The current issue and full text archive of this journal is available at www.emeraldinsight.com/0959-0552.

htm

IJRDM 34,6

Consumer demographics, store attributes, and retail format choice in the US grocery market
Jason M. Carpenter and Marguerite Moore
Department of Retailing, University of South Carolina, Columbia, South Carolina, USA
Abstract
Purpose To provide a general understanding of grocery consumers retail format choice in the US marketplace. Design/methodology/approach A random sample of US grocery consumers (N 454) was surveyed using a self-administered questionnaire. Descriptive and inferential statistical techniques (regression, ANOVA) were used to evaluate the data. Findings Identies demographic groups who frequent specic formats (specialty grocers, traditional supermarkets, supercenters, warehouse clubs, internet grocers) and examines store attributes (e.g. price competitiveness, product selection, and atmosphere) as drivers of format choice. Research limitations/implications The results included in this research were gathered and reported on an individual format basis. In order to capture consumer choices across a range of grocery retail formats, forcing respondents to compare formats was not initiated. In addition, data pertaining to whether consumers had access to each and every type of format in the study were not collected. Examination of how dimensions of consumer access limit or expand retail patronage behavior could also be highly benecial to grocery retailers. Practical implications This research provides grocery retailers that operate within the USA specic knowledge of the attributes that consumers consider to be most important when making format choices (e.g. cleanliness, price competitiveness, product assortment, courtesy of personnel), and identies the demographic characteristics of these consumers. The results suggest marketing strategy implications for grocery retailers that operate in the US market. As competition in the sector continues to evolve and consumer demographics change within the US market, understanding the consumer-format choice linkage will be critical to retailer performance in the industry. Originality/value This exploratory study uses demographics and store attributes as a framework for proling consumers by their ultimate retail format choice. The paper is unique because there are few similar empirical studies focused on the US grocery sector. Keywords Retailing, Retail trade, Demographics, Store ambience, Consumer behaviour, United States of America Paper type Research paper

434

International Journal of Retail & Distribution Management Vol. 34 No. 6, 2006 pp. 434-452 q Emerald Group Publishing Limited 0959-0552 DOI 10.1108/09590550610667038

Introduction Competition in US grocery retailing has reached an unprecedented level of intensity. A recent series of consolidations and mergers, coupled with the emergence of new retail formats (e.g. supercenters and internet-only grocers) has radically modied the competitive landscape of the sector (US Department of Commerce/International Trade Administration, 2000). Much to the dismay of traditional supermarket retailers, full and/or partial lines of grocery products can now be found at supercenters such as Wal-Mart, K-Mart, and Target, as well as in other retail formats (e.g. specialty grocers, internet retailers, drug stores). Grocery products are also being offered online, although

growth in this format is considerably slower. Supermarket retailers believe that consumer cross-shopping among these formats poses a serious threat to traditional grocery stores (Gose, 2002; Progressive Grocer Report of the Grocery Industry, 1999; Taylor, 2003). Supercenters possess several key competitive advantages in comparison to traditional supermarkets, including the ability to sell items at lower prices and the ability to offer consumers the convenience of one-stop shopping. Likewise, specialty grocers are using strategies such as product assortment differentiation and customer relationship management to create and serve niche markets (Hansen and Solgaard, 2004). In response to these competitive threats, traditional grocery retailers in the US are increasing the number of private-label products offered, providing more prepared meal options, expanding their produce, deli, and meat departments, and creating customer loyalty programs. However, according to recent trade reports, supercenters are consistently outperforming supermarkets (Berner et al., 2004; Taylor, 2003; US Department of Commerce/International Trade Administration, 2000; Coleman, 1997). In light of the competitive shifts in the industry, it is crucial for retailers to gain a better understanding of the grocery consumer. Although there is a considerable body of literature that examines marketing issues in the grocery context, few recent studies have attempted to characterize the US market in terms of consumers channel and/or format choice and the reasons for their choice (i.e. store attributes). Instead, researchers have focused upon topics such as location modeling (Roy, 1994), product purchase patterns (Kim and Park, 1997), business potential at retail sites (Smith and Sanchez, 2003), and customer satisfaction and loyalty programs (Magi, 2003). The purpose of this research is to provide a general understanding of grocery consumers retail format choice in the US marketplace. To accomplish this purpose, we use demographics as a framework for examination of consumer format choice across ve major retail formats in the domestic retail industry: specialty grocers, traditional supermarkets, supercenters, warehouse clubs and the emerging internet format. In addition, we investigate the desired store attributes of consumer groups who frequent each format. By identifying the demographic characteristics and desired store attributes of US grocery shoppers and linking these variables to format choice, we provide a starting point for understanding the nature of patronage behavior in the dynamic US grocery market. This research provides grocery retailers that operate within the US specic knowledge of the attributes that consumers consider to be most important when making format choices, and identies the demographic characteristics of these consumers. As competition in the sector continues to evolve and consumer demographics change within the US market, understanding the consumer-format choice linkage will be critical to retailer performance in the industry. Literature review Consumer demographics and retail format choice Individual characteristics of consumers inuence their consumption behavior. Specically, previous research has revealed a connection between demographic characteristics and choice of retail format. Crask and Reynolds (1978) compared the demographic characteristics of frequent and non-frequent patrons of department stores and found that frequent patrons tended to be younger, more educated, and had higher incomes. Sampson and Tigert (1992) found that warehouse club members represent

