Chair for Marketing and Retailing

Trier University
Prof. Dr. Prof. h.c. B. Swoboda

PERCEPTION OF RETAIL MARKETING

EMPIRICAL STUDY ON FORMATS

Bernhard Swoboda, Bettina Berg, Dan Cristian Dabija International Conference Business Excellence October 17th 2009

Relevance and Objectives

Retail brand perception, store image or even the positioning of retail firms have frequently been examined in research and practice for many years. (e.g., Steenkamp and Wedel 1991; Chowdhury et al. 1998) Studies analysing retail formats on the basis of retailer attributes perceived in a particular retail sector are relatively seldom.
(e.g., Solgaard and Hansen 2003; Morschett et al. 2006)

Studies analysing retail formats in emerging countries are relatively scarce. (Uusitalo and Rkman 2007; Goldmann 2000; White and Absher 2007)

How do retailer attributes impact on store image in an emerging country grocery retail sector, and comparing known retail formats, i.e. hypermarkets, supermarkets, discounters, neighbourhood stores, and cash & carry stores?

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Agenda
1. Theory and hypotheses

Development of conceptual framework Conceptual framework and hypotheses

2. Methodology

Empirical design and sample Appropriateness of scales

3. Results

Results specific to the Romanian grocery retail sector Retail format-specific results

4. Conclusion and limitations

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Conceptual Framework

Store image is defined as the way in which a retail store is anchored in the consumers memory, partly by the functional qualities and partly by an aura of psychological attributes. (Martineau 1958) Consumers evaluate stores on the basis of the retailer attributes offered. (Mazursky and Jacoby 1986) Controversy between the theory of stimulus discrimination and the theory of stimulus generalization. (Till and Priluck 2000)

Individual retailer attributes are not perceived in isolation, but are linked to one another. (Marks 1976) Argumentation is based on simplification thesis and the importance of key information. (Wu and Petroshius 1987)

Different attributes dominate consumers perception in particular retail formats.

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Conceptual Framework

Assortment

Store layout

Location Store image Communication

Price

Service Retail formats

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Hypotheses
H1: The perception of service, assortment, and location dominates the image of supermarkets. (McDonald 1991, Solgaard and Hansen 2003) H2: The perception of assortment, price, and store layout dominates the image of hypermarkets. (Seiders and Teigert 2000, Solgaard and Hansen
2003, Castrillo, Forn and Mira 1997)

H3: The perception of price and location dominates the image of discounters. (Solgaard and Hansen 2003, Morschett et al. 2006) H4: The perception of location, service, and assortment dominates the image of neighbourhood stores. (Swoboda/Morschett 2001, Tordjman 1994) H5: The perception of assortment, communication, and price dominates the image of cash & carry stores. (no consumer-related studies but with
analogies to hypermarkets)

H6: The impact of each of the retailer attributes (assortment, store layout, location, communication, price, and service) on store image differs between formats. (Solgaard and Hansen 2003, Morschett et al. 2006)
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Research Context

Romania

one of the larger Eastern European country-markets, 22m inhabitants approx. 4,500 EUR GDP per person

Consumers

53% of the population live in cities 25 cities have more than 100,000 inhabitants consumer spending of 2,500 EUR per person per annum 49% of consumer spending is spent on food dynamic retail sector with a market volume of 25bn EUR approx. 10% annual growth low concentration rate with the top 5 retailers having a total share of only 22% largest retail company is Metro Group, which was the first mover in the Romanian grocery retail market with the C&C format 1997 Auchan is one of the last followers, entered the market two years ago

Grocery retail market

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Agenda
1. Theory and hypotheses

Development of conceptual framework Conceptual framework and hypotheses

2. Methodology

Empirical design and sample Appropriateness of scales

3. Results

Results specific to the Romanian grocery retail sector Retail format-specific results

4. Conclusion and limitations

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Methodology
Empirical design

Translation-backtranslation method Measurement of all items with Likert-type scale (from 1=totally disagree to 7=totally agree) At the beginning of the questionnaire: respondents had to list which grocery stores they frequently use (asking about one retail store) No check on the choice of retail formats

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Methodology
Sample
2,825

face-to-face interviews basing on quota sampling (sex and age) (Reynolds, Simintiras and Diamantopoulos 2003) measuring consumer perceptions Twelve grocery companies assigned to five retail formats are included:

hypermarkets (minimum retail floor space of 8,500 m) supermarkets (retail floor space of 1,000-5,000 m) discounters (maximum retail floor space of 1,000 m) cash & carry stores (minimum retail floor space of 7,500 m) neighbourhood stores (retail floor space of 100-750 m)

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Appropriateness of Scales

All constructs were tested for reliability; item reduction after item-tototal correlation (acc. to Churchill 1979) Unidimensionality of store image construct was scrutinized using exploratory factor analysis:

