Study: Consumers not loyal to one store

When it comes to groceries, consumers like to shop around.  

In the first test of detailed consumer-buying habits by categories at more than one chain store selling groceries, a team of business school researchers led by Washington University in St. Louis found that the vast majority of shoppers were not “monogamist” or “bigamist” when it came to selecting stores to shop, but rather “polygamist” – shopping at a vast number of stores, often in search of specific – and rather oddball – product categories, including dessert toppings, motor oil, candles, moist towelettes, lighters, automobile fluids/antifreeze and refrigerated ethnic foods.

The “Polygamous Store Loyalties: An Empirical Investigation” study used tracking 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.

The vast majority of shoppers – 83% – regularly visited between four and nine chain stores over the course of a year to purchase groceries. Of the 1,321 households studied, only 12 stayed loyal to just one store. More than half – 51.1% – went to an average of five to seven different stores, and 88 households, or six of every 100, went to 10 or more.

“Store loyalty was pretty much a given in grocery retail,” said senior author Seethu Seetharaman, director of the Center of Customer Analytics and Big Data and the W. Patrick McGinnis Professor of Marketing at Olin Business School at Washington University in St. Louis. “When people do their shopping, it’s the store close to where they live – location, location, location, like the real-estate mantra.”

But there are also a substantial number of shoppers who are “cherry pickers” clipping coupons and shopping from store to store for bargains, as well as certain brands or products.

“That made us do a deeper dive, and we found that people aren’t as store loyal as we thought,” Seetharaman said. “Clearly, people are polygamous. The majority of people are shopping at six grocery stores.”

The study examined the impact family size and family income have on shopping patterns. “We find that as family income increases, the loyalty to Costco increases,” Seetharaman said. “The effect of larger family size on store loyalty is most pronounced for Walmart Supercenters. We also find that as a category’s budget share increases, the household’s store loyalty to membership warehouses – Costco and Sam’s Club – increase.”

The study found that consumers shop according to “intrinsic store-category attractiveness,” or to the types of products found in a particular store. Consumers may shop one store for meat, for example, another for produce, another for frozen foods, etc.

The study’s researchers found the top 10 categories of products that changed a store’s attractiveness over its competitors, based on the available breadth of assortment were: motor oil, candles, lighters, refrigerated dips, refrigerated baked goods, dry beans/vegetables, moist towelettes, hairspray/spritz, hair accessories and automobile fluids/antifreeze.

When it comes to price consistency, consumers were most interested in the dessert toppings, refrigerated eggroll/wonton/tortilla wrap, pickles/relish/olives, peanut butter, toothbrush/dental accessories, toilet tissue, cat litter/dog supplies, refrigerated meat/poultry products, snack bars/granola bars and spaghetti/Italian sauce categories.

“The same store may need to engage in different marketing strategies in different product categories in order to win store loyalty,” Seetharaman told Supermarket News. “For example, price consistency over time must be maintained and advertised to attract more store loyalty in peanut butter. On the other hand, building and advertising a wide product assortment will attract store loyalty in refrigerated baked goods.”

According to Seetharaman, the study’s findings show that retailers have to rethink their marketing strategy.

“No matter what kind of strategic positioning you have carved out, consumers have a mind of their own,” he said. “They are choosing to do different things in different categories. And businesses should wise up to this. Even your core customer is buying some categories at other shops.”

The dataset comprised traditional supermarket chains 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. The authors note that some of the studied chains have dwindled since the study and no longer service several of their previous states. Also, although the study was recently released, the research was conducted before the boom in online shopping.

In addition to Seetharaman, the other authors of the study were Qin Zhang, assistant professor of business at Pacific Lutheran University in Tacoma, Wash., and Manish Gangwar, assistant professor of marketing at the Indian School of Business in Hyderebad, India.