US grocery market

435

IJRDM 34,6

436

an upscale market compared to the general population. Findings from the study indicated that warehouse club members were more educated and had higher incomes. Later work by Arnold (1997) found signicant differences between the demographic proles (e.g. age, education, household size) of large-format department store shoppers as compared to non-shoppers. A few studies have examined the effect of consumer demographics on retail format choice in the grocery context. Zeithaml (1985) conducted a eld study to examine the effects of ve demographic variables (gender, female working status, age, income, marital status) on supermarket shopping variables (e.g. shopping time, number of supermarkets visited weekly, amount of money spent). The study detected major shifts in demographic characteristics of US grocery consumers and the author predicted that the traditional mass market for grocery products in the US would break into various market fragments as new retail formats emerged. In particular, the study emphasized that changes in the family unit (e.g. increases in the number of working females, male shoppers, and single, divorced, or widowed households) would drive changes in grocery patronage in the USA. Stone (1995) compared the demographic proles of supermarket shoppers and warehouse club shoppers, nding that warehouse club members were younger, more educated, and had higher incomes. Fox et al. (2004) examined the effect of demographics on format choice across three formats: grocery stores, mass merchandisers, and drug stores. Findings from the study indicated that household size, income, and level of education inuence consumers format choices. Store attributes and retail format choice The relationship between store attributes and retail format choice is also examined in the literature. Previous studies have shown that pricing, product assortment, and customer services are important factors in determining choice of format in the department store context (Arnold, 1997; Sparks, 1995). In addition, store environment and atmosphere appear to be inuential in consumers format decisions (Baker et al., 1994; Donovan et al., 1994). The ndings of studies published in the trade literature are similar, identifying product assortment, availability, convenience, and pricing as signicant drivers of format choice (Chain Store Age, 2004; Taylor, 2003). Recent research linking store attributes to retail format choice within the US grocery market is less common. Early studies examined the effect of store environment on grocery store selection and produced evidence of a relationship between the two variables (Hansen and Deutscher, 1977; Doyle and Fenwick, 1974). Later, Williams et al. (1978) found evidence of relationships between pricing practices, customer service policies, and format choice. A more recent study by Seiders and Tigert (2000) compared supercenter shoppers with traditional supermarket shoppers. Supercenter shoppers identied low prices and range of product assortment as the primary reasons for their format choice. In contrast, traditional supermarket shoppers placed more importance on location and product quality. Fox et al. (2004) identied frequency of store promotion efforts and product assortment-related factors to be highly inuential on format choice in the grocery sector. Interestingly, price was shown to be less inuential. The ndings also suggest that households making frequent purchases from mass merchandisers are also frequent patrons of supermarkets, suggesting that visits to mass merchandisers do not substitute for visits to traditional supermarkets.

A large study of the Danish grocery retailing industry by Hansen and Solgaard (2004) provides several important ndings relevant to the current research. Product assortment was identied as the single most inuential variable affecting the choice of retail format across three formats: discount stores, hypermarkets and conventional supermarkets. In addition, price level and location appeared to be inuential factors in terms of retail format choice. The study also found that quality and service level did not appear to be inuential across the formats. Similar results were produced in a study of the Greek grocery market (Baltas and Papastathopoulou, 2003) where product assortment, quality, store brands and location were key drivers of choice. Cross shopping and retail format choice The importance of examining retail format choice is fueled by the evolution of formats and frequency of cross shopping behaviors among consumers. The cross shopping concept was rst discussed in the trade literature in the late 1970s (Cort and Dominguez, 1977). Over the past 25 years researchers have altered the formal denition of cross-shopping to represent different retail contexts. Cort and Dominguez (1977, p. 187) originally dened cross shopping as:
. . . when a single customer patronizes multiple types of retail outlets which carry the same broad lines of merchandise, are operated by a single rm, and are designed to appeal primarily to different target segments.

US grocery market

437

Cassill and Williamson (1994, p. 2) augmented the original denition by dening the concept as, a single customer patronizing multiple types of outlets which carry the same broad merchandise lines to suit their conception of cross-shopping in apparel retailing. Yet another denition of cross-shopping in the literature includes Schoenbachler and Gordon s (2002) interpretation of cross-shopping as situations where consumers purchase goods through multiple channels operated by the same rm (i.e. brick and mortar, internet, catalog). Regardless of context, the phenomenon refers to the incidence of consumers shopping at different types of retailer formats for like products also commonly referred to intra-type competition (i.e. two different retail formats that sell substitutable products or services). The trade literature reports that cross shopping is widespread in the US grocery market (Morgenson, 1992; Corstjens and Corstjens, 1995). However, empirical work that examines the cross-shopping phenomenon within the grocery context is limited. Fox et al. (2004) found that varying levels of assortment inuenced consumer purchases more than assortment or price. The same study found that frequent shoppers of mass merchandisers were also frequent shoppers of other formats (e.g. supermarkets, drug stores), which provides evidence that trips to mass merchandisers are not necessarily replacing trips to the supermarket. Galata et al. (1999) performed a store switching analysis based on a comparison of price formats (every day low pricing versus high-low promotional pricing) which demonstrated low levels of inter-format switching, but a great deal of intra-format switching. Davies (1993) studied patterns in cross-shopping for groceries as a means of supporting the idea of cooperative locations for similar retailers. Bucklin and Lattin (1992) attempted to model product category competition among grocery retailers as a means of understanding the nature of within-category store competition.