AVE of 61.5% KMO measure of sampling adequacy of .787 (middling acc. to Kaiser/Rice 1974) 2 of Bartletts test of sphericity of 3,183.4 (df=6 and p=.000)

Discriminant validity for the model could be approved (acc. to Fornell and Larcker 1981)

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Explorative Factor Analysis Perception of Retailer Attributes

Principal Axis Factor Analysis Items (split-half method) Very good store layout Very pleasant shopping atmosphere Always very clean store Very good assortment Always very good quality of the products Optimum location for me .878 Other retailers near the store .783 Other grocery retailers near the store .761 All products easy to find .3491 Frequent advertising -.891 Excellent advertising -.826 Very informative advertising -.801 Always reasonable prices .799 Very good price/performance ratio .761 Steady prices .691 Good price level compared to competitors .668 Friendly and helpful store staff .251 Good service .370 Well trained/highly qualified store staff Eigenvalues 6.460 2.460 1.570 1.420 Share of explained total variance 33.99% 12.96% 8.30% 7.48% 2 of Bartletts test of sphericity: 25,098.4 (sign. p=.000). KMO measure of sampling adequacy: .894; Chi
Note: Factor loadings below .1 are not displayed; 1 Item was excluded because of a factor loading below .4 acc. to Nunnally/Bernstein 1994.

Factor 1: Assortment/ store layout .811 .725 .720 .649 .647

Factor 2: Location

Factor 3: Communication

Factor 4: Price

Factor 5: Service

.868 .837 .675 1.040 5.46%

Confirmatory Factor Analysis Perception of Retailer Attributes

d d d d d d 1 2 3 4 5 6 7 8 Very good store layout Very pleasant shopping atmosphere Always very clean store Very good assortment Very good assortment .74 .79 .72 .65 .66

Assortment/ store layout

.27

Optimum location for me

Other retailers near the store Other grocery retailers near the store

.87 .77 .79

.40

d
d

Location
.35 .64 .71

d d d d 12 d d d d d d 16 17 18 13 14 15 9 10 11

Frequent advertising Excellent advertising Very informative advertising

.88 .83 .80

Communication
.39

.26

.15

Always reasonable prices

Very good price/performance ratio Steady prices Good price level compared to competitors

.78 .78 .69 .67

Price
.49

.26

Friendly and helpful store staff Good service Well trained/highly qualified store staff

.86

.85
.68

Service

Split-half method 2 818.0 125 df .967 NFI .965 TLI .972 CFI .967 GFI .955 AGFI .044 RMSEA .034 SRMR

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Agenda
1. Theory and hypotheses

Development of conceptual framework Conceptual framework and hypotheses

2. Methodology

Empirical design and sample Appropriateness of scales

3. Results

Results specific to the Romanian grocery retail sector Retail format-specific results

4. Conclusion and limitations

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Conceptual Framework

Assortment/ store layout

.49****

Location

.11****

.05****

Communication
.08****

Store image
N=2,825

2 Price
.15**** df NFI: TLI: CFI: GFI: AGFI RMSEA: SRMR:
Note: **** <.001

Service

1,267 194 .957 .957 .964 .958 .945 .044 .036

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Retail Format-Specific Results

Impact of Perceived Retailer Attributes on Store Image According to Retail Formats
Retailer attribute on store image Assortment/store layout store image Location store image Communication store image Price store image Service store image Cash & carry stores (N=435) .33**** (.51) .22**** (.31) .06ns (.01) .23*** (.30) .10ns (.13) Discounters (N=307) .61**** (.82) .08* (.06) .08ns (.09) .10ns (.17) .04ns (.05) Hypermarkets (N=809) .39**** (.59) .13**** (.11) .05ns (.06) .11*. (.16) .15*** (.18) Neighbourhood stores (N=373) .58**** (.99) .22**** (.19) .03ns (.02) -.02ns (-.02) .17* (.20) Supermarkets (N=901) .56**** (.90) .09*** (.08) .06ns (.07) .03ns (.05) .13*** (.17)

Goodness of fit statistics: GFI=.930; AGFI=.909; NFI=.922; CFI=.954; TLI=.945; RMSEA=.022; SRMR=.051; =2,259.1; df=970.
Note: **** <.001; *** <.01; ** <.05; * <.1; ns=not significant; un-standardized coefficients in brackets.

