ARTICLE IN PRESS

Journal of Retailing and Consumer Services 16 (2009) 260270

Contents lists available at ScienceDirect

Journal of Retailing and Consumer Services

journal homepage: www.elsevier.com/locate/jretconser

Consumer observations on channel choicesCompetitive strategies in

Finnish grocery retailing
Katri Koistinen a,, Raija Jarvinen b
a
b

National Consumer Research Centre (NCRC), P. O. Box 5, 00531 Helsinki, Finland

Helsinki School of Economics, P. O. Box 1210, 00101 Helsinki, Finland

a r t i c l e in f o

a b s t r a c t

Keywords:
Channel competitive strategies
Consumer
Cross-shopping
Grocery retailing
Multi-channel retailing

This article aims at providing consumers observations on their choices between various grocery
retailing channels. The theoretical roots are based on Porters competitive strategies and their further
developed variations, but also the retailing research concerning competition and consumer perspective
will be discussed. The results of the study conrm that consumers have one primary store, which is
often a hypermarket or a supermarket. In addition, they prefer to shop in several supplementary stores
located close to their homes. The empirical study also reveals that all retail channels have both
weaknesses and strengths from the consumers viewpoint.
& 2009 Elsevier Ltd. All rights reserved.

1. Introduction
A retail channel is a pathway from the producer to the
consumers. It contains various retailers who are involved in the
delivery of goods and services to consumers. The traditional
perspective sees the channel as a structure with several
producers, a limited number of retailers or other intermediaries
and an unlimited amount of consumers as nal users (Jarvinen
and Lehtinen, 1997). However, during the last decade traditional
channels have experienced several changes when retail chains
have developed bigger entities and multi-channel models have
replaced the traditional channel structures. In addition, consumers have become multi-channel shoppers as a consequence of
decline in channel loyalty (Gensler et al., 2007). The changing
reality is about to have its effect on the topics emerging among
academics working with retail channel research.
The tradition in channel research has been strong since the
1960s and the variety of research conducted vast (see state-ofthe-art reviews by e.g. Schwartz, 1965; Gaski, 1984; Stern and
El-Ansary, 1992; Cronin et al., 1994). Relationships between
producers and intermediaries from the producers point of view
have dominated the channel studies. The most common variables
in channel research have been power and conict (e.g. Gaski, 1984),
whereas channel competition and co-operation have become
sources of interest only recently, and even today these topics are
rare in channel research. Stern and El-Ansary (1992) (see also Weitz
and Jap, 1995; Andersson et al., 1996) do not even mention the term

 Corresponding author. Tel.: +358 400 871 598; fax: +358 9 7726 7715.

E-mail addresses: katri.koistinen@ncrc. (K. Koistinen), raija.jarvinen@hse.

(R. Jarvinen).
0969-6989/$ - see front matter & 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jretconser.2009.02.003

competition in their classication of various types of channel

research. However, it can be assumed that competition within the
channel is one cause of the conicts occurred.
The review by Jarvinen (1998) concludes that channel
literature does not accept consumers as full members within the
channel and there are no extensive discussions on the inuence of
consumers even though it is the consumers that in the end decide
which retailers they buy from and which they do not. Falvey
(1988, 277) reminds that:
You can do almost everything wrong in business and still
succeed if you serve the customer. You can do just about
everything right in business and fail if you do not take care of
their needs, wants, desires, and emotions.
Falveys words hold in the grocery retailing competition even
today. His view is supported by Stern and El-Ansary (1992) as they
encourage all channel members to keep their eyes on the most
important people in the entire channel consumers and Hardy
and Magrath (1988), who remind that one of the oldest axioms in
marketing is to keep close to the consumers. Anderson et al.
(1996) even suggest that channels should be evaluated with two
dimensions: consumer needs and costs. In spite of the few
arguments on behalf of consumers importance in retail channel
context, consumers seem to be the most neglected factor in the
channel research. Therefore, it is important to shift the focus of
retail channel studies to the consumer perspective.
This article aims at providing consumers observations on their
choices between various grocery retailing channels. The study was
started along the lines of the research idea developed by
Morganosky (1997), who has conducted studies on the impacts
of structural changes within grocery retailing on grocery retailing

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K. Koistinen, R. Ja

itself and the consumers. Her special concern has been the crossshopping patterns between different grocery retailing channels.
The article endeavors to nd answers to the following
questions:

 What are the cross-shopping patterns of Finnish consumers

within different grocery retailing channels?

 What do consumers regard as the strengths and weaknesses of

different retail channels?

 How do retail channels compete with or complete each other

from the consumers viewpoint?
Section 2 will discuss the channel competitive strategies in
grocery retailing, after which in Section 3 there will be details and
analysis of the research data. Section 4 will briey touch upon the
Finnish retail grocery channels as the context of the study,
followed by consumer observations on these grocery retail
channels in Section 5. In Section 6, the paper will concentrate
on channel competition or completion from the consumers
viewpoint, and in Section 7 conclusions and discussion were
outlined.

2. Channel competitive strategies in grocery retailing

Recent changes in the retail channel environment have
affected not only retailers but also consumers. According to the
table by Jarvinen and Lehtinen (1998) the most dramatic change is
the oversupply of goods and services experienced by all Western
countries. The second one concerns channel structures, as
producers move from one-channel to multi-channel strategy, the
third and fourth illustrate a tendency towards co-operation and
increasing power of retailers as intermediaries. The fth change
concerns consumers as they are becoming more experienced and
quality conscious. Therefore, the monologue that characterizes
mass marketing-oriented organizations and tries to manipulate
consumers has to be turned into a dialogue with consumers. Some
of the above changes listed in Table 1 have been going on for a
longer period, e.g. Bucklin and Schmalensee observed already in
1987 an increased retailer concentration and Stern (1987) stressed
the growth of retailer power.
2.1. Consumer preferences in multi-channel retailing
Many retailers play important roles in those channels where
producers lack direct contacts with consumers. Retailer cooperation can achieve positive results in the form of increased
sales volume and publicity (cf. Narus and Anderson, 1996) and
they are in special position to manage and inuence consumers
(Jarvinen, 1998).
Multi-channel retailing is becoming the standard approach
(McGoldrick and Collins, 2007). Multi-channel strategies concern
channels that often are organized as complex networks instead of
traditional channel structures (Rapp and Collins, 1987; Moriarty