IJRDM 34,6

438

In summary, the literature on format choice has been sporadic over the past 30 years and has focused on a number of issues and retail shopping contexts including: within chain choice (Cort and Dominguez, 1977), within product sector choice (e.g. Cassill and Williamson), choices based upon marketing and store attributes (Gehrt and Yan, 2004; Hansen and Deutscher, 1977) and multi-channel choices (Schoenbachler and Gordon, 2002) both inside and outside of the grocery sector. Owing to the contextual nature of extant ndings in this area, the current research is intended to establish a general understanding of grocery store format choice in the US market under current competitive conditions. The current research incorporates demographics and store attributes in a comprehensive study of store format choice across ve different retail formats in the US market. Though the studys design draws upon extant ndings explicated in the literature review, the research is conceived, planned and implemented from an exploratory perspective. Extant ndings on store choice are tied to specic contexts and in many cases cannot be applied in explaining general store choice behaviors, particularly in the US grocery market. A lack of unequivocal ndings directly relevant to the context including its changing market conditions (i.e. supply and demand side) provide further justication for an exploratory approach. Methodology Sampling method Data for the research is drawn from a larger study that examines general patronage behaviors across multiple retail contexts. The original sampling method was designed to capture a representation of US demographic groups based rst on age, then income, household size, and so forth. To control for size and cost of the survey, the sampling method focused upon providing representation among the demographic groups rather than exact proportion to the US population. Data were collected using a telephone survey among a sample of US consumers aged 18 years and older. Telephone administration was used for its effectiveness and efciency reaching a range of consumer demographics within a short time period. A market research rm with expertise in telephone survey methods was contracted to carry out data collection during September, 2004. The researchers worked with the rm to procure a mailing list from Info USA (www.infousa.com) that was consistent with the sampling criteria and to design the questionnaire for administration over the telephone. Trained interviewers administered the survey during a three and a-half week period, including a two-day pretest (N 50) which was carried out prior to full data collection. The pretest allowed the researchers and the rm to coordinate issues related to the wording of questions and the time required to administer the questionnaire. During the pretest, subjects indicated clear understanding of the format choice examples as well as the format choice scales which range from never to always (Appendix). Interviewers made calls until a representative sample of demographic characteristics was achieved (N 562). A minimum of three attempts were made to contact numbers drawn from the original sample in order to gain access to the focal range of demographics. Among the overall sample, 454 respondents indicated that they shopped for groceries for their household always, often or on occasion. Therefore, this group of respondents (N 454) constitutes the nal sample (N 454) for the analyses.

Measurement The survey opened with a single screening question designed to probe grocery shopping behavior. Subjects were rst asked to indicate how often they shop for groceries for their household. Respondents who indicated that they occasionally, often, or always shop for groceries for their household continued with the survey, while those who answered rarely or never were allowed to exit the data collection process. Measures for the studys variables were taken from previous research and developed directly for the study. The importance of 15 store attributes was measured on a ve-point interval scale ranging from not important at all to extremely important following the example of Yavas (2003). The measures for format choice were developed for the study using a ve-point interval scale (i.e. always, often, occasionally, rarely, never) that measured how often consumers shop for groceries in specialty grocery stores, supermarkets, supercenters, warehouse clubs, and internet-only grocers. In order to dene the formats, consumers were given examples of stores within each category. For the specialty category, consumers were told to refer to a neighborhood gourmet grocery store of their choice, and for supermarkets, Kroger, Safeway, Bi-Lo, Albertsons, Publix, and Winn-Dixie were provided as examples. Examples of supercenters included Wal-Mart, Meijer, and Big K-Mart, while warehouse club examples included Sams Club, Costco, and BJs Wholesale. Internet-only grocer examples included Peapod.com and Netgrocer.com. Demographic data including income, education, household size, age, race, marital status and gender were also collected (see Appendix). Analysis A combination of descriptive and inferential statistical techniques was used to analyze the effects of demographics and store attributes on format choice. Linear regression was used to examine the effect of the continuous demographic variables on format choice including: age measured by years, income, education level, and household size measured by total number in household. Stepwise regression models were t for each of the ve levels of format choice using a minimum inclusion alpha of .05. Signicance tests and beta estimates were used to evaluate the magnitude and direction of the effect(s) of the continuous demographic variables on format choice. One way analysis of variance (ANOVA) was used to examine the effect of the nominal variables including race and marital status on each of the ve levels of format choice. T-tests were used to examine differences between males and females for the ve levels of format choice. In cases that ANOVA models were signicant, post-hoc testing using Tukeys Honestly Signicant Difference (HSD) statistic were undertaken to investigate specic differences among the demographic variables and each of the ve levels of the dependent variable for format choice. In addition, Levenes test for homogeneity of variance was evaluated for each of the ANOVA models as well as for the t-tests. A descriptive method using means and ranks was performed to determine the importance of store attributes on format choice. The scale was applied in a disaggregated manner to retain the information inherent in each of the individual store attribute items consistent with the approach of Yavas (1997) and others in the extant literature related to the grocery sector (Fox et al., 2004; Hansen and Solgaard, 2004).

US grocery market

439

IJRDM 34,6

440

To facilitate the analysis and interpretation of store attributes, respondents were divided into three groups within each of the ve formats based upon their patronage frequency: frequent shoppers (i.e. responded always and usually shop in format), occasional shoppers (i.e. responded occasionally shop in format) and infrequent shoppers (i.e. responded rarely and never shop in format). Means and ranks were calculated across the store attribute scale for the frequent and occasional shopper groups only. The infrequent shopper group was omitted from this portion of the analysis to focus attention upon the consumers that are most likely to patronize the ve focal retail formats. Results Sample characteristics Examination of the respondents (N 454) indicated a majority of females (73 percent) compared to males (27 percent), which is inconsistent with the most recent US Census data (Table I). Ages of respondents ranged from 18 to 82, with a median age of 57 years. About 81 percent of the respondents were Caucasian, 9 percent were African American, 3 percent were Hispanic, 1.5 percent were Asian/Pacic Islander, 1.3 percent were Native American, and 3 percent were of mixed race. Income levels were normally distributed across the sample with 23 percent of respondents indicating annual household incomes less than $25,000, 30 percent indicating incomes between $25,000 and $50,000, 28 percent indicating incomes between $50,000 and $100,000 and 10 percent indicating incomes greater than $100,000. About 32 percent of respondents indicated that they had some high school, a high school degree or an equivalent degree. About 54 percent of the sample indicated having completed some college (20 percent), a two year degree (12 percent) or a four year degree (22 percent). An additional 13 percent reported graduate or professional degrees. A total of 39 percent of the sample responded that they represented single households: never married (23 percent), divorced, widowed or separated (16 percent) while 60 percent responded that they represented married households. The average number of inhabitants per household was three (range: 1, 11, SD: 1.44). This number was slightly skewed towards the small end which mirrors population trends in the US (US Census Bureau, 2000). Table I provides a comparison of the sample characteristics with US Census data (2000). Consumer demographics and retail format choice The effects of the continuous demographic variables including age, income, level of education and household size on the four individual format choices were examined using stepwise regression. The resulting regression models for all four dependent variables were signicant including distinct predictors at varying a levels. The overall regression model for specialty grocers yielded a signicant statistic (F 9.583, p , 0.002) with income as its single signicant predictor (b 0.144, t 3.096, p , 0.002) (Tables II and III). The regression model for the supermarket choice was also signicant (F 3.947, p , 0.048, a 0.05) with household composition generating a signicant effect within the model (b 2 0.093, t 2 1.987, p , 0.048). Again, the regression model for supercenter was signicant (F 15.136, p 0.000) with income (b 2 1.73, t 2 3.665, p 0.000), household composition (b 0.095, t 2.78, p , 0.038) and education (b 2 1.76, t 2 3.700, p 0.000) producing signicant estimates as predictors of this format choice. The nal regression