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Retail Format-Specific Results

Retail Format Comparisons by Pairs, Retailer Attributes
Cash & carry stores
C&C stores Discounters Hypermarkets Neighbourhood stores Supermarkets C&C stores Discounters Hypermarkets Neighbourhood stores Supermarkets C&C stores Discounters Hypermarkets Neighbourhood stores Supermarkets C&C stores Discounters Hypermarkets Neighbourhood stores Supermarkets C&C stores Discounters Hypermarkets Neighbourhood stores Supermarkets ns 1.83 ns .13 2.94* 3.74* 6.77*** 4.55** ns 1.80 6.16** ns .12 ns .02 ns .22 ns .01 ns .92 ns 1.16 8.49*** 5.04** ns .33 ns .15 ns .11 ns .07

Discounters
1.25ns .35ns .32ns 1.02ns 4.22** .14ns .17ns .72ns .10ns .00ns 1.72ns .72ns 1.15ns .81ns .93ns

Hypermarkets

Neighbourhood stores

Retailer Attribute
Assortment/ store layout

2.35ns 3.17*

.03ns

Location 1.60ns .52ns 3.57*

Communication
.25ns .02ns .48ns

2.19ns .88ns

Price .35ns

.00ns .03ns

Service .02ns

Note: **** <.001; *** <.01; ** <.05; * <.1; ns=not significant; 2-difference=the difference in parameters between the two groups is inferred from the difference in model fit when comparing a model with the parameters constrained to be equal versus a model in which they are allowed to differ.

Agenda
1. Theory and hypotheses Development of conceptual framework Conceptual framework and hypotheses
2. Methodology

Empirical design and sample Appropriateness of scales

3. Results

Results specific to the Romanian grocery retail sector Retail format-specific results

4. Conclusion and limitations

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Conclusion and Limitations

(1) Consumer perceptions of assortment/store layout has an important effect on store image in Romanian grocery retail sector in general and (2) is also the most important construct for all retail formats in building store image, whereas communication has no influence. Implications

Study supports some interesting results from previous studies, but also discloses new findings for an Eastern European Market Study reveals an appropriate method for analysing store image on the basis of several retailer attributes General: Further research is required as this is an initial study in Romania, impact of communication has to be investigated as well as the one extracted factor for store layout and assortment constructs Methodical: Check of retail formats to assure better opportunities for comparisons, investigation in other countries to validate measurements and to compare results between countries, inclusion of moderating factors (e.g. shopping motives or involvement), longitudinal analysis to examine impacts International Conference Business Excellence over time Chart 19

Limitations and further research

Chair for Marketing and Retailing

Trier University
Prof. Dr. Prof. h.c. B. Swoboda

Thank you for your attention!

Bernhard Swoboda Bettina Berg Dan Cristian Dabija

Chair for Marketing and Retailing

Trier University
Prof. Dr. Prof. h.c. B. Swoboda

Backup

Measurement of Retailer Attributes

Construct Store layout
(acc. to Chowdhury/Reardon/ Srivastava 1998) 1) 2) 3) 4) 5) 1) 2) 3) 4) 5)

Items
I like the store layout at X very much. I can find my way around easily at my nearest X branch. The X store is well-assorted. The shopping atmosphere at the X store is very pleasant. The X store is always very clean. The assortment at the X store is very good. At the X store I can find all the products I need very easily. The products are always available at the X store. The X store offers plenty of own brands. The quality of the products sold at X is always very good.

Assortment
(acc. to Chowdhury/Reardon/ Srivastava 1998)

Location
(acc. to Anselmsson 2006)

1) The X store has an optimum location for me. 2) There are other retailers near the X store. 3) There are other grocery retailers near the X store.

Communication
(acc. to Hansen/Deutscher 1977/78)

1) 2) 3) 4) 5)
1) 2) 3) 4) 5) 1) 2) 3) 4) 5)

The X store has excellent advertising. I often see advertising by the X store. Advertising for the X store is very informative. The X store has credible communication. In addition to typical information, advertising by the X store also provides additional information on the firm.
I think the prices at the X store are always reasonable. I find that most products are offered at favourable prices over a long period. I find the price/performance ratio very good at the X store. I find the special offers by the X store very attractive. Compared to its competitors, the X store has a good price level. Service is good at the X store. The X store staff is friendly and helpful. The X store staff is well trained/highly qualified. The X store staff does not hesitate to solve my problems. I appreciate having a product return guarantee at the X store.
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Price
(acc. to Arnold/Oum/Tigert 1983; Grewal et al. 1998; Yoo/Donthu/Lee 2000)

Service
(acc. to Sirdeshmukh/Singh/Sabol 2002)

Measurement of Store Image

Construct Store image
(acc. to Verhoef/Langerak/ Donkers 2007) 1) 2) 3) 4)

Items
The X store is a well known brand. The X store is a unique brand. The X store is a likable/attractive brand. The X store is a strong brand.

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Discriminatory Power of the Model (total sample)

Discriminant Validity of all Constructs
Squared correlations between constructs N=2,825 AVE Assortment/store layout Location Communication Price Service Store image .52 .65 .71 .52 .64 .50 Assortment/ store layout .52 .08 .17 .42 .51 .49 .15 .07 .03 .32 .16 .07 .14 .25 .27 .32 -

Location
.65

Communication .71

Price
.52

Service
.64

Store image
.50

Note: AVE=Average Variance Explained.

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