Table 1
Changes in channels (cf. Jarvinen and Lehtinen, 1998).
Demand
One channel strategy
Channel member competition
Producer domination
Price conscious consumers
Consumer manipulation (monologue)

)
)
)
)
)
)

Oversupply
Multi-channel strategy
Channel member co-operation
Retailer power increase
Quality conscious consumers
Consumer commitment (dialogue)

261

and Moran, 1990). Multi-channel types can be classied according

to their characteristics, e.g. Jarvinen (2001) has proposed three
types according to ownership, differentiation and complementary
nature. From retailers point of view, consumer channel use is
important to understand in order to maximize retailers efciency
in meeting the needs of the consumers. Channels can complete
each other and give consumers better shopping options (Johnson
et al., 2006; McGoldrick and Collins, 2007). The study of Johnson
et al. (2006) also indicates that consumers who try emerging
retail channels do not switch completely to the new channels but
just add them as further shopping options. Yet multiple buying
environments most probably change consumer buying habits,
because various channels interact and inuence each other in the
consumer mindset, as Park and Lennon (2006) state. However,
Birgelen et al. (2006) argue that multi-channel research has so far
left issues connected to consumer satisfaction and behavioral
intentions virtually unaddressed.
Dowdell (2006) reports that almost 80 per cent of consumers
shopped at ve or more retailers in a 3-month period, and one
quarter shopped at least at 10 retailers. He groups consumers
opinions of retailers in four segments: routine replenishment, big
shops, experience makers and quick shops. Out of these
alternatives routine replenishment retailers earn the most
frequent shopping trips and have wide, consistent selections.
McGoldrick and Collins (2007) prole four scales for multishoppers in their empirical study: ease of shopping, riskreduction, product value and experiment seeking. On the other
hand, Salmon (1987) concentrates on summarizing consumers
preferences in retail channels: one-stop shopping for routine
needs, complete assortment, convenience (location, opening
hours and parking), availability of post-sale services and hasslefree return privileges together with reasonable price level.
Another key component of consumers channel preference is
their behavioral loyalty to each channel (Gensler et al., 2007).
Aalto-Setala et al. (2004) studied the reasons for high prices in the
Aland Islands, a small archipelago between Finland and Sweden.
They found that high prices manifest the strong regional spirit
among the inhabitants: they are prepared to pay higher prices for
products that are produced in Aland. Further support for loyalty is
given by Johnson et al. (2006), who conrm that consumers
remain loyal to their local stores if they are satised with them
and have a feeling of belonging to the local community.
Practically all grocery retail chains target on long-term
relationships with consumers. On the other hand, Light (1988)
has noticed that in many cases consumers feel that they have a
relationship with both retailers and producers. We agree with
Light, as many retail chains and producers have together
developed various kinds of long-term loyalty programs. Park and
Lennon (2006) particularly stress the interaction between sales
personnel and consumers because of its positive impact on
purchasing behavior. Juttner and Wehrli (1994) even see longterm relationships with consumers as a stabilizing element and
they suggest that information exchange provides a basis for
personalized offerings.
According to the above studies, long-term relationships
between consumers and retailers benet both parties and create
loyalty and commitment. However, consumers seem to prefer
multi-shopping and frequenting various retailers instead of only
one. One reason for that can be the retailers neglect of consumers
as soon as they have established a relationship with them, as
Kotler (1995) claims. In order to avoid this, retail channels need to
adopt new strategies and attitudes towards their existing
customers. When taking into account that producers believe in
multi-channel structures in spite of the increasing competition
between retailers, this issue arises among the most important
strategic decisions. Therefore, it can be suggested that consumer

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K. Koistinen, R. Ja

buying patterns and attitudes are one of the key phenomena

when future retail channels are planned and established.

2.2. Retailers options for competitive strategies

Studying consumers observations on their choices between
various competing grocery retailing channels is well grounded, as
there is an abundance of retail channels availableone might
even say there is an excess of options to choose from. The more
channels there are to choose from, the more demands will be
placed on those channels that the consumers actually decide to
favor. In her study, Morganosky (1997) pays attention to two key
concepts: channel competition, which assesses the degree to
which one format shares its customers with alternative formats
for a given product category, and channel competitiveness, which
refers to a channels ability to attract or pull customers from the
alternative channels.
From the retailers perspective there are several alternative
strategies to handle competition. Porter (1982) divides competitive strategies into three basic types: cost leadership, segmentation/differentiation and focusing. In grocery retailing the narrow
focus is rare whereas strategies like cost based and segmentation/
differentiation are more relevant. Alternative ways to achieve
competitive advantage in retailing are listed more thoroughly by
Walters and Knee (1989).
The cost-based strategy consists of seeking advantage from the
functions, which cause costs, i.e. customer operations, logistics,
services and self-service equipment, product range, quantity and
timing of buying. The cost-based strategy has contributed to the
success of large hypermarkets and supermarkets, which have
succeeded in offering broader ranges at lower prices. Tight cost
focus has enabled them to gain competitive advantage over small
stores with higher costs (Uusitalo, 1998). Naturally, it is more
difcult for small stores to gain economies of scale and
negotiation power (Ellis and Kelley, 1992; Morschett et al.,
2006). However, in the competition between large hypermarkets
this strategy is less effective, because it is difcult to win a cost
advantage over an equally cost-efcient unit. On the other hand,
there are enough hard discounters in the markets that focus on
low prices and low costs only. The segmentation/differentiation
strategy implies that competitive advantage is pursued by
specifying customer groups and differentiating retail offers from
other retail chains. Successful differentiation enables the retail
chain to gain an unique position among retailers. Differentiation
can be executed through product design or store image (Uusitalo,
1998; Knee and Walters, 1985).
In addition to Porters (1982) strategies Wortzel (1987)
suggests one new strategy, a service and personality differentiation strategy, to be included in competitive strategies. It is based
on unique services and the personality of each store. On the other
hand, Ellis and Kelley (1992) present four comparative advantages
such as (1) product variety and sizes, (2) amount of promotion, (3)
promotion effectiveness and (4) customer service, but soon after
them Conant et al. (1993) add pricing, incentives and fashion into
the Ellis and Kelley list. Later, relational attitudes, i.e. the
advantage of building lasting relationships with consumers, have
been paid attention to Harris and Ogbonna (2001).
Recently, Morschett et al. (2006) conducted an empirical study
of Porters competitive strategies in the context of food retailing.
One reason for their analysis is the criticism presented towards
Porters framework with arguments claiming it to be too
simplied. From our point of view the criticism towards Porter
arises from missing consumer perspective. However, for our
purposes the article of Morschett et al. (2006) offers three central
dimensions of competitive strategies identied from the con-