Variable Gender Age

Level Male Female Total 18-19 20-24 25-34 35-44 45-59 60-74 75 Total Median Caucasian African American Hispanic Asian/Pacic Islander Native American Mixed Total Less than $25,000 $25,000-$50,000 $50,001-$100,000 . $100,000 Total No high school degree High school graduate Some college Two year degree Four year degree Graduate/professional degree Total Single, never married Married Separated Divorced Widowed Total

Frequency 121 333 454 10 62 95 77 101 100 9 454 57 years 369 40 14 7 6 12 448 105 136 127 45 413 13 132 92 53 101 60 451 103 274 3 35 34 449 3 (mean)

Percent 27 73 100 2 14 21 17 22 22 2 100 81.3 8.8 3.1 1.5 1.3 2.6 98.7b 23.1 30 28 9.9 91b 2.9 29.1 20.3 11.7 22.2 13.2 99.3b 22.7 60.4 0.7 7.7 7.5 98.9b

US census percent 49.1 50.9 100 7a 6.7 14.2 16 18.2 10.3 5.9 78.6 35.3 years 70 12.3 11.5 3 .8 2.4 100 28.6 29.3 29.7 12.3 100 19.6 28.6 21 6.3 15.5 9 100 27.1 54.4 2.2 9.7 6.6 100 2.59 (mean)

US grocery market

441

Race

Income (annual)

Education

Marital status

Average household size

Notes: aUS Census data includes ages 15-19 in this category, but our sample includes those 18 and older; bmissing values resulted in less than 100 percent response for variable

Table I. Sample characteristics as compared to US Census Data (2000)

model for the warehouse club format was also signicant (F 9.478, p 0.000) with two signicant predictors including income (b 0.173, t 3.371, p 0.000) and household size (b 1.02, t 2.216, p , 0.027). One-way analysis of variance was used to examine the effects of the xed factor demographic variables including race and marital status on the four levels of format choice (Table IV). Among this portion of the analysis only a single signicant model emerged, the effect of race on the supercenter format choice. The one-way ANOVA model generated a signicant estimate (F 2.772, p , 0.027). Tukey HSD tests were

442

IJRDM 34,6

Model/dependent variable 0.144 7.601 358.522 366.123 0.093 8.420 964.284 972.705 0.303 0.092 0.086 1.408 89.992 891.834 981.826 0.201 0.040 0.036 1.239 29.019 692.550 721.659 1 452 453 3 450 453 0.009 0.006 1.461 1 452 453 1 452 453 0.021 0.019 0.891

Gourmet specialty a Regression Residual Total Supermarket b Regression Residual Total Supercenter c Regression Residual Total Warehouse club d Regression Residual Total

Notes: apredictors: constant and income; bpredictors: constant and number in household; cpredictors: constant, education, income and number in household; dpredictors: constant, income and number in household; *a , 0.05, * *a , 0.01, * * *a , 0.001

Table II. Summary regression models for effect of demographic variables on format choice R R2 Standard error of estimate Sum of squares df Adjusted R 2 Mean square 7.601 0.793 8.420 2.133 29.99 F 9.583 Signicance 0.002 * * 3.947 0.048 * 15.136 0.000 * * * 14.555 1.536 9.478 0.000 * * *

Model/predictor variable Gourmet specialty Constant Income Education Household size Age Supermarket Constant Income Education Household size Age Supercenter Constant Income Education Household size Age Warehouse club Constant Income Education Household size Age

Unstandardized coefcients B Standard error 1.272 0.087 0.101 0.028

Standardized coefcients b t Signicance 12.646 3.096 1.705 0.111 0.692 24.946 0.950 0.750 2 1.987 1.350 23.717 2 3.665 2 3.700 2.078 2 1.476 8.801 3.371 0.381 2.216 1.564 0.000 0.002 * * 0.089 0.912 0.489 0.000 0.343 0.453 0.048 * 0.178 0.000 0.000 * * * 0.000 * * * 0.038 * 0.141 0.000 * * * 0.000 * * * 0.704 0.027 * 0.119

US grocery market

0.144 0.083 0.005 0.032

443

3.813 2 0.095

0.153 0.048 0.045 0.036 2 0.093 0.066

3.515 2 1.70 2 0.219 0.097

0.148 0.046 0.059 0.047

2 0.173 2 0.176 0.095 2 0.70

1.577 0.144 0.090

0.179 0.039 0.040

0.173 0.019 0.102 0.076

Notes: *a , 0.05, * *a , 0.01, * * *a , 0.001

Table III. Predictor effects and beta estimates for demographic variables on format choice

used to investigate specic differences in each racial group and their strength of choice for the supercenter format (Table V). Tukey HSD indicated a specic difference between Caucasian respondents and African American respondents in their frequency of patronage in supercenter formats (mean difference 2 749, p , 0.019). The Levene test for homogeneity of variances between race and supercenter format choice was non-signicant (Levene 0.103, p 982). The t-tests which examined the effect of gender on format choice across the ve format types indicated signicant differences between males and females among their choices of the supercenter (t 2 3.871, p 0.000, mean difference, 2 0.59) and warehouse club formats (t 2 2.381, p , 0.026, mean difference 2 0.29) (Table VI). All tests for homogeneity of variance were non-signicant with the exception of the warehouse club format choice (F 2 4.480, p , 0.035) in which case the t-statistic for non-equal variances was interpreted. Given the signicant ndings associated with gender and the two format choices (supercenters and warehouse clubs), an additional t-test was performed to examine whether the female respondents represented larger households compared to the male respondents. The difference in household size between the two genders was signicant (t 2 3.372, p , 0.001), with a non-signicant Levene statistic (F 0.109, p , 0.742). This test indicated that the females represented signicantly larger households compared to the males in the sample.

