4th Assignment Of

RETAIL MANAGEMENT

Submitted To:
LECT. Amanpreet Kaur Mam,

Submitted By:
RAVISH BAJRA
BBA 6th
Roll no.- RT1809A09
Reg No.-10808077
A COMPARATIVE ANALYSIS OF RETAIL STORE

ABSTRACT -

Results from twelve studies provided the opportunity to identify determinant attributes
in retail store selection. Generalizations of the findings appeared possible in light of the
variation among the studies in terms of retail environment, market differentiation, and
national boundaries. Location and price appeared determinant in food stores selection
while value for the money, assortment, and quality were determinant in the selection of
fashion clothing stores. The results suggest implications for both super and box store
strategies.

INTRODUCTION

Review studies such as that of Lindquist (1974-75) attest to the continued search for
determinant attributes in the retail store selection process. Is price the major
determinant or is it shopping convenience? Or is determinancy dependent upon some
combination of other attributes such as assortment, service and quality?

The availability of results from twelve studies provided the opportunity to address these
questions. A review of these results is first preceded by a discussion of the concept of
determinancy. The results are further placed in context by a brief review of comparable
studies. Additional questions are raised and discussed.

Attribute Determinance

The notion of attribute determinance was discussed by Myers and Alpert (1968) and
Alpert (1971). In order for an attribute to be determinant in the choice process, or, in
other words, predispose consumers to action, the attribute must exhibit two
characteristics. First, the attribute must be regarded as important. By important, it is
meant that the consumer is "extremely offended" (Myers and Alpert, 1968, citing Foote,
1961) by the attribute's absence. It also appears that "important" is related to the multi-
attribute attitude notion (e.g. Fishbein, 1972) that the attribute is "highly evaluated" or
that its presence provides the consumers "much satisfaction.''

The second characteristic exhibited by a determinant attribute is that alternatives in the

choice process are perceived as "differentiated" with respect to the presence of the
important attribute. In the multiattribute attitude context, consumers state "different
beliefs" or provide "different likelihoods" about the presence or absence of the attribute
in each of the alternatives.

According to the preceding, determinant attributes would appear to be identifiable by

either of two general approaches. Directly, they can be determined by relating the
degree of presence of the attribute to the results of the choice process (Myers and
Alpert's, 1968 "covariate analysis"). Less directly, they can be determined by
identification of those attributes that consumers say are important, as well as
identification of those attributes that consumers say differentiate the alternatives
(Myers and Alpert's, 1968 "dual questioning"). Either approach, however, has
limitations related to problems of causality and consumer vocalization of "real"
motivations and attitudes (Myers and Alpert, 1968). Following Alpert's (1971)
conclusion that regression coefficient determination (covariate analysis) and direct dual
questioning are the best methods, it is concluded here that combinations of both general
approaches (direct and indirect) are necessary in the search for determinant attributes.

"Important" Attributes in Retail Store Selection

A review by Lindquist (1974-75) of 26 empirical and theoretical studies of retail store

selection led him to observe that the following attributes were mentioned in at least 25%
of the studies:

TABLE

While he provided a caveat, Lindquist suggested that this relative frequency of mention
is a "valuable indicator" of the important attributes.

In a study not reviewed by Lindquist, Jolson and Spath (1973) found that price/value
relationship, store specialization, quality of merchandise, salesclerk service, and
location were the factors considered most important in the selection of eight stores at a
local shopping center.

How valid it is to aggregate different retail environments (e.g. food, department,

clothing, etc.) in order to identify important attributes is not clear. Presumably, each
type of retail store exists to satisfy different consumer needs. Hence, the "evoked set" of
attributes from which arise the "determinant" attributes would be different in each
situation. Conversely, if all retail environments are characterized by the same evoked
set, it would suggest that consumers would be indifferent in their pursuit of need
satisfaction as to whether they went to a food, department or clothing store. Casual
observation suggests that this indifference is not the case and it is thus concluded that
each retail environment must be examined separately.

A separate analysis of department and grocery stores characterized a recent study by

Hansen and Deutscher (forthcoming) of important attributes. In this investigation, it
was found that the three top-ranked dimensions in grocery store selection were physical
facilities (clean, easy to move through, easy to find items, fast checkout), store
atmosphere (friendly store personnel), and merchandise (dependable products, high
quality products, high value for the money, wide selection, fully stocked, numerous
brands, well-known brands, low prices vs. competition, many specially-priced items).