sumer perspective: (1) price level, (2) quality of performance, and

(3) scope of offers/convenience.
For a large amount of consumers price has traditionally been
one of the most important criteria in grocery store choice in
Finland (Marjanen, 1997; Raijas, 1997). Uusitalo (1998) even
argues that consumers are thought to select an outlet on the basis
of the price, the results of which can be seen in the aggressive
price advertising in local newspapers. In many areas, price-wars
have resulted from using price as the primary competitive tool.
We claim that as long as grocery stores fail to promote any other
appealing advantages, price is likely to remain the major store
choice criterion for the consumers.
The research by Pitkaaho et al. (2005) reveals a clear shift in
grocery choice from price to other criteria. Namely, it suggests
that the most important criteria for choosing a grocery store in
Finland are location near home, benets for regular customers,
pricequality ratio, assortment and ease of patronizing. Price is
important only for the age group over 55 years. It seems that
location near home in particular has became a more important
choice criterion for consumers at the beginning of the twentieth
century and this concerns all store types from the small stores to
department stores.
In order to conclude the discussion on the competitive
strategies and the research conducted in grocery retailing area,
it should be emphasized, as do Morschett et al. (2006), that Porter
forms a solid ground for research, but his strategies need to be
further developed as current research proves that there are other
criteria in addition to costs, differentiation and focusing that affect
consumer channel choices. The above-presented dimensions of
Morschett et al. (2006) are chosen to guide our empirical analysis.
The study by Pitkaaho et al. (2005) supports this choice. The
reason for this choice is that similarly to this study, Morschett
et al. (2006) also carried out their research in grocery retailing,
and we believe that there can be variation in most valid
competitive strategies between various areas in retailing.

3. Research data and analysis

This study is qualitative in nature and focus groups were used
for data acquisition (see e.g. Morgan, 1988; Barbour and Kitzinger,
1999; Bloor et al., 2001). Focus groups help the researcher to
perceive and outline the research subject in a comprehensive way
and successful groups may discuss a range of topics that not only
cover the issues that researchers already know to be important,
but also introduce a set of issues that the researchers had not
anticipated (see e.g. Morgan, 1988; Bloor et al., 2001). As opposed
to this, for example in surveys respondents answer the questions
but the questions may not concern issues that the respondents
consider important. The goal in using focus groups is to learn
about the participants experiences, perspectives, opinions, wishes
and concerns (see e.g. Morgan, 1988; Barbour and Kitzinger, 1999)
In this research the target was to gather current information about
consumers experiences and perspectives on their choices between various grocery retailing channels.
The strength of a focus group is that the group stimulates
participants to discuss topics which would perhaps not have been
brought up without the interaction of the group (Morgan, 1988;
Barbour and Kitzinger 1999). The practical strength of focus
groups is that the same number of participants could be
interviewed in much less time in a group format than in
individual interviews (Morgan, 1988).
Most participants in the focus groups were members of the
National Consumer Research Centre (NCRC, Finland) Consumer
Panel but some participants were recruited through the researchers own networks. There were altogether 45 participants

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attending the seven focus groups in spring 2004. The groups

represented consumers in three different shopping environments.
The differences in retail structure and supply were expected to
inuence the consumers attitudes, opinions and behavior.
Four of the groups consisted of consumers living in urban areas
(the cities of Helsinki, Turku and Joensuu), three of the groups
represented consumers living in rural areas with limited retail
supply. The rural areas are situated close to the cities mentioned
above. The more segmented the groups are, the more necessary it
is to have several groups (see e.g. Bloor et al., 2001). Seven focus
groups altogether were a suitable amount of groups in this
research as the discussion themes were the same in every group,
and by having at least two groups per research area the
researchers made sure that possible regional differences would
come up.
The methodological texts about focus groups have typically
recommended groups consisting of between six and eight
participants as the optimum size for focus group discussion (see
e.g. Bloor et al., 2001). This advise was followed in this research as
far as it was possible (some very late cancellation of participation
decreased the size of two groups) and it was found relevant. In
general, it was discovered that the bigger the group was, the more
care the researcher needed to take to make sure that every
participant got a possibility to take the oor.
Each focus group consisted of veeight participants with
varying socio-economic backgrounds but their residing areas were
alike. Of the participants 69 per cent were women and 31 per cent
were men. The youngest participant was 22 years old and the
oldest was 66 years old. Participants were highly educated, half of
them had an academic degree and one third of them had a
college-level degree. The households of 64 per cent of the
participants consisted of one or two adults. The remaining 36
per cent of households had one child or several children under 18
years of age. The percentage of households with one child or
several children in Finland was 25 per cent in 2004 (Statistics
Finland, 2008). Thus, the participants in the discussion with one
or several children were somewhat overrepresented against the
average. It was assumed that a similar residing area would make it
easier for the group to discuss retailing and service supply as they
are bound to be more diversied in urban areas than in rural areas
(Fig. 1).

