The inter-store mobility of supermarket shoppers

Abstract

The allegiance of a particular customer, and the distribution across customers of strength of affiliation to a store are important indicators of store health. It is therefore important to understand the extent and determinants of shopper mobility among competing retailers. While shoppers often patronize many stores, they typically have a primary affiliation to a "main store" that captures the majority of their purchases. We examine, in detail, the tendencies of shoppers to transition away from the current main store and adopt another in its place. That is, rather than study all types of store switching behavior, we focus on the decision to change primary allegiance. The model is established in a discrete time hazard framework and estimated as random-effects probit. Data from 548 households taking 88,945 shopping trips among five stores are used to calibrate the model. We find that state dependence is prevalent with nearly three quarters of the shoppers showing progressive attachment to their current main store. Interestingly, this finding is not simply driven by location (i.e., because shoppers are captive to a single store based on geographical distance). More likely, shoppers are unwilling to give up the benefits of store-specific knowledge of assortment, layout and prices. Second, the decision to transition from a current main store is not influenced by temporary price promotions on a common basket of items: Shoppers will cherry-pick, but this alone does not cause them to change primary allegiance. The majority of transitions occur across competing stores of the same price format, which suggests "format loyalty" is an important aspect of shopper behavior. After controlling for unobserved heterogeneity, we find little relationship between observable demographics and the transition probability. We do, however, find that shoppers who spend more per trip are less likely to change main stores, as are less frequent shoppers. Implications for retail management strategy are discussed.

The relevance of shopper logistics for consumers of store-based retail formats

“…These variables were chosen since they distinguish between the different extents of logistics tasks to be undertaken in households (Rhee and Bell, 2002). As mentioned, age differentiates between the different abilities of respondents to carry out shopper logistics (e.g.…”

Retail-led regeneration and store-switching behaviour

“…Support for this level of switching generally has also been presented by Rhee and Bell (2002) who found nearly 75% attachment to the main store in their USA based study.…”

“…Popkowski-Leszczyc and Timmermans (1997), whose study is more about variety-seeking than main store switching, identify the more 'loyal' shoppers as having dual employment, being better educated, spending more per trip and taking more time between shopping trips. These latter two elements were also identified by Rhee and Bell (2002), who equated them to 'shopping style', and then related this to format loyalty and degrees of 'stickiness' with main stores and store types. They did not find any relationship between demographics and 'transitioning' probabilities.…”

A B2C Business Agenda: Analyzing Customers’ Perceptions towards Bumiputera Retailers

“…However, while customers often patronize many stores, they typically have a primary affiliation to a "main store" that captures the majority of their purchases (Rhee & Bell, 2002). Having said that, understanding and fulfilling shoppers' requirement is the essence of building retail patronage (Bellenger & Kargaonkar, 1980) Customer Perception…”