IJRDM 34,6

Independent variable Race

Dependent variable Specialty Between Within Total Supermarket Between Within Total Supercenter Between Within Total Warehouse club Between Within Total Specialty Between Within Total Supermarket Between Within Total Supercenter Between Within Total Warehouse club Between Within Total

Model Sum of squares 0.994 365.130 366.123 12.507 960.198 972.705 23.666 958.160 951.826 2.064 719.594 0.662 365.462 366.123 10.088 962.617 972.705 8.908 972.918 981.826 11.371 710.288 721.659

df 4 449 453 4 449 453 4 449 453 4 449 453 3 450 453 3 450 453 3 450 453 3 450 453

Mean square 0.248 0.813 3.127 2.139 5.916 2.134 0.516 1.603 0.221 0.812 3.363 2.139 2.969 2.162 3.790 1.578

F 0.305

Signicance 0.874

444

1.462

0.213

2.772

0.027 *

0.322

0.863

Marital status

0.272

0.846

1.572

0.195

1.373

0.250

Table IV. Analysis of variance models for effects of race and marital status on format choice

2.401

0.067

Note: *a , 0.05

Store attributes and retail format choice The means and ranking of each store attribute by format are presented in Tables II and III. Both frequent and occasional shoppers across all retail formats indicated cleanliness as the single most important store attribute (Tables VII and VIII). The second most important attribute among frequent shoppers for the specialty grocery format, the supermarket format and the warehouse club format was product selection. Among frequent shoppers of the supercenter format, price competitiveness was the second most important store attribute, followed next by product selection. A total of 15 respondents indicated that they were both frequent and occasional users of the internet channel for groceries. Owing to very low response in this category, the Internet format was omitted from the analysis.

Dependent variable Supercenter

I (race) Caucasian

J (race) African American Hispanic Asian Pacic, Native American and other Hispanic Asian Pacic, Native American and other Asian Pacic, Native American and other

Mean Standard difference (I-J) error Signicance 2 0.749 2 0.559 2 0.154 0.189 0.595 0.406 0.243 0.398 0.302 0.454 0.372 0.488 0.019 * 0.624 0.986 0.994 0.500 0.921

US grocery market

445

African American Hispanic Note: *a , 0.05

Table V. Tukey HSD tests for differences among race and supercenter format choice

Format Specialty Supermarket Supercenter Warehouse club

Levenes test for equality of variances F Signicance T 2.556 1.089 2.617 4.480 0.111a 0.297a 0.106a 0.035b 0.925 1.191 2 3.871 2 2.381c

df 452 452 452 452

T-tests for equality of means Signicance (2-tailed) Mean difference 0.355 0.234 0.000 * * * 0.026 * 0.088 0.185 2 0.596 2 0.299 Table VI. Effect of gender on format choice

Notes: aNon-signicant Levene statistic assumes equal variances between gender groups; bsignicant Levene statistic indicates unequal between gender groups for Warehouse club; cequal variances not assumed; *a , 0.05; * * *a , 0.01

Conclusions and discussion Examination of the demographic variables for their effect on the specialty grocery format indicated income as the only signicant predictor of patronage. The stepwise regression model indicated that respondents with higher incomes were more likely to shop in specialty grocery stores. There was no indication among the data that the other demographics predicted or indicated a propensity to patronize this format. The top ve store attributes for the small sample of frequent shoppers among the specialty grocery format (N 14) are cleanliness, product selection, courtesy of personnel, crowding and price competitiveness. Though price competitiveness was ranked lowest by the frequent specialty store shopper, it remained one of the top ve store attributes sought. Though the respondents indicated that product assortment and courteous personnel were most important, price competitiveness remains an inuential factor within this context. Rankings for the specialty format were slightly different for respondents among the occasional shopper group (N 64) which indicated cleanliness, product selection, ease of access, courtesy of personnel and crowding as the top ve store attributes. As a whole, these results appear logical and agree with a typical specialty grocery strategy with high service levels in terms of customer service and physical facilities.

IJRDM 34,6

Store attribute Price competitiveness Courtesy of personnel Cleanliness Product selection Hours of operation Atmosphere Ease of access Security Parking facilities Crowding Presence of eating places Special events Seats/rest area Ease of children

Specialty grocers N 14 3.57 (5) 3.93 (3) 4.57 (1) 4.36 (2) 2.79 (9) 3.36 (7) 3.29 (8) 3.93 (3) 3.43 (6) 3.71 (4) 2.57 (11) 2.29 (12) 2.64 (10) 2.29 (12)

Supermarkets N 454 3.90 (3) 3.82 (5) 4.31 (1) 4.00 (2) 3.32 (10) 3.41 (9) 3.75 (6) 3.59 (8) 3.63 (7) 3.83 (4) 2.47 (13) 2.28 (14) 2.68 (12) 2.73 (11)

Supercenters N 194 4.09 (2) 3.99 (4) 4.40 (1) 4.04 (3) 3.52 (10) 3.53 (6) 3.87 (7) 3.89 (5) 3.85 (8) 3.80 (9) 3.85 (8) 3.89 (5) 2.95 (12) 3.10 (11)