Fig. 1. The centers of the research areas.

263

The research area of Helsinki is by far the largest urban area in

Finland in terms of the number of inhabitants. This area is
populated by approximately 1.2 million people, i.e. almost every
fourth Finn lives inside this area. The center of the area is Helsinki,
the capital of Finland. The area boasts the most diversied supply
of grocery stores and specialty stores. The research area of Turku is
the third biggest urban area in Finland with nearly 300 000
inhabitants and a wide supply of services. The population of the
research area of Joensuu is almost 100 000 and it is a typical
representative of a middle-sized urban area in Finland. The
Joensuu region has suffered from loss of population during the
past decades.
The data collection revealed that the same subjects came up in
various discussions. The differences between the research areas
were very small. Grocery stores and chains are very alike in
different parts of Finland and we believe this to be due to the very
small differences between the areas. The only differences were
found to concern shopping for specialty products, which is outside
the scope of this article.
The seven focus groups discussed following preformulated
themes:
1. The supply of grocery and specialty stores in the neighborhood
and in the region in general.
2. Shopping for grocerieswhere, how and when (food, detergents and personal hygiene)
3. Shopping for specialty productswhere, how and when?
4. Multi-purpose shopping trips.
5. Shopping as a leisure time activity.
This article concentrates on grocery shopping only. Each
discussion was preceded by a presentation of the topic of the
research, discussion themes, researchers, nance of the research
and the ethical principles of the research. The discussions were
tape-recorded. Two researchers attended every focus group: one
as a moderator and the other took the minutes and did the
recording. However, the moderator did not let the participants
engage in a free-owing discussion, she stepped in to cut off
unproductive discussion. Most of the discussion time the
participants discussed actively and the moderator only listened
to the discussions. Sometimes the moderator asked more specic
questions. (e.g., Morgan, 1988; Bloor et al., 2001). On the whole,
discussions were successful.
The discussions were written down from the tapes. The data
were analyzed by using content analysis (e.g. Eskola and Suoranta,
1998; Mayring, 2004). First the grocery retail channels that the
participants used were identied. Likewise were identied the
primary and supplementary retail stores. The participants homes
and the grocery shops were located on maps using geographical
information systems. In that way it was possible to study the
distances between the homes and shops. According to these facts
it was possible to conceptualize where, when, in which way and
how often the participants did their grocery shopping.
After that the analysis continued by collecting the expressions
(words and terms) that the participants used to describe the
character and quality of a certain grocery retail channel. Information was linked to every expression to indicate whether it was
connected to a primary, secondary or supplementary grocery
store. Some participants evaluated also grocery retail channels
they had not used. These expressions were also included in the
analysis.
All the expressions (words and terms) with enclosed information were organized to strengths and weaknesses of each channel.
While doing this organizing, it was important to be conscious of
the context and meaning of the expressions. For example, some

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K. Koistinen, R. Ja

participants considered it a positive factor that a hypermarket had

a large area, whereas some felt negative about it. The context of
the expression revealed what the participant really meant. The
strengths and weaknesses of each channel were rst divided into
three dimensions presented by Morschett et al. (2006) and
thereafter further up to following groups (e.g., Berman and Evans,
2001), in order to make it easier to analyze and compare the retail
channels:
(a) Price level
 price level of products
(b) Quality of performance
 quality of products
 selection and assortment
 service (customer service)
(c) Scope of convenience
 location
 shop environment (ease of patronizing)
 business hours
All this information was summarized together in the tables (see
Appendix A). In every focus group more strengths than weaknesses of each channel came up. Also Uusitalo (1998) has come up
with ndings of more strengths than weaknesses in her research
regarding consumer perceptions of grocery stores, even though
her study was conducted only in one town in Finland and
restricted to the six specied stores. Unlike this study, Uusitalo
used a strictly structured questionnaire with a variety of
quantications. However, in this research it was assumed that
consumers patronize stores they nd competitive and satisfactory
to their needs, and that is the reason why a great number of
strengths came up.

4. Finnish retail grocery channels as the context of the study

In spite of the vision that channel structures in many cases
tend to develop towards network arrangements (see. e.g.,
Hakansson and Snehota, 1995), the following list of the main
grocery retailing channels in Finland conrms that the structure
obviously still is more close to the traditional channel than
network arrangements:

 hypermarkets, supermarkets, neighborhood stores and conve








nience stores, hard discounters

market places
market halls
direct sales outlets
kiosks
service stations
patisseries, bakeries, sweet shops, butchers and shmongers
shops
e-retailing

Fig. 2 shows the market shares of each retail channel in Finland.

In 2005, the total market share of all-sized supermarkets in
Finland accounted for almost half of the grocery retail business
(47%), the share of hypermarkets being 24% (A.C.Nielsen Finland
Oy, 2006).
About 80 per cent of Finnish grocery stores belong to different
grocery chains and these chains sell 94 per cent of all groceries
(A.C.Nielsen Finland Oy, 2006). Stores belonging to the chains are
very alike regardless of location. Also certain styles of stores, for
example supermarkets, are similar despite the chain they belong
to. Therefore, it is assumed in the empirical part of the research

Fig. 2. The market share of Finnish grocery stores in 2005 (A.C.Nielsen Finland Oy,
2006).

that the participants descriptions of a certain shop signify this

type of shops. By studying the strengths and weaknesses
simultaneously it was possible to form an opinion on how the
consumers perceive the competition between the different retail
channels (Koistinen et al., 2005).

