Grocery categories such as dessert toppings and refrigerated ethnic foods were some of the leading products that lure customers to separate stores, according to a report released by a team of business school researchers led by Washington University, St. Louis, Mo.
In the first test of detailed consumer-buying habits by categories at more than one chain store selling groceries, this study, “Polygamous Store Loyalties: An Empirical Investigation,” found that shoppers weren’t monogamist or bigamist, but rather polygamist in their choice of outlets.
The vast majority — a whopping 83% — regularly visited between 4-9 chain stores within a year’s time to purchase groceries. Of 1,321 households studied, only 12 stayed loyal to just one store. More than half, at 51.1%, went to the average of 5-7 different stores. And, 88 households, or six of every 100, went to 10 or more.
Using tracked data from a vendor utilizing a swipe card akin to a loyalty card, the researchers parsed more than $1 million worth of shopping transactions over 53 weeks involving 248 types of products sold at 14 retail chain stores in a large metropolitan market.
“Store loyalty was pretty much a given in grocery retail,” says Seethu Seetharaman, senior author of the report and director of the Center of Customer Analytics and Big Data and the W. Patrick McGinnis Professor of Marketing at Olin Business School. “When people do their shopping, it’s the store close to where they live — location, location, location, like the real-estate mantra. Then there is a group of choosy consumers who stop at many stores, shopping for bargains or certain brands or products. They’ve been called ‘cherry pickers.’ Often, those folks were associated with coupon shoppers. That made us do a deeper dive, and we found that people aren’t as store loyal as we thought. Clearly, people are polygamous. The majority of people are shopping at six grocery stores.”
Consumers tend to shop multiple stores for multiple reasons. In fact, the data showed little loyalty to a single store or handful of stores, but more so to types of products found in a store. Consumers shopped various stories for specific product categories—frozen treats at one grocer, meat and poultry at another, and so on. The researchers called this “intrinsic store-category attractiveness.”
The dataset comprised chains such as traditional supermarkets (Albertsons, Bashas’, Food 4 Less, Food City, Fry’s Food Store, IGA, Safeway, Trader Joe’s and Wild Oats Market), supercenters (Kmart and Walmart) and warehouse clubs (Costco, Sam’s Club and Smart & Final).
What shoppers want in pricing
The study also revealed the top 10 categories of products that change a store’s attractiveness over its competitors, based on the degree of price consistency (or lack of price variability) over time, with dessert toppings placing first, followed by refrigerated eggroll/wonton/tortilla wraps at No. 2 and refrigerated meat and poultry products at No. 8.
“It’s very diffuse,” Seetharaman says. “Only 40% of their basket is coming from their ‘favorite’ store.”
Some other findings from the research:
- In the market surveyed in particular, Fry’s Food Stores emerged as the market favorite by a sizable margin, followed by Albertson’s, Safeway and Walmart.
- In a large set of categories, a handful of stores competed intensely—Albertson’s, Bashas’, Safeway and Fry’s.
- Warehouse clubs attract loyalty in categories different from the traditional supermarkets and supercenters.
- Family size predicted store loyalty — the larger families tended to frequent Fry’s or a Walmart Supercenter.
- Income was a somewhat surprising predictor, in that households with higher incomes were more likely to “budget shop” at a Costco, which could be explained by the fact that large houses with large basements are usually needed to store products bought in bulk.
“This gives you a good sense of what you are winning, and how you are winning. But, there’s no silver bullet,” adds Seetharaman. “The traditional wisdom is—Walmart is an aggressive, everyday-low-price price retailer and Target is the assortment retailer. So, let’s say both mass merchandisers, each of them has a certain strategic positioning and therefore thought they attract a certain type of consumer. We are upending that wisdom a little bit here. No matter what kind of strategic positioning you have carved out, consumers have a mind of their own. They are choosing to do different things in different categories. And, businesses should wise up to this. Even your core customer is buying categories at other shops.”
Seetharaman was joined in this study by Qin Zhang, assistant professor of business at Pacific Lutheran University, Tacoma, Wash., and Manish Gangwar, assistant professor of marketing at the Indian School of Business, India.