Warehouse clubs N 129 3.99 (3) 3.97 (4) 4.45 (1) 4.00 (2) 3.42 (9) 3.29 (10) 3.88 (5) 3.80 (7) 3.70 (8) 3.83 (6) 2.42 (13) 2.59 (14) 2.99 (12) 3.12 (11)

446

Table VII. Means and ranks of store attributes among frequent shoppers by channel

Note: Respondents were allowed to indicate that they were frequent shoppers of as many formats as they desired. They were not forced to choose one format over another. Therefore, the numbers do not correspond directly with the sample size

Store attribute Price competitiveness Courtesy of personnel Cleanliness Product selection Hours of operation Atmosphere Ease of access Security Parking facilities Crowding Presence of eating places Special events Seats/rest area Ease of children

Specialty grocers N 64 3.73 (7) 3.80 (5) 4.27 (1) 3.98 (2) 3.36 (10) 3.47 (9) 3.94 (3) 3.55 (8) 3.84 (4) 3.81 (6) 2.50 (13) 2.30 (14) 2.84 (11) 2.67 (12)

Supermarkets N 71 3.96 (2) 3.96 (2) 4.39 (1) 3.87 (3) 3.30 (9) 3.44 (8) 3.86 (5) 3.75 (6) 3.92 (4) 3.73 (7) 2.54 (12) 2.45 (13) 2.94 (11) 3.04 (10)

Supercenters N 111 3.74 (8) 3.80 (4) 4.38 (1) 3.89 (2) 3.49 (10) 3.50 (9) 3.83 (3) 3.77 (5) 3.75 (7) 3.76 (6) 2.70 (13) 2.54 (14) 2.79 (12) 2.95 (11)

Warehouse clubs N 129 3.87 (5) 3.95 (3) 4.32 (1) 3.98 (2) 3.22 (4) 3.33 (8) 3.91 (4) 3.65 (7) 3.83 (6) 3.91 (4) 2.37 (12) 2.34 (15) 2.63 (11) 2.80 (10)

Table VIII. Means and ranking of store attributes among occasional shoppers by channel

Note: Respondents were allowed to indicate that they were frequent shoppers of as many formats as they desired. They were not forced to choose one format over another. Therefore, the numbers do not correspond directly with the sample size

Analysis of the demographic variables suggests that household size is a signicant predictor of patronage within the traditional supermarket category. The negative b estimate indicates that as household size decreases, supermarket patronage increases. Given the importance of accessibility motivations like crowding, parking facilities, and

ease of access, it appears that this format may appeal to the convenience oriented shopper. The regression models indication that household size decreases as patronage increases could be interpreted to suggest that smaller households tend to patronize traditional neighborhood markets rather than traveling to larger grocery shopping venues such as supercenters or warehouse clubs. The highest ranked store attributes among frequent shoppers in the traditional supermarket format (N 454) are cleanliness, product selection, price competitiveness, crowding and courtesy of personnel. The rankings of these attributes among occasional shoppers are the same with the exception of the fourth and fth most important, which are parking facilities and ease of access. The regression model indicated that education, income and household size predict patronage within the supercenter format. This nding appears to be consistent with conventional wisdom: as income and education decrease, the likelihood of shopping in the supercenter format increases. Likewise, as household size increases, the likelihood of shopping in this format increases. The ANOVA model indicated signicant differences among racial afliation and supercenter patronage. Focused contrasts suggest that this difference occurs specically between the Caucasian and African American respondents in the sample. The African American respondents indicated a signicantly higher likelihood of shopping within this format as compared to Caucasians. Further, the t-test for gender indicated that females were signicantly more likely to patronize supercenters as compared to males. The ndings related to supercenter patronage appear to agree with popular logic for the most part: supercenters attract price oriented patrons with larger households. In addition, based upon our sample these formats attract female and African American consumers in greater numbers. Cleanliness, price competitiveness, product selection, courtesy of personnel and security are the top ve store attributes among frequent shoppers (N 194) in the supercenter format. Interestingly, the occasional shoppers (N 111) among this format ranked cleanliness, product selection, ease of access, courtesy of personnel and security as the top ve attributes. Price competitiveness was not ranked among the occasional shoppers top attributes, indicating that these shoppers may be more concerned with product assortment. Attention to deep inventory, price control and operational efciency are already an important operational component within the supercenter format type and should continue to be emphasized. In addition, the importance of catering to diverse consumer groups remains important in the supercenter format which attracts a diverse customer base compared to traditional neighborhood markets that tend to draw on more homogenous local and regional customer bases. Supercenters should consider diversity in stafng, product assortment and customer service. Given the growth of diverse family oriented consumer groups in the USA such as Hispanics, diversity management could be an important competitive advantage for grocery formats in the coming decade. The regression model and its related b estimates for income and education indicated that as each of these demographic variables increased, patronage in the warehouse format increased. Further, the t-tests for gender differences in format choice suggested that women were more likely to choose the warehouse club format to shop for groceries compared to men. Additional investigation indicated that female respondents