5. Consumer observations on the grocery retail channels

All respondents in the study patronize one primary retail store,
and in addition, they use at least one retail store as a
supplementary channel to complete the primary one. Some of
the respondents even use several primary stores that compete
with each other. For example, two hypermarkets are named as
main stores, and the choice between them was made on the basis
of location. On working days the choice is made in favor of the
hypermarket located along the way home, but during weekends
the criteria for choice can be business hours, hobbies or location of
other stores.
On the basis of focus group discussions, the primary store is
most often a hypermarket. They are not the nearest grocery stores
to home, but their location is convenient by other criteria. The
second most often visited primary store is a supermarket that
locates near the consumers, especially if they live in densely
populated urban areas.
The supplementary grocery store is often the one that is
located as near as possible. The type of store varies from hard
discounters to neighborhood stores and even to kiosks. Those
consumers that are living in rural areas are used to the fact that
the nearest store may be from 2 to even 10 km from their homes.
Moreover, respondents stress the speed of shopping in connection
with the choice of a supplementary grocery store. However, there
is no one and only type of store used as the supplementary choice,
instead, that choice can be a niche channel such as a market place
or a market hall. Even Lidl, which entered the Finnish market in
2002 is considered one of the supplementary stores. All in all, the
respondents knew very clearly which stores they considered
supplementary grocery stores.
The focus groups produced a vast variety of characteristics
concerning each channel. They will be explained below in more
detail (see Appendix A).

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5.1. Hypermarkets
The price level of hypermarkets inspired the respondents to
describe a vast variety of experience and opinions, and some of
them were inconsistent with each other. For example, typical
goods targeted for families with children are priced as low as
possible, but the others are perceived expensive. It is obvious that
hypermarket chains have chosen different price strategies. Two
hypermarket chains tend to use the every day low pricing (EDLP)
format and one chain uses the promotional pricing (Hi-Lo pricing)
format, and two of them seem to have succeeded in their loyalty
program. The advantages of hypermarkets revealed by the earlier
research (e.g. Aalto-Setala, 2002) are competitive price level and
cost-effectiveness. In spite of this, the price policies between the
chains vary in the light of our research and the consumers are well
aware of these variations. The other strengths of the hypermarkets
are the quality of products and wide assortment. Quality in this
case means that there is enough time before the date of expiry.
Moreover, the special diet meals and private label products were
highly appreciated.
Lack of personal service is a widely accepted factor in
connection with hypermarkets. In spite of this, many respondents
wish to have more service available. The cashier is often the only
person to interact with. Selling food and clothes in the same store
appeals to some consumers but irritates others. Having to go
through other departments in order to reach the food department
is considered particularly irritating. When there is no public
transportation with a bus stop available, the location is considered
poorly planned. On the other hand, if there is a hypermarket close
to home, or speedy public connections, or enough parking space,
the consumer opinions turn more positive.
5.2. Supermarkets
Surprisingly, the respondents pay no attention to the price
level of supermarkets. From that we draw the conclusion that it is
not considered an important factor in choosing the supermarket,
or that the price level is already considered reasonable. We
explain this conclusion by the observation that both high and low
price levels are clearly a decisive factor, which came out in the
discussions concerning the different channels.
The advantages of the supermarkets are a wide and versatile
assortment and the availability of specialty and local products. In
a supermarket a consumer can buy everything in one go. Personal
service proved to be the major strength, e.g. in the form of
personal advice for preparing the food together with bountiful
meat and sh counters.
The size of the supermarkets is another strength: the
respondents evaluated the size optimal in this respect, as they
could do all their shopping within a reasonable time span.
5.3. Neighborhood stores and convenience stores
The biggest strengths of neighborhood and convenience stores,
i.e. stores less than 400 m2 of selling space, are their business
hours on Sundays and late nights on weekdays. On the other hand,
the most important weakness of this type of store is lack of fresh
food, such as bread, especially outside ofce hours. The long
business hours do not serve consumers if they cannot nd the
food they prefer.
The product assortment of neighborhood and convenience
stores is considered sufcient as far as normal everyday products
are concerned even if there are not so many delicacies available.
The personal service is of high quality and the sales staff know
their customers. Especially in the countryside and small villages

265

these stores are favored so as to keep them going. In some cases,

the importance of social contacts is mentioned. Location and
small size are the main strengths of neighborhood and convenience stores. They are nearby, thus making the shopping easy and
fast. Therefore, saving time together with store layout are among
the most important factors when these stores are discussed.
5.4. Hard discounters (Lidl)
The greatest advantage of Lidl proved to be reasonable, even
cheap prices. Typically, consumers nd one or several products
with excellent qualityprice ratio and these items attract them to
shop in Lidl. Examples of these attractive product lines are drinks,
sweets, snacks, nuts, fruits, vegetables, washing agents and
nappies. In addition, Lidl offers more unique alternatives compared to Finnish retail chains.
The most important weakness of Lidl is the limited selection
and assortment. Therefore, Lidl alone cannot serve as the primary
store or the only store, but consumers have to complete their
shopping in other stores. Another weakness of Lidl is connected
with the lack of personal service, in addition to which the checkout desks and the routines at check-out are different from those of
the Finnish stores. One the other hand, it is easy to nd the
products as every Lidl is organized the same way.
5.5. Kiosks and service stations
Kiosks and service stations have long business hours. Consumers are able to shop in these stores, when all the other stores
are closed, but on the other hand, the price level is high compared
to other alternatives. When there are larger stores, e.g. convenience stores, in service station areas, their price level seems to be
more reasonable.
Service stations are particularly important for small shopping
in rural areas. It is fast and easy to get the necessary groceries
from the station when you drive by. In many cases service stations
and kiosks are visited during the leisure time. The last minute
shopping before summer cottage or visits is a good example. The
typical shopping items are drinks, snacks, sweets, sausages and
ice cream.
5.6. Market places
Market places were favored because of the fresh food and
reasonable price level. Market places are ideal for buying seasons
specialties and in fact this is often the main reason to go to the
market place. Especially domestic strawberries and apples were
considered best when bought from the market places. In addition,
the special atmosphere in the market places attracts many
consumers.
The main weakness of market places is the lack of car parking
facilities, because they are usually located in city centers. The
other weakness concerns business hours, which are quite short, as
market places close early in the afternoon. Shopping in the market
places centers around some high seasons, but also on weekends,
and for many consumers they represent quite an occasional
shopping place.
5.7. Market halls
Market halls are similar shopping options to market places.
Again, fresh food is considered the main strength of the market
halls, especially fresh meat, sh, vegetables, bread and all kind of
organic food. Particular value was set on skilled staff, who know
their assortment and the origins of the food well. If necessary,

