Assessing Grocery Store Attraction via Cross-Shopping Linkages – Introduction

Assessing Grocery Store Attraction via Cross-Shopping Linkages - IntroductionWith the realization that technology is changing consumer behaviors, retailers are increasingly concerned about maintaining consumer loyalty and attracting customers away from the competition. In today’s market, technology is increasing the likelihood of consumer cross-shopping. Through the use of smart phones, consumers can search multiple stores for price and either make the purchase online or travel to another store to make a purchase. Recently Lesonsky reported on a study by Prosper Mobile Insights which found that 40% of their respondents, after learning of lower prices via their mobile device, left the store they were currently in to go to a competitor’s store. But price is only one of the evaluative criteria used by consumers when making a purchase. Retailers have found that customer service and product quality may also provide a means to reduce cross-shopping behavior and increase store loyalty.
The marketing literature has addressed retail patronage and focused on store selection criteria such as convenience, accessibility, and price. Like retail patronage, cross-shopping behavior addresses issues related to store selection, but cross-shopping behavior also implies consumer evaluation of multiple stores. Since a wide range of store formats exist (i.e., grocery stores, discount stores, supercenters, off-price stores) it is important to address the degree of similarity among store formats selected by consumers for cross-shopping. Inter-type competition occurs when consumers’ cross-shop across various types of store formats (a grocery store and a discount department store) while intra-type competition occurs when consumers cross-shop similar store formats (e.g., only grocery stores or only discount department stores). In intra-type competition, lower prices can be an important part of a store’s strategy, but can lead to lower profits. On the other hand, the use of service and product branding provides stores an opportunity to maintain loyalty while retaining profitability.
Previous cross-shopping research has focused on consumer characteristics of cross-shoppers in both inter- and intra-type markets. The majority of this research has been consumer centric meaning research has focused on differences between consumer segments (i.e,. cross-shoppers versus non-cross-shoppers). For example, previous cross-shopping research has examined demographic variables such as gender, age, and income. For a store owner this information can be useful, but provides limited insights into changes the store could make to attract cross-shoppers from other stores or reduce the percentage of shoppers they share with their competition.
Current cross-shopping research has examined antecedents of cross-shopping behavior by studying consumer preferences and demographics which are used to profile a cross-shopper. In previous research the premise has been that consumer preferences can be mapped to store formats. These preference profiles provide marketers a means to identify differences among market segments and subsequently associate the market segments with specific store formats. The current study takes a unique approach to better understand the strategic implications of cross-shopping behavior. Using cross-shopping data this study attempts to determine the strength of a store to attract customers away from its competitors. Stores that attract shoppers away from their competitors’ stores are providing greater perceived value. Understanding the differences between stores that can attract cross-shoppers away from a competitor versus a store that “shares” their customers with the competition would be of great importance in the development of the retailer’s strategy.

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