Govers et al. (2008) and Masberg (1998). Although regression was not significant, the study is exploratory in nature and offers direction for future research. Distance and expenditure findings support the first assumption for the framework that guided this study: travel and visitor outshopping or cross-border shopping are not mutually exclusive, but rather are interdependent. Results indicate Mexican national cross-border shopper expenditures generate income and create jobs for the local area and region as indicated by the multipliers generated from IMPLAN. Multiplier results compare favorably with other studies of visitor related retail expenditures. This study found a regional Type II multipliers between 1.42 and 1.73 which was higher than the multiplier range identified in Chang’s (2001), 1.14 to 1.58, but consistent with Baaijens and Nijkamp (2000) discussion of multipliers in relation to the efficient product offer in a concentrated tourist area. Content analysis results found Mexican nationals cross the U.S. border for shopping. Results indicate limited support for the assumption social reasons motivate Mexican cross-border shoppers to visit the discount outlet malls. Results in this study support previous findings by Ghaddar and Brown (2005) and Guo et al. (2006) regarding Mexican nationals shopping in the United States, as well as research by Dmitrovic and Vida (2007) and Timothy (1995) about cross-border shoppers. Consumers cross borders to shop and price is an important motivation for cross-border shopping. Results from the study validate the second assumption for a framework cross-border shopping and its outcome. Findings indicate cross-border shopper expenditures provide economic benefits to both the local and regional economy. Furthermore, consumer purchase perceived benefits, such as price and variety,

391-air transportation; 395-transit and ground and passenger transportation;  397-scenic and sightseeing transportation; 407-gasoline stations; 432 automotive equipment rentals and leasing Lodging 479-hotels and motels, including casino hotels; 480-other accommodations. Restaurants 81-food services and drinking places. Groceries 405-food and beverage stores. Entertainment 418 motion picture and video industries; 477-bowling centers; 478-other amusement, gambling, recreation. Admission attractions 471-performing arts companies; 475, museums, historical sites, zoos and parks. Spectator sports 472-spectator sports. Apparel shopping 408-clothing and accessories stores. Other shopping 402-furniture and home furnishing sales; 403-electronics and appliance sales; 404 building materials garden supplies; 409-sporting goods, hobbies, and books sales; 410 general merchandise store; 411 miscellaneous store retailers; 412 nonstore retailers

604

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