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K. Koistinen, R. Ja

they can also teach consumers how to preserve, handle and cook
food. In addition, market halls often contain cafes, where you can
comfortably pop in while doing your shopping.
Similarly to market places, also market halls suffer from short
business hours as they are closed in the evenings. Often market
halls locate near market places in city centers and as a
consequence of this their additional weakness is lack of car
parking. In general, market halls are appreciated because of their
architecture; they are beautiful old buildings that form an
essential part of the cityscape.
5.8. Direct sales outlets
Farm shops close to farms are popular in rural areas. They are
worth visiting because of their low price level and fresh products
of high quality. The assortment varies according to season, but the
origin and growth environment is well known.
Some farm shops function without staff. In these cases
products can be paid to special money boxes, which characterizes
a strong trust in the visiting consumers. This system is
appreciated, as there are no xed business hours, but consumers
can visit the stores whenever they pass by. Still, farm shops are
seldom located near main roads, more often they are located at a
distance, but that does not bother the consumers. The reason for
this is that both the price level and the quality satisfy the
customers and they do not mind making a special effort to reach
the particular shop.
5.9. Patisseries and bakeries
Patisseries and bakeries are specialized in their own products
that may have a unique recipe. Often the assortment, selection
and even taste, freshness, raw-materials and looks are different
from the products of mass production. Often consumers with a
special diet nd suitable alternatives from patisseries and
bakeries.
It is important for many consumers to buy the products of a
certain bakery, and if those products are not available in the usual
retail store, then they are bought separately from the particular
bakery or patisserie.
The good smell that attracts customers to buy something or
pop in for a cup of coffee is the main strength of bakeries and
patisseries. This is not mentioned in connection with other retail
channels. The experience concerning business hours varied; some
bakeries and patisseries were open for a limited time, but others
also during the weekends and late nights. The opportunity to use
bakeries and patisseries as a complementing outlet outside the
usual retail business hours and to have access to fresh products
every day is appreciated, in particular.

6. Channel competition or complementation from the

consumers viewpoint
Consumers tend to take their business mainly to hypermarkets
and supermarkets if their key choice criterion for deciding on a
retail channel is price level. Out of the supplementary choices that
display a more limited range of groceries but still provide several
product groups, stores such as Lidl, are the ones that compete
with low price level. Competing with price level is also common
for such supplementary shopping choices as market places and
direct sales outlets, which concentrate on selective product
groups.
If the key criterion is the high quality of all products on offer,
the consumers favor hypermarkets and supermarkets as their

primary and supplementary choices. Quality is a competitive

factor for those supplementary choices, which offer individual
product groups, i.e. market halls, market places, direct sales
outlets, and bakeries and patisseries.
When wide assortment and selection is the decisive criterion for
the consumers, they will choose hypermarkets and supermarkets,
which then compete with each other for being the primary choice.
However, some of the supplementary shopping choices offer a
wide selection of individual product groups. For example, market
places and direct sales outlets compete with their choice of fresh
vegetables, fruits and berries.
When the decisive criterion is service, supermarkets compete
with neighborhood stores and convenience stores for being the
primary and supplementary shopping choices. Out of the
supplementary choices offering individual product groups, only
market halls can be said to offer top service. It is difcult to
determine the competition in terms of the location of the store. If
the consumers resort to walking, biking or public transportation,
the primary and supplementary shopping choices are mainly
neighborhood and convenience stores and supermarkets that are
within walking distance or along public transportation routes. If
the consumers have access to cars, the most likely shopping
choices are hypermarkets and supermarkets, because the bulk of
these are easily accessible by car and they provide free parking.
The opinions of the consumers concerning the shopping
environment vary greatly both within a single retail channel as
well as between the different channels. Those consumers who
appreciate the efciency of shopping choose either neighborhood
or convenience stores as well as supermarkets. Consumers who
consider shopping an enjoyment and a way of spending their
leisure time, will choose hypermarkets and supermarkets. Within
supplementary shopping choices for individual products, places
such as market places and market halls are able to provide an
attractive shopping environment.
If consumers prefer business hours above all, neighborhood
stores and convenience stores compete with supermarkets for
being the primary and supplementary shopping choices. Neighborhood stores and convenience stores are open every day, also on
Sundays and late in the evenings. Supermarkets and hypermarkets
are not allowed to stay open on Sundays except during the
summer season and on ve Sundays just before Christmas. The
business hours of hypermarkets did not generate any discussion.
Instead, the business hours of supplementary shopping choices
such as market places, market halls, patisseries and bakeries were
considered insufcient.
The focus group discussions revealed that shopping for food
and shopping for other products are not usually done at the same
store or even during the same shopping trip, i.e., Finnish
consumers do not prefer to connect grocery shopping with
shopping for specialty products. Only low price, small-in-size
specialty products are sometimes purchased in connection with
grocery shopping, i.e. everyday consumer goods such as socks,
underwear, books and music recordings (cf. Bromley and Thomas,
2002; Popkowski Leszczyc et al., 2004), which are usually
available in hypermarkets, because they are easy to pick up on
the way to the food department. When shopping for more
valuable and sizeable specialty products, consumers are likely to
make a separate shopping trip for that purpose and visit a
specialty store.
The reason for not combining the shopping trips is that
normally specialty stores are located far away from grocery stores.
Another reason is that groceries need to be taken home and put
into the freezer or refrigerator as quickly as possible. Furthermore,
large and expensive specialty products, such as household
appliances, need time and concentration in order for the
consumer to choose the most suitable product.

