Satisfaction with the local grocery store
mix: A consumer perspective
Harmen Oppewal (Monash University)
Ian Clarke (University of Edinburgh)
Malcolm Kirkup (University of Exeter)
Supermarket Power in Australia Symposium,
Melbourne, 1 August 2013
Department of Marketing
UK grocery sector issues similar but further
developed and more debated than in Australia
– Concerns over increasing
concentration
– Supply chain issues &
accusations of abuse of
power
– Town centre v out of town
locations
– Food deserts debate
– Overseas entrants incl
ALDI and Walmart
– Private labels
– Loyalty cards
– Unit pricing
– Role of the small store &
supermarkets moving into
the convenience sector
– Organic and local
products
– Homogenisation of high
street
– Consumer concern and
activism
– Online channel
Aim and approach of this research
● Aim
–
Explore what it means to have variety in the retail setting,
what influences it, and how it affects consumer perceptions of
choice
–
Assess how concentration, format diversity and proximity to
stores influence satisfaction with the local store mix
● Approach
–
Consumer satisfaction survey among consumers from
different neigbourhoods, across different cities
–
Respondents rated their current neighbourhood’s provision
and then completed a set of ‘stated preference’ tasks.
Some relevant literature
● Consumer perceptions of local choice
– Quality of consumers’ lives affected by neighbourhoods in which they
live, including retail provision
– Clarke et al., 2006; Jackson et al., 2006
● Perception of assortments within stores
– Effects of assortment reductions and extensions
– Botti & Iyengar, 2006; Broniarczyk et al, 1998; Iyengar &
Lepper, 1999; Oppewal & Koelemeijer, 2005
● Access and disadvantage
– Benefits of co-location
– Arentze et al., 2005; Dellaert et al., 1998, Oppewal et al, 1997
– Role of location and distance
– Dawson et al 2008; Talukdar 2008; Wrigley et al 2003
Stated preference study (Clarke et al 2012)
● Personal interviews across the population in one ‘average’
town in Mid England (Worcester) (n=288)
● Respondents evaluate hypothetical store mixes for their local
area
– Local parade of shops within 5 minutes
– Location at 15 minutes but near the town centre
– Location at 15 minutes towards the edge of town
● Presence/absence of 8 individual stores varied across the
three locations
– Tesco (3x); Sainsbury; ASDA; Morrison; Somerfield
– Tesco Express; Independent small retailer
● Satisfaction with store mix
– 1=very unsatisfied, .., 5 = very satisfied
Stated preference task
● “Imagine your neighbourhood has a completely different
range of food store available…”
POSTCARD 14A
Local parade 5 minutes away
Independent small retailer
Sainsbury Supermarket
Tesco supermarket
15 minutes away but near the town centre
Morrison
Somerfield
Tesco Supermarket
15 minutes away in another direction,
towards the edge of town
Tesco Express
Tesco Supermarket
ASDA
● “How satisfied or dissatisfied would you be with this mix of
stores” (1= very dissatisfied, 5 = very satisfied)
Store presence effects
(regression parameters)
Findings
● Supermarkets at 5 minutes have largest
contribution
– Tesco more than Sainsbury
– If both present then joint effect is reduced
● Only minimal contribution of small stores
– Small effect for independent, does not depend on presence of
other retailers; mainly reduces dissatisfaction
– No effect for Tesco Express at 15 minutes
● Effects at 15 minutes vary by brand and location
– ASDA and Morrison larger effects than (second) Tesco
– If Tesco at 5 minutes then smaller effects of ASDA/Morrison
Main findings
1. Consumers are more satisfied if they have more
grocery stores available
2. Consumers are more satisfied if they have a greater
variety of brands and formats available
Published as:
Clarke I., M. Kirkup and H. Oppewal (2012), “Consumer
satisfaction with local retail diversity in the UK:
effects of supermarket access, brand variety, and
social deprivation” Environment and Planning A, 44:
1896- 1911
Extension
(similar approach, separate sample)
● Role of online shopping
– Extra condition varied presence of online channel
– No significant effect: online is no substitute for brick
and mortar store access
● Role of discounters
– ALDI adds significant benefit, but only if a main
supermarket is also present
● Role of premium stores
– Waitrose adds only modest amount
Store presence effects
(study 2)
Next steps in the research
● Real neighbourhood evaluations
● Effect of actual store mix and access levels
● Comparison across two towns
– With different levels of concentration
Study Areas
Telford
Milton Keynes
Retail supply in the two towns
●
Town A = Telford:
–
●
Town B = Milton Keynes:
–
●
Low level of concentration of main supermarket brands (HHI<1500)
and a Tesco market share of only 17%,
High level of concentration (Herfindahl-Hirschman Index >3000) and
a high Tesco market share of 52% (at time of surveying)
Approximately 20 supermarkets and 50 small local
supermarkets and convenience stores in each town
–
All main competitors present
–
Similar presence of discounters and of high end luxury
supermarkets
Methodology
● Careful selection of nine local areas in each town
● 60 face to face interviews in each area to collect
consumer evaluations of the retail supply
● Location data for all supermarkets combined with
travel time data for all area postcodes.
