Many retailers are rushing into the click-and-collect (C&C) format, where shoppers place orders online and pick up the goods themselves later. The authors study the demand implications of C&C and ...postulate how different ways of organizing this format—each with its own convenience features—appeal to households with different shopper characteristics. Using two data sets, each covering the introduction of two C&C fulfillment types by a major grocery retailer in a large number of local markets, the authors compare the impact of in-store fulfillment (pickup at existing stores), near-store fulfillment (pickup at outlets adjoining stores), and stand-alone fulfillment (pickup at free-standing locations). The authors find that the shift in online consumer spending significantly differs between the three order fulfillment types, as does the impact on total spending. No one order fulfillment type systematically dominates; the effects depend heavily on shopper characteristics. The study’s results provide guidance on which C&C fulfillment type(s) to operate under what conditions and caution retailers not to take the easy in-store route routinely.
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IZUM, KILJ, NUK, OILJ, PILJ, SAZU, UKNU, UL, UM, UPUK
Three-tiered private-label (PL) portfolio strategies (low-quality tier: economy PLs, mid-quality tier: standard PLs, and top-quality tier: premium PLs) are gaining interest around the world. Drawing ...on the context-effects literature, the authors postulate how the introduction of economy and premium PLs may affect the choice of mainstream-quality and premium-quality national brands (NBs) and the choice of the retailer's existing PL offering. The authors use the natural experiment offered by Asda's and Sainsbury's introduction of economy and premium PL tiers in the corn flakes and canned soup categories in the United Kingdom to test their framework. Using brand choice models that accommodate context (compromise, similarity, and attraction) effects, the authors find that both economy and premium PLs cannibalize incumbent PLs. Economy PL introductions benefit mainstream-quality NBs because these NBs become a compromise or middle option in terms of quality in the retailer's assortment. The effects of premium PL introductions on premium-quality NBs are mixed: Their share improves in two of four cases but decreases in the other two cases.
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In response to pressure to defend their stand sales against discounters, grocery retailers started engaging in retailer-themed super saver events: promotional events (1) specific to the retailer, in ...which they (2) mass advertise (3) unusually deep, immediate deals (4) across a broad range of categories (5) under a common savings theme and deal format. Given these characteristics, such events are expected to generate higher awareness and interest than typical day-to-day promotions, thereby enhancing visits and purchases during the event but also reducing them before and after. The authors evaluate these effects by analyzing 44 retailerthemed super saver events operated by the largest Dutch grocery retailers over four years. They find a substantial increase in visits and total purchases during the event, especially among nonprimary customers and hard-discount shoppers. The larger part of this lift stems from the use of an overarching event theme. Consumers buy less in anticipation of the event and visit the store more often afterward, but for smaller baskets—typically leading to a null effect in terms of profit. Finally, our results suggest that rather than the deal depth or advertising budget, the number of items and media resonance of the theme are key drivers of event success.
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While some researchers view private labels (PLs) as a key tool for retailer differentiation, others imply that consumers do not distinguish between PLs of different chains. This debate raises the ...question: Do a retail chain's PL investments subsidize rival PLs? In addition, how does this affect their choice share vis-à-vis national brands? The authors investigate whether consumers generalize knowledge from product experience across PLs of different retail chains and whether such cross-brand learning depends on the PL brands' link with the chain name or on their quality differences. The proposed brand choice model captures cross-brand learning through quality perception spillovers (consumers adjust beliefs about PL quality on the basis of consumption experience) and familiarity spillovers (uncertainty about a PL diminishes with rival PL consumption). Household scanner panel data on dish soap and breakfast cereals yield clear evidence of cross-retailer learning among standard PLs, regardless of their name or quality differences. The results also reveal that familiarity spillovers dominate quality-level spillovers, implying that the presence of cross-learning benefits PLs and enhances their market position relative to national brands. The authors conclude with a discussion of managerial implications.
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Retailer loyalty programs (LPs) are pervasive in grocery retailing. However, participant spending and redemption typically wear off over time and traditional communication has not revealed very ...effective at maintaining program engagement. We study the impact of in-app mobile push notifications on consumer participation and reward collection in store-loyalty programs. Using a unique data set covering consumer spending before and during such a program, we estimate the effect of push messaging on expenditure and reward redemption during the program. We report positive effects of push messages on spending, and even stronger effects on redemption, relative to a control group not receiving such messages. Due to the savings dynamics, the total spending impact is larger for messages sent early on rather than late in the program, while the opposite holds for the total number of stamps redeemed. Conditioning on observable consumer characteristics, we allow for heterogeneous treatment effects and find that the spending and redemption effects of push messaging increase with high levels of pre-program spending. Our findings reveal which loyalty-program stakeholders benefit the most from mobile marketing campaigns, and help to formulate rules for campaign scheduling and targeting.
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GEOZS, IJS, IMTLJ, KILJ, KISLJ, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, UILJ, UL, UM, UPCLJ, UPUK, ZAGLJ, ZRSKP
The Rise of Online Grocery Shopping in China van Ewijk, Bernadette J.; Steenkamp, Jan-Benedict E.M.; Gijsbrechts, Els
Journal of international marketing,
06/2020, Volume:
28, Issue:
2
Journal Article
Peer reviewed
Open access
Online grocery in China is on the rise. With large differences in brands’ abilities to secure a portion of China’s online pie, a key question is what drives these differences. The authors derive how ...a brand’s total sales change as the online grocery share goes up, and they show that it depends on two indices: (1) the brand’s online index (brand’s online category share relative to its offline category share) and (2) the category’s online index (category’s grocery share online relative to its grocery share offline). The authors then identify brand and category factors that drive these indices. They estimate their model on 448 brands in 60 product categories in China using 2011–2015 data. Their analyses show that the brand online index mainly increases with higher levels of online availability, lower online-to-offline price ratios, and for “trusted,” less “fun” brands. As for the category online index, expensive, less frequently bought categories benefit from the shift toward the online channel, whereas the opposite holds for perishable and heavy categories.