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K. Koistinen, R. Ja

Finnish consumers are rather loyal to the retail channels they

have chosen. They are also loyal to their supplementary choices,
even if they use a variety of them, they know exactly what to get
in each shop. To change the store where the everyday grocery
shopping is done, is a decision that is not made in a haste. In a
familiar store with a convenient location, it is very easy and
efcient to shop when the consumer knows exactly where to nd
the right products. The respondents criticize moving product
displays from one place to another inside the stores, as it takes
some time to nd the products again. Some respondents are more
understanding if, as a result, the displays will be more logically
organized afterwards.
The study shows that the choice of the retail channel of big
households is more likely to be affected by the various loyalty
programs and cards than the choice made by smaller households.
The reason for this is the way these programs work, i.e. the more
you buy, the more you benet from the loyalty card. Small, and
especially single-person households, feel that the volume of their
purchases will never add up to any signicant benets. Consequently, for these households, it is less important to favor any
particular chain.

7. Conclusions and discussion

When consumers are shopping they use several channels, and
retailers have made it easy for them to move between alternative
channels. Variables that promote multi-channel shopping behavior are time poverty, satisfaction with local offerings, community
attachment and shopping criteria (Johnson et al., 2006).
In this study, consumers favor primarily hypermarkets and
secondarily supermarkets as their main choices for grocery
shopping. This is the expected result, as the market share of this
kind of large retail units has grown in Finland since the end of the
1980s (Koistinen and Vesala, 2006). The most frequently visited
supplementary choices are the neighborhood stores and convenience stores close to home. Other retail channels (e.g. market
places, market halls, kiosks, service stations) are only used as
supplementary choices.
On the basis of the present study, it can be concluded that
when the key criteria for choosing the primary grocery retailing
channel are price, quality, selection and assortment, and shopping
environment, the main choices are hypermarkets and supermarkets. If the most important criteria are service, shopping
efciency and accessibility on foot or by public transportation, the
rst choices of the consumers are neighborhood and convenience
stores and supermarkets. The study conrms that supermarkets
compete with both hypermarkets, and neighborhood and convenience stores.
During the past few years, the retail groups in Finland have
built new hypermarkets, expanded old hypermarkets and increased the supply of specialty products in hypermarkets. In other
words, the retailing business has assumed that the consumers
want to connect grocery shopping with shopping for specialty
products. This study shows that this is often not the case.
Supermarkets, which mainly supply groceries, proved to be the
most competitive choice from the consumers viewpoint. Accordingly, the retail groups in Finland should seriously reconsider their
store strategy, especially in connection with strategic positioning
(see e.g., Yiu and Yau, 2006). Following the example of
municipalities and provincial federations, also retailers should
carefully consider the type and size of unit needed for each
planned location. When the land use plans have provided space
for large retail units, this has normally meant building hypermarkets. However, since the Ministry of Environment endeavors to
make the urban structure more compact instead of decentralized,

267

and since the size of Finnish households is constantly decreasing,

and as consumers do not want to combine grocery shopping with
shopping for specialty products, it might be that in the future,
supermarkets will be the most competitive choice in the grocery
retail markets. It is possible to plan supermarkets of the size
which the consumers feel can offer them a sufciently diversied
supply of products. In addition to this, supermarkets are smaller in
size than hypermarkets and thus it is easier to include them in the
compact urban structure, whereas hypermarkets often need to be
located outside urban centers where they are only accessible by
car.
It can be concluded that Finnish consumers are used to multichannel choices and they are capable of taking advantage of
channel competition strategies. In addition, the empirical results
show that the cost-based strategy is not dominating, but
consumers value other criteria too. Quality and assortment in
particular came up in each channel. Therefore, there is room for
the other two strategy dimensions, quality of performance and
scope of convenience, in the retailing markets. The quality for
consumers means fresh food with low or reasonable price. Extra
services and long business hours are found attractive, whereas
consumers attitudes towards location were divided; store should
either be close to home or at a distance with free car parking.
This study reveals quite many differences between grocery
retail channels. This differs from the results of the study by
Pitkaaho et al. (2005) where all ve studied channel types come
close to each other when choice criteria are compared. For
example, location near home is the most important attribute of all
channels in the research of Pitkaaho et al. (2005), whereas in this
study location dominates only in connection with neighborhood
stores. Hypermarkets and supermarkets locations are described
with such expressions as on the way home and easy access by
car. In addition, focusing as a strategic choice seems to work very
well in the Finnish market, particularly when it is connected to
choosing the supplementary store, such as market places and
market halls. This is quite an opposite view compared to the one
in the study of Uusitalo (1998).
According to our study Finnish consumers are rather loyal
shoppers and they are also active in using loyalty cards. However,
in reality the cards are so popular that it is usual to have twove
loyalty cards in each household. This phenomenon refers to
oating customers (see Gensler et al., 2007) and it is about time
that retail chains develop their loyalty programs further in order
to tie their customers in more closely. Particular attention should
be paid to catering for smaller households, as their number is
increasing every year. The amount of one- and two-person
households is already 70 per cent of Finnish households. In
addition, one of the retailers primary goals in todays competitive
environment is to engage customers by keeping them interested
in their store (Jones and Reynolds, 2006). That can be done e.g. by
organizing special offers and various campaigns with special
themes.
Changes in working hours and leisure time are inuencing the
preferences of consumers, their exibility and individualization
(Cuthbertson et al., 2006). The growth of information and
communication technologies in the society may lead to increasing
opportunities for e-commerce and home deliveries (Cuthbertson
et al., 2006). So far consumers prefer traditional shopping options
because of higher prices and problems with logistic arrangements
in e-commerce.
One issue we did not discuss in this article is the motivation
behind channel choice. Typically research in shopping distinguishes between two different orientations: economic shopping
on one hand and recreational shopping on the other (Backstrom,
2006). Economic shopping refers strongly to the fact that grocery
retailing is a necessity for most consumers. In recreational