In another recent study of men's clothing stores by James, Durand and Dreves (1976), it
was found that price, assortment and personnel were the attributes deemed most
important by respondents.
"Determinant" Attributes in Retail Store Selection

While replication of the preceding studies in similar retail environments might identify
consistently-rated "important" attributes, it is not clear that the same subset of
attributes would be consistently identified as "determinant." To the extent that markets
differ in the extent of differentiation on each of the important attributes, it would be
expected that studies carried out in each market would also differ in their reports of
determinant attributes. For example, a Toronto, Canada study of retail food stores
(Arnold and Tigert, 1973-74) reported that Dominion Store increased its market share
from 30% to 45% when it suddenly created a wide gap in the pricing structure by
dropping its prices by about 12%. In other words, price appeared determinant among a
large group of shoppers.

A year later, there was evidence that the key determinant attribute had changed. With
the price war over, "best customer service" was found to be the variable most closely
correlated with whether or not the respondent last shopped at Dominion. However,
"lower price" still remained most highly correlated with Miracle Food Mart shopping
behavior while "easiest to get to" characterized Loblaws shoppers. That is, even in the
same geographic market, determinancy appeared to change over time.

With changes even in the same market, it might be expected that determinant attributes
would again be different when national boundaries are crossed and the search for
determinant attributes is carried out in different cultures. Thus, Doyle and Fenwick
(1974-75) found in a London, U.K. study of food stores that "most individuals preferred
to move up the vertical or 'quality' dimension toward Sainsbury's and Marks and
Spencer" (as opposed to the "greater variety" or "lower prices" dimensions in that
study). Quality is a different determinant attribute than the determinant service,
location, and price attributes found in the Toronto study.

It must be further noted that different measurement methodologies characterized the

latter two studies. In the Arnold and Tigert (1973-74) study, respondents selected the
store best on an attribute. That selection was then correlated against store last shopped.
In the Doyle and Fenwick (1974-75) study, however, stores were both ranked by
preference and rated on semantic differential scales. These data were then subjected to
multidimensional scaling. Thus, different methodologies may also account for the
different results in these two studies. It is consequently recognized that this factor may
tend to confound the search for consistently rated important and determinant
attributes.

In view of the preceding considerations, an analysis was made of results obtained in 12

different commercial studies. The usefulness of these studies arose from the fact that
although there were differences in methodologies, national boundaries, and retail
environments, there were enough replications of each condition to permit tentative
conclusions about important and determinant attributes.
RESEARCH METHODOLOGY

Attribute importance and determinancy in retail store selection were investigated in

twelve separate studies characterized by: i) three different countries (U.S., Canada,
Netherlands); (ii) three different methodologies (open-ended questions, Likert type
statements, forced-choice scales); iii) three different interviewing techniques
(telephone, in-home interview, in-home self-administered questionnaires); and iv) two
different retail environments (supermarkets, fashion). All studies were completed in
1976-77 and all involved random samples of between 1,000 and 3,000 female household
heads drawn from Census Metropolitan Trading Areas. All studies involved a
measurement of not only attribute importance but also attribute scores of retail outlets,
shopping behaviour across outlets, and external validity data on actual prices, market
share, performance/productivity, etc. One of the best comparative performance
measures across stores and across markets is sales per square foot of gross leasable
space (GLA) or sales per square foot of selling area, on either a weekly or annual basis.
All ten studies reported here used that measurement, as well as others.

Retail Food

Seven of the twelve studies were surveys of retail food store patronage. In each of these
seven studies, the attribute importance question was asked in an identical fashion using
the open-ended question, "What is the single most important reason you shop at for
most of your food shopping?" Some 35 specifically recorded verbatim responses were
post-coded into eight major components. Six of the seven studies were completed by
telephone while the seventh utilized an in-home interview at the same time the
telephone interview was being completed in the same market (i.e. the sixth study).

Clothing Fashions

Five separate measures were made of attribute importance in the selection of stores for
women's fashions. Two of the studies involved the use of five point importance
statements while the remaining three utilized an i1 point forced choice format. Unlike
the supermarket studies, the fashion studies involved preselected store attributes that
had been determined on the basis of a large number of focussed group interviews
probing on the importance of various store characteristics. The derived list of 11
attributes included a number of economy/utility dimensions (price, value, location) as
well as a number of fashion specific store characteristics. Three of these dimensions
relate to how a store is positioned on the "fashion spectrum" from low (everyday,
conservative wear) to high (latest, most fashionable women's wear). Respondents
completed the questionnaires in their homes on a self-administered basis.

RESULTS

Retail Food

Table I reports on the seven separate studies of supermarket shopping behavior. While
the commercial nature of the data dictates disguise of each city's identity, it is
nonetheless clear that location and price ranked either first or second in importance
among the eight major attribute groupings.

