Consumer

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Consumer the shop

• Week 6 4 June 2003

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Sources

• East (chapter 9)
• Marshall (chapter 5)
• Lam (2001). The Effects of Store Environment on
  Shopping Behaviors A Critical Review. Advances
  in Consumer Research, 28 190-197
• Taylor and Nelson web site http//www.tnsofres.com
  /superpanel

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Retail changes (T N)
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(No Transcript)
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Consequences of the retailing growth

• Saturation
• Price competition
• Out-of-town versus town centre
• Supermarket concentration

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Gravity models for shopper choice

• Trade is directly proportional to population and
  inversely related to distance
• Geographical vs. time distance
• Geographical vs. economic distance
• Central place theory (economic distance)
• Accounting for demographic differences

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Huffs Retail Gravitation Model
Selling area
Attraction of a shopping centre
Travel time
Probability of using a shopping centre
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Some empirical results with Huffs model

• ? ? 2
• Adj. R2 ? 0.25
• Does the consumer consider ALL shopping centres?
• What are the effects of ignoring all other
  details on the shopping area?

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Store preferences

• Store image beliefs, attitudes and feelings
  about a store
• What attribute does make the shop attractive to
  consumer?
• Image is retained for long periods (difficult to
  change)

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Main reason for choosing a store in Britain (1994)

• Source Adapted from East (1997), original source
  CRU-Kingston Business School

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Supermarket vs local shop (1991)

• Source East et al. (1991b, 1997)

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Determinants of choice

• Salient attributes!
• One/two factors
• Store location is the most relevant attribute in
  UK (several studies)
• In 1994 price was more important than store
  location in the US.

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1992 vs 1994(and US vs UK)
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Shopping trips

• Main trip customers
• Secondary quick trips customers
• Average consumer
• One weekly trip (main)
• Supplements of secondary trips

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Types of customers

• Principal component analysis (1992) on Britain
  and US supermarket surveys
• Heavy buyer large income and household, aged
  under 45, prefers large out-of-town stores, shop
  later in the day and usually on a regular day
• Congestion dislikers dislike shopping, claim to
  avoid busy times and to be busy themselves
  (reluctant shopper)
• Local shoppers use small local stores, shop
  frequently, spend little, often old and from
  small households

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Compulsive shoppers

• Buying something not needed
• Buying something that will not be used
• Mood repair out of the process of buying

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The in-store environment

• It is a tool for market differentiation
• Store layout
• Atmospherics
• The store environment affects
• Cognition
• Emotions
• Behaviours

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Environment and actions

• Actions occur when the environment presents
• Opportunities
• Stimuli
• Rewards
• Example try to find the exit in IKEA

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Congruence

• If store environmental elements/factors are
  congruent with each other, their effects on
  emotions, cognitions and shopping behaviour will
  be magnified
• Match in cultural dimension

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Store layout

• Optimising spending opportunities
• Delicatessen at the back
• Presenting purchase cues
• Making the store an easy and pleasant place
• Place products to increase probability to buy
• End aisle and displays
• Optimisation of space and location devoted to a
  Stock keeping unit
• Optimal layout to maximise profits (e.g. move
  profitable products to the eye-level)

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Atmospherics
MusicColourTemperatureLayoutsOdours
ENVIRONMENT
MOODS
Pleasure-displeasureArousal-non-arousal
BEHAVIOURS
Time spentExplorationCommunicationSpending
East (1997)
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Some examples

• Smell in the Body Shop
• Handwritten prices in Oddbins
• Case study (essay by Clara Ikemeh and Ravinun
  Bovornsantisuth, 2003)

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The Treat Store  Ambient Factors Mixture of
soft/strong lighting tones Floral
Fragrance  Design Factors Very Modern Pictorial
Representations Use of Subtle colours
(Green/Silver) Numerous strategic positioning
tills Extremely wide aisles Simply and very
orderly layout  Social Factors Affluent, more
upmarket shopper Specialist shopper (e.g.
organic) Crowd haters Strong customer service
emphasis Formal staff uniform
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The Hypermarket  Ambient Factors Use of
contemporary music Bright/intense lighting Food
Aroma Design factor Significant use of subtle
colours display (Green/Yellow) Wider
aisle Pictorial representation Use of stimuli
(e.g. sound bites-cock a doo in egg
section) Social Factors Heavy shopper Younger
shopper Casual staff uniform High level floating
staff  
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The Local Store  Ambient Factors Use of
Music Moderate/poor lighting  Design Factor Old
Fashioned/Outdated Use of Bright Colours (Red
Yellow) Simple Layout  Social Factor Older
Demographic profile Cost saving shopper Low level
of staff flow Limited Range products  
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Direct Stimulus-Response effects some examples

• Red is more arousing, lead to quick decisions
• Rhythm of music influences speed of customers
  through the store
• Classical music leads to buy more expensive wine
• Lighting level in a cellar
• Affects amount of handled wine
• Does not influence time spent or amount bought

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Time of store use

• Food is perishable
• Different environment at different times
• Different level of consumption over the year
  (seasonality)

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Weekly timing
East (1997)
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Day timing
East (1997)
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Segments by time of use

• Full time employed mainly shop on Friday and
  Saturday and in the evenings (62 after 2pm)
• Not full-time employed on average shop earlier
  in the week and in the day (70 before 2pm)

East (1997)
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Reasons for shopping on different days / times

• Days
• Near weekend (28)
• Day not working (16)
• Store less busy (13)
• Needed specific food (13)
• Time of day
• Fitted in with other shopping (25)
• Store less busy (25)
• Left work then (13)
• Car / lift / help available (13)

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Food retailing methods

• Concentration of retailing in western countries
• Small shop disappearing
• Economies of scale
• Labour costs
• Economies of scope for the consumer
• Price, services and range differentiation/segmenta
  tion
• Specialisation
• Kwik save
• Iceland

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Non-price competition

• Multi-buy
• Link-save
• Shopper loyalty schemes
• Retail format
• Differentiation
• Specialisation
• Diversification

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Retail marketing strategies
High price
Marshall (1995)
Delicatessen Specialist Food
Department store food hall
Convenience store
Conventional Supermarket
Wide and deep range
Narrow range
Food superstore
Warehouse club
Hard discount store
Discount superstore
Low price
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Retail own brands

• Expansion of retail own brands (labels,
  sub-brands)
• First/second generation RB
• Substitutes of well-known brands at a discount
  price
• Third generation RB
• Low price, but close to leader quality
• Fourth generation RB
• Added value product, differentiation from
  competitors, not significant price discount,
  competing with premium brands, customer loyalty
• Lower advertising costs
• Quality control link between product and
  retailer name

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Own brands and price perception

• Consumer search and shopping costs are too high
  to search for different own brands
• Consumer usually select a single store / retail
  brand
• Price comparison is made on price of main item
  retail brand
• Price of main item retail brand becomes the
  surrogate of the perceived price level of the
  whole store

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Use of information

• Scan data item data at the point of sale
• Efficient shelf and store layouts
• Matching of checkout labour to shopper flows
• Effectiveness in buying by the retailer (cost
  reduction)
• Capability to have link-save, consumer loyalty
  programmes (panel data)
• Improved stock management

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Other management strategies

• Product internationalisation
• Higher margins
• Variety
• Store operation in other countries
• Strategic alliances
• International buying consortia
• Marketing groups
• International joint venture