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K. Koistinen, R. Ja

Table A1
Strengths
Consumers accounts of hypermarket as a choice for shopping for food
Price level
Reasonable price level, especially in the products necessary for
families with children, and gluten-free products
Quality
Fresh food; quick turnover; enough shelf life
Selection and assortment
Wide selection/supply of goods; food, clothes and house ware
available in one store; availability of special products, private
label products, organic food, special fruits, etc.
Service (customer service)
Customer-friendly checkout; additional services such as
chemists, off-license ; tasting of products
Location
Easy access by car; on the way home; along the bus route; next
to public services
Shop environment
Capacious and free car park; perfect for strolling; spacious and
convenient atmosphere; safe; easy to patronize with children;
free public facilities

Weaknesses

High price level; only limited advantage of loyalty card

Food, clothes and house ware available in one store; too wide
selection/supply of goods
Not enough salespersons/shop assistants; lack of an armchair
service; queuing at rush hour; wipes out corner shops
Only accessible by car
Unattractive car park; layouts differ between stores belonging
to the same chain; the placing of the articles changes too
often; shopping takes too much time in the large store; rush
hours; massive shopping trolleys; unpleasant color scheme

Business hours

Consumers accounts of supermarket as a choice for shopping for food

Price level
Quality
Fresh food, quick turnover, enough shelf life
Selection and assortment
Wide selection/supply of goods, special food products, local
food products, private label products
Service (customer service)
High standard of service; not only self-service; polite personnel
Location
On the way home or to hobbies
Shop environment
Nice layout; comfortable size, not too large; capacious car park
Business hours
Long business hours
Consumers accounts of neighborhood stores and convenience stores as a choice for shopping for food
Price level
Suitable offers
Quality
Fresh food, quick turnover, enough shelf life
Selection and assortment
Wide selection/supply of goods; private label products
Service (customer service)
Location
Shop environment

Business hours

High standard of service, familiar Sales personnel

Near home; within walking or cycling distance from home
Quick shopping; easy to patronize with children; the placing of
the articles is easy to learn and shopping list can be made
according to the placing of the articles
Open on Sundays and late in the evenings

Consumers accounts of hard discounters (Lidl) as a choice for shopping for food
Price level
Low price level; some products are inexpensive
Quality
Food products with different taste; sufcient salt content
Selection and assortment

Patronizing for a change; products from abroad; products from

Finland

Service (customer service)

Location
Shop environment

Exotic, foreign grocery store; the placing of the articles is the

same in every store in every country

Only limited advantage of loyalty card

Queuing at rush hour

The placing of the articles changes too often; narrow aisles

Only limited advantage of loyalty card; high price level

Slow turnover, outdated products
Skeletal selection/supply of goods, especially organic food;
service counters unattended in the evenings
Low standard of service

Pricequality ratio is good only in certain products

Cold cuts containing a lot of fat; country of manufacture is not
stated
Skeletal selection/supply of goods, especially products from
Finland
Low standard of service; not taking part in the bottle recycling
system; different check-out system; queuing
Location outside the city center
Insufcient car parks; narrow aisles; no shopping baskets;
cramped store layout; untidiness; mistreatment of the sales
personnel

Business hours
Consumers accounts of kiosks and service stations as a choice for shopping for food
Price level
Relatively affordable price level in the grocery shops adjacent to
service stations
Quality
Selection and assortment
Service (customer service)
Easy and quick to patronize
Location
Shop environment
Business hours
Long business hours, open when grocery stores are closed

High price level

Consumers accounts of market places as a choice for shopping for food

Price level
Low price level
Quality
Fresh food
Selection and assortment
Organic food; local food; specialties from the province; fruits,
berries and vegetables (seasonal products); market events
Service (customer service)
Location
Shop environment
Good atmosphere
Business hours

Far away from home for carrying a heavy shopping bag

Insufcient car parks
Insufcient business hours

Consumers accounts of market halls as a choice for shopping for food

Price level
Low price level

High price level

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K. Koistinen, R. Ja

269

Table A1. (continued )

Quality
Selection and assortment
Service (customer service)
Location
Shop environment
Business hours

Fresh food
Wide selection/supply of goods; meat; sh; vegetables; organic
food; bread
High standard of service; nice cafe
Possibility to sit down for a cup of coffee
Insufcient business hours

Consumers accounts of direct sales outlets as a choice for shopping for food
Price level
Low price level
Quality
Fresh, high quality food
Selection and assortment
Organic food; berries; vegetables
Service (customer service)
Location
Shop environment
Business hours
Consumers accounts of patisseries and bakeries as a choice for shopping for food
Price level
Some products have good prices for second rate quality
Quality
Fresh food
Selection and assortment
Special products; products made to order; cakes
Service (customer service)
Location
Within walking distance
Shop environment
Lovely scent attracts customers
Business hours
Open at weekends

shopping elements like social aspects, atmosphere, store design,

display and layout are associated with in-store experiences
(Backstrom and Johansson, 2006). The reason why consumers
shop will denitely affect which channel they choose and,
therefore, this issue should be included in future retail channel
studies. This is conrmed in the study by Cottet et al. (2006) that
also revealed that atmosphere, service and store employees
increase the shopping value most. Our study contains consumers
opinions on service, and in some channels evaluations of atmosphere, but leaves employees outside the scope of the study.
Opinions are described in terms like customer-friendly, polite
personnel or familiar personnel. On the other hand, positive
atmosphere seems to contain free public facilities, free car
parking, nice layout, quick shopping, cafe, etc.

Acknowledgements
The authors are grateful to the anonymous referees of this
journal for their valuable comments that improved the structure
and content of this article. Editor-in-Chief Harry Timmermans
earns special thanks for his guidance during the review and
publication process.

Appendix A
See Table A1 for the strengths and weaknesses of different
retail channelsconsumers accounts of different retail channels
as choice for shopping for food.
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