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An increasing number of consumers have come to patronize a hard discounter (HD) to save on their grocery budget. Given the HDs' rock-bottom prices, a complete switch from the traditional supermarket ...(TS) to the HD format would, indeed, substantially reduce grocery spending. However, consumers typically visit the HD on top of a TS, leading to a more complex purchase allocation and decision process. In addition to limiting the potential savings to part of the basket, these multiple store shopping patterns may therefore result in depletion of self-control resources and to self-licensing, consumers using realized savings to justify additional indulgent purchases. In this study, we explain and empirically analyze the effect of HD patronage on consumer spending, taking the selected shopping pattern (single versus multiple stores, visited on separate versus combined shopping trips) into account. To this end, we use scanner panel data on households' actual weekly purchase behavior. We also examine household differences in these effects, and relate them to household characteristics.
Our results show that shifting the entire basket to the HD entails substantial savings. Yet, for the majority of consumers, adding a HD to the store set does not reduce grocery outlay: visiting the HD and TS on separate shopping trips leads to a “status quo”, and visiting them on combined shopping trips even enhances weekly spending. While consumers pay less per unit bought at the HD, this is (more than) offset by the purchase of larger quantities across a broad range of product categories, and of more expensive items at the TS. Especially older consumers or larger households, and consumers who shop more frequently or are easily enticed by promotions, are bound to overspend.
•Many consumers seek to save on groceries by shopping at hard-discounters (HDs).•HD patronage reduces price per unit, but also strongly affects purchase volume.•Consumers who only buy at the HD substantially save on groceries.•Consumers who shift only part of their basket to the HD, save less (in separate-trip patterns) or spend more (in combined-trip patterns).•Especially older consumers and larger households are bound to patronize HDs and overspend.
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8.
Winners and Losers in a Major Price War van Heerde, Harald J.; Gijsbrechts, Els; Pauwels, Koen
Journal of marketing research,
10/2008, Volume:
45, Issue:
5
Journal Article
Peer reviewed
Although retail price wars have received much business press and some research attention, it is unclear how they affect consumer purchase behavior. This article studies an unprecedented price war in ...Dutch grocery retailing that started in fall 2003, initiated by the market leader to halt its sliding market share. The authors investigate the short- and long-term effects of the price war on store visits, on spending, and on the sensitivity of these decisions to weekly prices and price image. They use a unique data set with consumer hand-scan and perceptual data for a national panel of 1821 households, covering two years before and two years after the price war started. Although the price war initially entailed more shopping around and increased spending, spending per visit ultimately dropped because consumers redistributed their purchases across stores. The price war made consumers more sensitive to weekly prices and price image, which helped both the chain that showed an improvement in price image (the price war initiator) and the chains that already had a favorable price image (hard discounters). The price war initiator managed to halt the slide in its market share, and its stock price improved. The losers were the rival mid-level and high-end chains. Unlike the initiator, their price image did not improve, and they suffered from increased price image sensitivity. The authors provide managerial implications for firms that are (or about to be) involved in a price war.
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The authors empirically explore how consumers update beliefs about a store's overall expensiveness. They estimate a learning model of store price image (SPI) formation with the impact of actual ...prices linked to category characteristics on a unique data set combining consumers' store visit and purchase information with their price perceptions. The results identify characteristics that drive categories' store price signaling power for different store formats. "Big ticket" categories with a narrow price range strongly shape consumers' store price beliefs, whereas (volatile) prices of frequently or deeply promoted categories are less influential. At traditional supermarkets, consumers anchor and elaborate on prices of storable categories bought in large quantities and for which quality differentiation is high. For hard discounters, however, SPI is mostly shaped by frequently bought categories with narrow assortments. Notably, categories' SPI signaling power is not proportional to their share of wallet at either type of chain. Managers can use these results to identify "Lighthouse" categories that signal low prices, yet make up a small portion of store spending, and in which price cuts do not overly hurt revenue.
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The proliferation of free trials for high-tech services calls for a careful study of their effectiveness, and the drivers thereof. On one hand, free trials can generate new paying subscribers by ...allowing consumers to become acquainted with the service free of charge. On the other hand, a disappointing trial experience might alienate potential customers, when they decide not to adopt the system and are lost for good. This dilemma is particularly worrisome in early periods, when service quality has not been “tried and tested” in the field, and breakdowns occur. We accommodate these phenomena in a model of consumers’ free-trial and regular adoption decisions. Among other effects, it incorporates usage- and word-of-mouth-based learning about quality in a setting where quality itself is evolving. Consumers are forward-looking in that they account for changes in quality and anticipate uncertainty reduction due to trial usage. We estimate our model and run simulations on the basis of a rich and unique data set that incorporates customers’ trial subscription, adoption, and usage behavior for an interactive digital television service. The results underscore that free trials constitute a double-edged sword, and that timing and consumers’ usage intensity during the trial are key to the effectiveness of these promotions. Implications for managers are also discussed.
Data, as supplemental material, are available at
http://dx.doi.org/10.1287/mksc.2015.0973
.
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