US grocery market

447

IJRDM 34,6

448

represented signicantly larger households compared to male respondents suggesting that these consumers are likely carrying out household shopping duties. Cleanliness, product selection, price competitiveness, courtesy of personnel and ease of access were the top ve store attributes among frequent patrons in this format. Occasional shoppers indicated a similar ranking of attributes: cleanliness, product selection, courtesy of personnel, and ease of access. The ndings associated with the warehouse club format suggest that consumers seek product variety and easy access as major motivations. Further, it appears that higher income consumers frequent this venue and likely expect a higher level of service compared to the supercenter customer. Warehouse clubs should focus on ease of access and service related to aiding consumers in the logistics of their shopping experience particularly given the fact that females appear to be more likely to choose this format. They may also consider integrating upscale products and services into their offer given their higher income consumer. Overall, the results provide interesting insights into the US consumers choice of grocery format. With regard to store attributes, the fact that cleanliness was the most important attribute regardless of format was not surprising. The price competitiveness attribute appeared to be most important among shoppers in the traditional supermarket format and the supercenter format. Surprisingly, price competitiveness did not rank among the top ve attributes for occasional shoppers in the supercenter format or the specialty grocery format and ranked only fth among these shoppers for the warehouse format. While many assert that the grocery industry is strongly driven by price competitiveness (Taylor, 2003), our results suggest that product selection and courtesy of personnel are also very important in determining format choice. Limitations and future research The results included in this research were gathered and reported on an individual format basis. In order to capture consumer choices across a range of grocery retail formats, forcing respondents to compare formats was not initiated. Though we can make general observations and predictions about the demographic variables and store attributes that inuence format choice, we cannot suggest the factors that inuence consumer to choose one format over another. A useful addition to this area of research would be to examine the situations under which consumers patronize different grocery formats such as extensive shopping trips versus short shopping trips or the accessibility of format types. Considering the constant evolution of retail formats, longitudinal studies could also be particularly helpful in this highly competitive arena. The ndings associated with format choice suggest that different shopping needs likely inuence format choice. For example, the largest group of respondents indicated frequent or occasional patronage in the traditional supermarket format. Among this group, frequency of patronage rose as household size decreased. Under what circumstances do smaller households frequent formats outside of their neighborhood or regional markets? Do they plan for special shopping trips outside of their locale or do they choose not to patronize supercenters or warehouse clubs based upon household size alone?

We did not collect data pertaining to whether consumers had access to each and every type of format in the study. For instance, we understand that Internet-based grocers operate in very few markets in the USA and are diffusing very slowly. Therefore, low response to the questions related to the internet channel was not surprising. However, we do not know whether all respondents had access to each of the format types which ultimately limits the applicability of our ndings beyond the general trends that were indicated by the data. Examination of how dimensions of consumer access limit or expand retail patronage behavior could also be highly benecial to grocery retailers.
References Arnold, S. (1997), Shopping habits at Kingston department sores: wave III: three years after Wal-Marts entry into Canada, Report No. 3, Queens University School of Business, Kingston, July. Baker, J., Grewal, D. and Parasuraman, A. (1994), The inuence of store environment on quality inferences and store image, Journal of the Academy of Marketing Science, Vol. 22 No. 4, pp. 328-39. Baltas, G. and Papastathopoulou, P. (2003), Shopper characteristics, product and store choice criteria: a survey in the Greek grocery sector, International Journal of Retail & Distribution Management, Vol. 31 No. 10, pp. 498-507. Berner, R., Brady, D. and Zellner, W. (2004), There goes the rainbow nut crunch, Business Week, No. 3892, p. 38. Bucklin, R. and Lattin, J. (1992), A model product category competition among grocery retailers, Journal of Retailing, Vol. 68 No. 3, pp. 271-93. Cassill, N. and Williamson, N. (1994), Department store cross-shoppers, Journal of Applied Business Research, Vol. 10 No. 4, pp. 88-97. Chain Store Age (2004), Age doesnt affect buying patterns, Chain Store Age, June, p. 33. Coleman, C. (1997), How grocers are ghting giant rivals, The Wall Street Journal, Eastern edition, March 27, p. B.1. Corstjens, J. and Corstjens, M. (1995), Store Wars: The Battle for Mindspace and Shelfsp, Wiley, New York, NY, p. 0. Cort, S. and Dominguez, L. (1977), Cross-shopping and retail growth, Journal of Marketing Research, Vol. 14 No. 2, pp. 187-92. Crask, M. and Reynolds, F. (1978), An indepth prole of the department store shopper, Journal of Retailing, Vol. 54 No. 2, pp. 23-33. Davies, G. (1993), Patterns in cross shopping for groceries and their implications for co-operation in retail location, British Journal of Management, Vol. 4, pp. 91-101. Donovan, R., Rossister, J., Marcoolyn, G. and Nesdale, A. (1994), Store atmosphere and purchase behavior, Journal of Retailing, Vol. 70 No. 3, pp. 283-94. Doyle, P. and Fenwick, I. (1974), How store image affects shopping habits in grocery chains, Journal of Retailing, Vol. 50 No. 4, pp. 39-52. Fox, E., Montgomery, A. and Lodish, L. (2004), Consumer shopping and spending across retail formats, Journal of Business, Vol. 77 No. 2, pp. S25-S60. Galata, G., Randolph, E., Bucklin, R. and Hanssens, D. (1999), On the stability of store format choice, Working paper, Anderson School of at UCLA.