● Resulted in each respondent’s available set of
stores, including their brands and travel times.
● Selected nearest six supermarkets for each
respondent
Descriptive statistics
Town B
Town A
Mean Std. Dev. Mean Std. Dev.
Variable
2.93
6.50
1.62
4.46
X1:TravelTimeToNearestSuper
1.27
1.91
1.44
2.64
X2: ExtraTravelTimeToThirdNearest
0.17
0.22
0.17
0.15
X3: P_Discount
0.10
0.08
0.05
0.02
X4: P_Highend
0.15
0.33
0.09
0.45
X5: P_Main
0.36
0.34
0.20
0.11
X6: P_Tesco(withinMain)
0.48
0.65
0.50
0.53
X7: CarAvailable3+days
1.06
3.48
1.22
4.09
Y: Satisfaction
Analysis: mixed linear regression
(18 groups; 1129 respondents)
Variable
Coef. Std. Err.
X1: TravelTimeToNearestSuper
0.02
0.02
X2: ExtraTravelTimeToNNearest -0.08
0.04
X3: P_Discount
1.03
0.50
X4: P_Highend
-0.80
0.65
X6: P_Tesco(withinMain)
-0.46
0.21
X7: CarAvailable3+days
0.28
0.06
X8: Town A (vs B)
0.68
0.26
Constant
3.29
0.30
Var(Neighbourhood Constant)
0.26
0.10
Var(Residual)
1.04
0.04
z P>|z|
0.99 0.32
-2.36 0.02
2.04 0.04
-1.23 0.22
-2.22 0.03
4.35 0.00
2.58 0.01
10.94 0.00
2.58 0.00
23.39 0.00
Results (1)
● Distance to nearest supermarket: no effect
– But negative effect of distance to next nearest
– So it is the access to multiple supermarkets in the
vicinity that is important
● Variety: Presence of a discount store
increases satisfaction
– No effect of the presence of a high end store
– So the effect is due to discounter availability, not
mere variety
Results (2)
● Proportion of Tesco’s negatively affects
satisfaction
– Consumers are more satisfied when there is more
brand variety among the main supermarkets
● Respondents in Low Concentration town
more satisfied than those in HC town
– The High Concentration town also included more
Tesco branded convenience stores
● Higher satisfaction if car available
– No interaction with distance variables
Conclusions
● Consumers in the town less dominated by Tesco
significantly more satisfied with their local mix
● Satisfaction does not depend on distance to the
nearest supermarket; instead it depends on the
combined distances to the set of nearest stores
● Consumers value brand variety and discounter
● Policy makers should focus on variety, not just on
providing ‘minimal’ access levels
– But there may be vulnerable subgroups who need access
– No indication that online can provide a substitute
Do these findings transfer to the
Australian context?
● Yes, in principle, –
● But differences to note
– Number of competitors
– Regulatory environment
– …
● Still an open research question
– Research pending
– Partnering (Monash):
acrs@monash.edu
Thank you!
● Questions & discussion
Satisfaction with the local grocery store
mix: A consumer perspective
Harmen Oppewal (Monash University)
Ian Clarke (University of Edinburgh)
Malcolm Kirkup (University of Exeter)
Supermarket Power in Australia Symposium,
Melbourne, 1 August 2013
Department of Marketing