With regards to determinancy, it was observed that in all seven studies, the chain with
the highest market performance, as measured by sales per square foot of GLA, was also
the market price leader, both in terms of consumer perceptions and in terms of an
actual market basket measurement, or was within two percentage points of the price
leader in the shopping basket measure. Price was thus concluded to be determinant.

There are several differences in the columns of Table 1 that relate primarily to
differences in competitive activity and hence market differentiation but which reinforce
the above conclusions about importance and determinacy.

TABLE 1

COMPARATIVE ATTRIBUTE IMPORTANCE DATA FOR SUPERMARKETS: SHARE

OF MENTIONS GOING TO EACH RESPONSE TO THE QUESTION..."ALL THINGS
CONSIDERED, WHAT IS THE SINGLE MOST IMPORTANT REASON YOU SHOP AT
FOR MOST OF YOUR FOOD SHOPPING"

The first four cities (A, B, C, D) all show location/ convenience to rank first by a wide
margin with low price in second position but only slightly ahead of attributes like
assortment, meat, quality and service. In these four markets, the price differential across
the four leading chains in market share is less than four percentage points in the price
basket. Thus, while there is limited but noticeable price differentiation, price clearly
plays a lesser role as a determinant of patronage and the non-price variables play a more
prominent role, particularly location.

In North American city "E" and in the two Netherlands studies, the low price attribute
jumps into first place and by a wide margin over location. In these markets, the price
leader is 12 to 15 percent below the next nearest competitor. Furthermore, the price
leaders are also the market share leaders in these markets and have by far the highest
performance records in sales per square foot. Clearly, the competitive structure of the
market has forced price into the leading role as a determinant store attribute. In
addition, but not shown in this report, low price is the single most important
determinant of patronage for the market leaders in these markets. Finally, on store
attributes like cleanliness, friendly personnel, etc., that received high ratings in the
Hansen and Deutscher study, the leading chains in city "E" and the Netherlands cities
have the lowest ratings in the market. They have traded away those dimensions, as well
as quality on such items as meat and produce, in favor of total market dominance on
price and assortment. Their bottom line profitability indicates their strategy is working
well.

In the two Netherlands cities, meat quality/variety received no mentions on the

attribute importance question. That result should hardly be surprising given that
upwards of 80 percent of all Dutch consumers buy their meat at a specialty butcher
shop. Pleasant shopping environment, however, ranks fourth in the Netherlands while
receiving almost no mentions in the North American studies.

Clothing Fashions

The results of the comparative investigation of important attributes in the selection of

women's fashion clothing stores are found in Table 2. Value for the money,
assortment/selection, and quality dominate the first three rank positions. Rank
correlations above 0.99 for all 10 pairs of columns indicate that these results are highly
consistent across the five studies.

Across national boundaries and assuming equivalent translation of the questions, it was
found that there were significant differences in the mean score levels. For example, in
the two forced choice scales in Canada in 1976 and 1977, "best value for the money"
totally dominated the data with mean scores of 2.5 and 2.6 in the two years. The gap
between this dimension in first place and the second ranked dimension, largest overall
assortment, is enormous, about 20 standard errors. In the Netherlands, the top three
store dimensions received almost identical mean scores on the importance scale and
"highest quality" was in first place on the forced choice. In fact, highest quality ranked
first or second in both Dutch studies.

TABLE 2

COMPARATIVE ATTRIBUTE IMPORTANCE DATA FOR WOMEN'S CLOTHING

FASHIONS: MEAN AND RANK SCORES ON STORE CHARACTERISTICS FOR
LIKERT SCALES AND FORCED CHOICE SCALES..."HOW IMPORTANT IS EACH
SPECIFIC STORE CHARACTERISTIC TO YOU IN CHOOSING A STORE TO SHOP
FOR WOMEN'S FASHIONS?"

An interesting trend was also observed in the two year period separating the two
Canadian studies. "Best for current, up-to-date women's fashions" moved up from fifth
to third position while "knowledgeable, helpful salesclerks" dropped from fourth to sixth
position. While such a change could be attributed to sampling error, focussed group
research suggested that salesclerk service was becoming universally poor across major
fashion outlets with the result that the consumers perceived they would have to service
themselves in the stores. Thus, importance of good in-store service was consequently
declining as an important store attribute.

DISCUSSION AND IMPLICATIONS

What conclusions can be reached on the basis of these results and in the context of other
studies devoted to the identification of important and determinant attributes? First,
price/value for the money is an important attribute and will be determinant, it appears,
with even small amounts of differentiation across competitors.

This finding, characterizing both the retail food and fashion clothing environments,
clearly matches the results of Jolson and Spath (1973) and James et-al (1976) and
closely parallels those of Lindquist (1974-75) and Arnold and Tigert (1973-74). Only in
the results of Hansen and Deutscher (forthcoming) does the effect of price appear
absent. It is hypothesized that the latter result was obtained because there was little
pricing differentiation in the Columbus, Ohio market at the time of their study and that
respondents to the questionnaire were, in fact, identifying the determinant as opposed
to the important attributes as suggested. Thus, overall, the economic model of the
consumer is suggested as having strong validity in the retail store selection process.

Attributes either equally important or secondary to price appear to differ depending

upon the environment. Among retail food stores, according to these studies, it is
locational convenience. Among fashion clothing stores, however, it is assortment and
quality.

In other words, there is considerable evidence that whenever there is noticeable

dispersion across supermarket chains on the economy/utility dimensions (price,
location), those store characteristics dominate the store choice process. Fashion
shoppers, on the other hand are not as concerned about physical convenience. They
search out value, quality, wide assortments, and up-to-date fashions. They appear to be
willing to travel to whatever location is required to find what they want.

This second conclusion supports Arnold and Tigert (1973-74) in the retail food
environment and James et al (1976), Lindquist (1974-75), and Jolson and Spath (l973)
to the extent that their findings apply to fashion clothing stores. These two conclusions
appear to hold implications for both retail food superstores and box stores. The
supermarket chains that are now moving into the "superstore" game with 35-100,000
square foot outlets are implicitly trading on the assortment attribute which was not
concluded to be as important as price and location. Thus, in order to be successful,
superstores will at least have to match the competition on price. But the very nature of
the large capital investment in physical plant, however, implies fewer stores and
therefore less convenience. Their only apparent option in order to satisfy the important
convenience attribute would be, as some have done, to add specialty bakeries,
delicatessens, floral shop and general merchandise departments, which would then
provide one-stop shopping for the consumer and thereby justify the greater distance
they would have to travel on average. Superstores would then be perceived as satisfying
the convenience criterion.

At the other end of the spectrum are the box stores such as Aldi in Iowa which are
attempting to take a share of the market on the basis of only limited assortments of
basic groceries (400 stock keeping units). Furthermore, prices are at least ten percent
below the next nearest competitor.

While the box store strategy has worked well in Germany, the evidence is not yet
available for North America. However, the results of this study appear to support the
strategy. Pricing well below the competition automatically makes the important price
attribute also determinant. In addition, low capital investment per outlet should also
make them more amenable to greater numbers of units and hence more likely to satisfy
the convenience attribute.
If the future brings a showdown between the superstore and the box store, the
superstore may win. It is conceivable that over time, the cost advantages that accrue to
the box store will be wiped out due to advances in technology. For example, no price
stamping of merchandise in the box store could be countered by optical scanning of
label codes. Thus, if price differentiation is erased and consumers perceive the fewer
superstores just as convenient, the superstores will then completely dominate on
assortment, the other important and consequently determinant attribute in retail food
store selection.

REFERENCES

Mark I. Alpert, "Identification of Determinant Attributes: A Comparison of

Methods," Journal of Marketing Research, 8(May, 1971), 184-91.

Stephen J. Arnold and Douglas J. Tigert, "Market Monitoring Through Attitude

Research," Journal of Retailing, 49(Winter, 1973-74), 3-22.

Peter Doyle and Ian Fenwick, "How Store Image Affects Shopping Habits in Grocery
Stores," Journal of Retailing, 50(Winter, 1974-75), 39-52.

Martin Fishbein, "The Search for Attitudinal-Behavioral Consistency," in Joel B. Cohen

(ed.), Behavioral Science Foundations of Consumer Behavior (New York: Free Press,
1972).

Nelson N. Foote, Consumer Behavior: Household Decision-Making, Vol. 4 (New York:

New York University Press, 1961).

Robert A. Hansen and Terry Deutscher, "An Empirical Investigation of Attribute

Importance in Retail Store Selection," Journal of Retailing, forthcoming.

Don L. James, Richard M. Durand and Robert A. Dreves, "The Use of Multi-Attribute
Attitude Models in a Store Image Study," Journal of Retailing, 52(Summer, 1976), 23-
32.

M. A. Jolson and Walter F. Spath, "Understanding and Fulfilling Shopper's

Requirement: An Anomaly in Retailing?'' Journal of Retailing, 49(Summer, 1973), 39-
49.

Jay D. Lindquist, "Meaning of Image: A Survey of Empirical Hypothetical

Evidence," Journal of Retailing, 50(Winter, 1974-75), 29-38.

James H. Myers and Mark I. Alpert, "Determinant Buying Attitudes: Meaning and
Measurement," Journal of Marketing, 32(October, 1968), 13-20.