US grocery market

449

IJRDM 34,6

Gehrt, K. and Yan, R. (2004), Situational, consumer, and retailer factors affecting internet, catalog, and store shopping, International Journal of Retail & Distribution Management, Vol. 32 No. 1, pp. 5-18. Gose, J. (2002), Supercenter showdown, National Real Estate Investor, Vol. 44 No. 12, p. 14. Hansen, R. and Deutscher, T. (1977), An empirical investigation of attribute importance in retail store selection, Journal of Retailing, Vol. 53 No. 4, pp. 59-72. Hansen, T. and Solgaard, H. (2004), New Perspectives on Retailing and Store Patronage Behavior, Kluwer Academic Publishers, Boston, MA. Kim, B. and Park, K. (1997), Studying patterns of consumers grocery shopping trip, Journal of Retailing, Vol. 73 No. 4, pp. 501-17. Magi, A. (2003), Share of wallet in retailing: the effects of customer satisfaction, loyalty cards and shopper characteristics, Journal of Retailing, Vol. 79 No. 1, pp. 97-106. Morgenson, G. (1992), Here come the cross-shoppers, Forbes, December 7. Progressive Grocer Report of the Grocery Industry (1999), Markets in Motion, April. Roy, A. (1994), Correlates of mall visit frequency, Journal of Retailing, Vol. 70 No. 2, pp. 139-61. Sampson, S. and Tigert, D. (1992), The impact of warehouse membership clubs: the wheel of retailing turns one more time, International Review of Retail, Distribution and Consumer Research, Vol. 4 No. 1, pp. 33-58. Schoenbachler, D. and Gordon, G. (2002), Multi-channel shopping: understanding what drives channel choice, Journal of Consumer Marketing, Vol. 19 No. 1, pp. 42-53. Seiders, K. and Tigert, D. (2000), The impact of supercenters on traditional food retailers in four markets, International Journal of Retail & Distribution Management, Vol. 28 Nos 4/5, pp. 191-3. Smith, D. and Sanchez, S. (2003), Assessment of business potential at retail sites: empirical ndings from a US supermarket chain, The International Review of Retail, Distribution, and Consumer Research, Vol. 13 No. 1, pp. 37-58. Sparks, L. (1995), Customer service in retailing, in Akehrst, G. and Nicholas, A. (Eds), Retail Marketing, Frank Call, London. Stone, K. (1995), Competing with the Retail Giants: How to Survive in the New Retail Landscape, Wiley, New York, NY. Taylor, R. (2003), Top of mind: saving Americas grocers, Brandweek, Vol. 44 No. 18, pp. 22-3. US Census Bureau (2000), Census of the United States, available at: www.census.gov US Census Data (2000), Census of the United States, available at: www.census.gov US Department of Commerce/International Trade Administration (2000), US Industry & Trade Outlook (Retailing & Economic Trade Trends), Chapter 42, McGraw-Hill, New York, NY. Williams, R., Painter, J. and Nicholas, H. (1978), A policy-oriented typology of grocery shoppers, Journal of Retailing, Vol. 54 No. 1, pp. 27-42. Yavas, U. (2003), A multi-attribute approach to understanding shopper segments, International Journal of Retail & Distribution Management, Vol. 31 No. 11, pp. 541-8. Zeithaml, V. (1985), The new demographics and market fragmentation, Journal of Marketing, Vol. 49, pp. 64-75.

450

Further reading Bell, D., Ho, T. and Tang, C. (1998), Determining where to shop: xed and variable costs of shopping, Journal of Marketing Research, Vol. 31 No. 3, pp. 352-69. Bellenger, D., Robertson, D. and Greenburg, B. (1977), Shopping center patronage motives, Journal of Retailing, No. 2, pp. 29-38. Bhatnagar, A. and Ratchford, B. (2004), A model of retail format competition for non-durable goods, International Journal of Research in Marketing, Vol. 21 No. 1, pp. 39-59. Corstjens, J. and Corstjens, M. (1995), Store Wars, the Battle for Mindspace and Shelfspace, Wiley, New York, NY. Dellaert, B., Arentze, T., Bierlaire, M., Borgers, A. and Timmermans, H. (1998), Investigating consumers tendency to combine multiple shopping purposes and destinations, Journal of Marketing Research, May, pp. 177-88. Finn, A. and Louviere, J. (1990), Shopping center patronage models: fashioning a consideration set segmentation solution, Journal of Business Research, Vol. 3, pp. 259-75. Grewal, D., Levy, M., Mehrotra, A. and Sharma, A. (1999), Planning merchandising decisions to account for regional and product assortment differences, Journal of Retailing, Vol. 75 No. 3, pp. 405-25. Hortman, S., Allaway, A., Mason, J. and Rasp, J. (1990), Multi-segment analysis of supermarket patronage, Journal of Business Research, Vol. 21, pp. 209-23. Kirsche, M. (2004), Convenience is key in customers choice of channel, Drug Store News, 19 July, p. 17. Korgaonkar, P., Lund, D. and Price, B. (1985), A structural equations approach toward examination of store attitude and store patronage, Journal of Retailing, Vol. 61 No. 2, pp. 39-60. Leszcyzc, P., Sinha, A. and Timmermans, H. (2000), Consumer store choice dynamics: an analysis of the competitive market structure for grocery stores, Journal of Retailing, Vol. 73 No. 3, pp. 323-45. Lord, J. (1986), Cross shopping ows among Atlantas regional shopping centres, International Journal of Retailing, Vol. 1, pp. 33-54. Messinger, P. and Narasimhan, C. (1997), A model of retail formats based on consumers economizing on shopping time, Marketing Science, Vol. 16 No. 1, pp. 1-23. Rousey, S. and Morganosky, M. (1996), Retail format change in US markets, International Journal of Retail & Distribution Management, Vol. 24 No. 3, pp. 8-16. Tang, C., Bell, D. and Ho, T. (2001), Store choice and shopping behavior: how price format works, California Management Review, Vol. 43 No. 2, pp. 56-74. Turley, L. and Milliman, R. (2000), Atmospheric effects on shopping behavior: a review of the experimental evidence, Journal of Business Research, Vol. 49 No. 2, pp. 193-211. Wakeeld, K. and Baker, J. (1998), Excitement at the mall: determinants and effects on shopping response, Journal of Retailing, No. 4, pp. 515-39.

US grocery market

451

IJRDM 34,6

Appendix. Survey instrument How often do you shop for groceries for your household?
Never 1 Rarely 2 Occasionally 3 Often 4 Always 5

452
Please indicate how often you shop at the following types of retailers when shopping for groceries.
Never Rarely Occasionally Usually Always 1 2 3 4 5 1 2 3 4 5 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5

Gourmet grocery store Supermarket (Kroger, Safeway, Bi-Lo, Albertsons, Publix, Winn-Dixie) Supercenters (WalMart, Meyer, Big KMart) Warehouse club (Sams Club, Costco, BJs) Internet ONLY grocery store (Peapod.com, Netgrocer.com)

Please indicate how important each of the following factors is to you when selecting a place to shop.
Never important 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Rarely important 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Sometimes important 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Often important 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 Always important 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

Price competitiveness Courtesy of personnel Cleanliness Product selection Hours of operation Atmosphere Ease of access Security Parking facilities Crowding Presence of eating places Special events Seats/rest area Availability of smoking area Ease of children

Corresponding author Jason M. Carpenter can be contacted at: jcarpent@gwm.sc.edu To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints