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Loyalty to supermarketsRobert East , Patricia Harris , Gill Willson & WendyLomaxPublished online: 28 Jul 2006.

To cite this article: Robert East , Patricia Harris , Gill Willson & Wendy Lomax (1995)Loyalty to supermarkets, The International Review of Retail, Distribution and ConsumerResearch, 5:1, 99-109

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Loyalty to supermarkets

Robert East, Patricia Harris, Gill Willson and Wendy Lomax

I

Abstract

I We report results from a mail survey of loyalty among supermarket cus- I tomers. Most findings are consistent with previous research but the study

does not support earlier evidence that store loyalty is associated with low eco- nomic and educational status. The research shows that store-loyal people i more often come from the 25-44 year-old age group and that they prefer large out-of-town supermarkets.

1 Keywords

Store loyalty, supermarkets, consumer choice.

Introduction

Retailers want to attract and hold customers who spend more money in their shops. Heavier expenditure in a primary store occurs either because a shopper generally spends more or because she concentrates her spending on that store, i.e. is more loyal. Here we focus on store loyalty and report findings from a mail survey of supermarket use.

Jacoby and Chestnut (1978) noted over fifty operational definitions of loyalty; an idea which is central to many of these definitions is that loy- alty is indicated by the proportion of expenditure devoted to a specific brand or store. This proportionate approach was used by Cunningham (1956, 1961) who defined first store loyalty as the percentage of expendi- ture by a household in the most preferred store. Proportionate measures have a clear marketing relevance and can be framed adequately in a mail questionnaire. Other studies have used measures of attitude to the store, sequences of purchase in the same store or hybrid measures, particularly the Enis-Paul index (Burford, Enis and Paul 1971) which was used by Denison and Knox (1993).

Loyalty studies are usually based on consumer panel research because this type of data covers long periods of time with high precision.

The International Review of Retail, Distribution and Consumer Research 5:l January 1995

0959-3969 O Routledge 1995

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100 Robert East, Patricia Harris, Gill Willson and Wendy Lomax

Cunningham used the panel established by the Chicago Tribune; in Britain, Dunn and Wrigley (1984) used a specially established panel in Cardiff, and Mason (1991) reported on store loyalty using the Nielsen HomeScan panel. Though surveys give less accurate measures of pur- chase behaviour than panels they do have advantages: they can measure individual rather than household purchase and they can include a variety of items (e.g. attitude measures) that are not available in panel data. When a survey is used, the accuracy of recall is likely to be increased when shop- pers are intercepted as they leave the store; this was done by Denison and Knox (1993) but this method leads also to over-representation of the frequent shoppers. Mail questionnaires avoid the problem of over- representing frequent shoppers but rely heavily on respondent recall.

Average levels of store loyalty depend on the retail category, the country, the period of time taken for measurement and the year of mea- surement. For supermarkets in Britain, Mason (1991) reported first store loyalty (over one month) of 72 per cent by store and 75 per cent by store group; AGB (1992), using Superpanel data, reported that over an eight-week period approximately 75 per cent of expenditure took place in the favourite supermarket.

How d o the more loyal customers differ f rom the less loyal?

Both academic researchers and marketing practitioners are interested in establishing whether there are characteristics which identify those with high loyalty. In particular, we are interested in whether store loyalty relates to brand loyalty, the number of stores used, the total expenditure in the retail category and to demographic characteristics of the shopper.

Cunningham (1961) found that store loyalty was weakly associated with brand loyalty, an effect that he thought was due to preferences for store brands; however Rao (1969) found a small residual correlation between store and brand loyalty after allowing for store brands.

As might be expected those who are highly store loyal do visit fewer stores. The study by Cunningham (1961) did not show this, but Cunningham measured loyalty over a year and covered both supermar- kets and convenience stores; this gave a long tail of infrequently used stores for both high and low loyalty store users. Studies over shorter periods that exclude convenience stores have shown the expected inverse relationship; both Dunn and Wrigley (1984) and Mason (1991) showed that, as the number of stores visited increased, so the percent- age of expenditure in the primary store decreased but Mason noted that, even when households visited nine different supermarkets over a three-month period, they still devoted over 50 per cent of their expen- diture to their first store.

one ' potential discriminator between those with high and low store

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Loyalty to supermarkets 101

loyalty is total expenditure in the retail category. It might be thought that those who spend more would use more shops and therefore have lower loyalty but Dunn and Wrigley (1984) and Mason (1991) found that first store loyalty did not change with increasing total expenditure in supermarkets. Denison and Knox (1993) found a small positive associ- ation (r = 0.24) between store loyalty and total spending for supermar- kets and a negative relationship for other types of retail outlet. A related question is whether those with higher loyalty do spend more in their favourite store than those with lower loyalty; here Tate (1961), Enis and Paul (1970) and Mason (1991) all agree that the more loyal households spend more money in the primary store than the less loyal.

I Previous research has not revealed demographic characteristics that I strongly discriminate store-loyal households from others. Farley (1968), I

who used Cunningham's (1961) data, found no associations, but Enis and Paul (1970) found that high loyalty was associated with low income and fewer years of education. Carman (1970) also found that the more loyal had lower incomes and less education and also that the more store-loyal household tended to be one with children of school age and a female part- ner in employment. In Britain, Dunn and Wrigley (1984) confirmed that store loyalty was higher in low-income households and those with chil- dren at or below school age, but working wives were slightly less loyal in

1 this study, perhaps because their journey to work gave them access to a large number of stores. Mason, using the first store loyalty measure, found little difference in store loyalty by social class, household size or

I

number of children. He also found that the under 45-year-old shoppers and the full-time employed were less frequent and more loyal shoppers.

Generally, store loyalty has been viewed negatively, i.e. those with fewer resources of money, time and transport are thought to restrict their shopping to the few stores that are accessible under these circum- stances; Enis and Paul (1970), Carman (1970) and Charlton (1973) have endorsed this forced choice view of store loyalty. Carman observed that the loyal shopper was one who was not interested in discounts and food advertising, had strong commitments outside the home, e.g. a job, and did little home entertaining. The evidence was quite weak but Carman presented a plausible account of a reluctant shopper who reduced the

1 trouble of shopping by restricting patronage. Explanations of store loyalty also need to take account of differences

between countries and the evolution of retailing in recent years. Retail change has been reviewed in detail elsewhere (e.g. Sparks 1993); here we draw attention to the increased size of supermarkets coupled with a move in Britain to out-of-town sites, the concentration and near satura- tion of grocery retailing in Britain, and the increased range of goods and services available. These changes, when coupled with the high penetra- tion of car and freezer ownership, have brought more choice to cus- tomers so that past explanations of store loyalty may no longer apply.

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102 Robert East, Patricia Harris, Gill Willson and Wendy Lomax

A remarkable feature of Dunn and Wrigley's report is that the vari- ables which were related to store loyalty, although statistically significant, explained less than 3 per cent of adjusted R~ in the regres- sion analysis. Such weak explanation of loyalty is found in other studies yet the fact that shoppers maintain loyalty patterns over long periods of time suggests that explanations can be found in their backgrounds, work, temperament, store access, attitudes and beliefs, and the failure to find stronger explanations remains a challenge. Four approaches may assist us:

1 . Discretionary choice Dunn and Wrigley (1984) accept that the forced choice approach to store loyalty may account for the behaviour of one group of shoppers, but argue that there may be a second group of high-income discretionary shoppers who choose to shop in a way that gives a large proportion of their custom to their favourite store. If Dunn and Wrigley are correct, these two types of loyalty may can- cel each other out in regression analyses in which a linear relation- ship between predictor variables and criterion is assumed. Dunn and Wrigley suggest that the different types of store may draw different types of loyal shopper, the forced choice shopper going to nearby stores and the discretionary shopper to the larger stores. When they looked at a sub-sample of very loyal shoppers they found that these people favoured the large out-of-town supermarkets and they suggest that analysis by store type might reveal different types of loyalty.

2. Store accessibility The effect of location on store choice has been much studied, but how distance or travel time interacts with loyalty is less clear. It seems possible that, when a store is very accessible compared to others, it will take a higher proportion of expenditure and thus relative accessibility might explain a part of loyalty. Carman (1970) found some support for this and Tate (1961) found that loy- alty to a single store was more common in rural areas and explained this partly as the result of limited access to other stores. But when people do take the trouble to go to a distant store they may then try to cover all their needs and this might lead to high loyalty; thus there appears to be no obvious prediction about the effect of store accessibility on loyalty. Related to this matter is the use of cars; cars make it easier to carry large amounts of goods and could raise store loyalty by reducing the need for other trips. Conversely cars make it easier to get to other supermarkets and this could reduce loyalty.

3. Temperament Some people are more disposed to establish routines to cover their daily lives, including what to buy and where and when to shop. Kahn and Schmittlein (1989) and East et al. (1994) have noted that many supermarket shoppers have regular times for shop- ping. Store loyalty may be a similar routinization of behaviour and may therefore be related to brand loyalty and regular time of

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Loyalty to supermarkets 103

shopping. However the evidence of only weak correlation between store and brand loyalty suggests that this type of explanation has lim- ited scope.

4. Attitudes and spectjic beliefs If one store is liked much more than others it may be used more but there are other practical reasons why one shop may be used rather than another, such as familiarity, acces- sibility, availability of specific products such as petrol and easy park- ing. We accept that store attitudes and store choice criteria may affect store loyalty but these issues lie outside the scope of this study.

The Study

We report a postal questionnaire study which was designed:

1. T o test whether mail surveys can be used to investigate store loyalty. 2. T o compare the forced choice and discretionary choice explanations

of store loyalty. 3. T o examine whether store accessibility, brand loyalty and routine

purchase on specific days and at particular times are related to store loyalty.

The Electoral Register was used to obtain 400 names and addresses in England and Wales. Two waves were used with a month between them; the first wave was sent out two weeks before Christmas 1993. There were eleven Post Office returns, leaving 389 potential respondents. Of these seven refused to assist and 199 provided usable responses (51 per cent).

The questionnaire sought responses from the person who usually did the shopping in the household and was focused on the last main super- market shopping tr$; forty-four questions were asked which covered the number of different stores used, shopping frequency, distance/time from usual store, method of transport, size and location of store, main trip spend, pleasantness of shopping, importance of low prices and amount of free time available to the respondent. Demographic items covered the respondent's sex, household size, whether the household included school-age children, income, employment status, age, and duration of full-time education. The full questionnaire is available from the first author.

Many items were the same as, or similar to, those used in a previous study (East et al. 1994). The items on loyalty were new and were pre- tested on fifty people to check on their comprehension and on the divi- sion of responses across the response format. The question chosen for store loyalty was:

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104 Robert East, Patricia Harris, Gill Willson and Wendy Lomax

What proportion of your total supermarket spending is in the store that you use most?

Less than 50% [I] so-80% [2] 81-95% [3]

More than 95% [4]

Brand loyalties in four widely bought categories (tea, toothpaste, sham- poo and washing-up liquid) were measured using the format:

What proportion of your spending on tea goes to your usual brand

Less than 50% [I] so-80% [2] 81-95% [3]

More than 95% [4] No usual brand [5] I

Do not buy tea [6] I

The four measures were averaged to produce a composite brand loyalty measure which would reflect any general tendency to be loyal to brands. 'No usual brand' was treated as 'Less than 50 per cent' and any non- purchase of the category was excluded from the average.

Results

Consistency with previous findings

Supermarket shopping is regarded as a pleasant or neutral experience by most people with no significant difference between loyalty levels. Unlike earlier studies, we found no associations between store loyalty and either household income or period of full-time education.

Other results were generally consistent with previous research. An I

approximate measure of overall store loyalty was obtained by using the mid-points of the loyalty ranges, i.e. someone who recorded a loyalty of SO-80 per cent was assumed to have a loyalty of 65 per cent. This pro- cedure gave an overall average figure of 75 per cent loyalty.

Table 1 shows that there is a negative association between the mea- sure of store loyalty and the number of stores visited in the last month (r = -0.37). We also find, as expected, a positive correlation between store loyalty and main trip expenditure (r = 0.24). A separate analysis showed that the highly loyal >81 per cent customers spend on average about 32 per cent more than the rest. Those doing their main shopping in large out-of-town stores show a higher correlation between spending and loyalty (r = 0.36).

Like Mason, we find a negative correlation between store loyalty and age (r = -0.18). There is also a small but significant correlation (r = 0.19) between store loyalty and the composite brand loyalty measure.

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Loyalty to supermarkets 105

Table 1 Correlations with store loyalty

Number of supermarket visits in last 4 weeks -0.37** Last trip was to store used most often 0.29** Amount spent on main trip 0.24** Composite brand loyalty 0.19* Age -0.18*

A regression analysis using only demographzc variables gave an adjusted R2 which accounts for 4 per cent of variance (F = 6.7, df 157, p < 0.02) with only age showing a significant and negative beta weight;

I this parallels the low R2 found by Dunn and Wrigley (1984).

1 Other characteristics of the loyal shopper

I For simplicity of exposition respondents are aggregated into high loyalty (>81 per cent) and low loyalty (< 81 per cent) groups of approximately equal size. Table 2 shows the way high and low loyals divide between store types with the high loyals more often preferring big out-of-town supermarkets.

Tab le 2 Type of supermarket used by store loyalty

Type of store Store loyalty Low High N % %

Large, out-of-town 3 5 46 77 Large, in-town 40 41 77 Small, in-town 19 13 31 Small, out-of-town 6 0 6

N 98 93 191

X2 test, p < .02

Table 3 shows that store loyalty is high in 2 5 4 4 age group and it is for this reason that it is negatively associated with age. The higher loy- alty of this age group may reflect cultural changes or, alternatively, it may be related to the major family commitments of this group, suggest- ing that store loyalty relates to social pressures. Two non-significant trends are consistent with the second account; we find that:

39 per cent of high loyals have full-time jobs compared with 30 per cent of low loyals.

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106 Robert East, Patricia Harris, Gill Willson and Wendy Lomax

Table 3 Age group by store loyalty

Type o f store Store loyalty Low High N % %

Less than 25 4 4 8 25-44 28 50 73 45564 47 33 76 65+ 2 1 13 32 N 96 93 189

XZ test, p < .03

51 per cent of high loyals claim to avoid busy shopping periods com- pared with 36 per cent of low loyals.

Store accessibility

Sixty-eight per cent of respondents made their last main trip to the store that is easiest to get to, but there is no significant difference between high and low loyalty levels in this respect. However, when the patrons of large out-of-town stores are examined separately, we find that s t ~ r e loyalty is positively related to ease of access to the store. There is no significant association between store loyalty and either access time or distance travelled.

Eighty-four per cent of respondents go to the supermarket by car. Those who use cars spend nearly twice as much as those who do not. There is no general association between car use and store loyalty.

Temperament

The data were analysed to see whether those who had high store loyalty were also more brand loyal and loyal to times for shopping. The sup- port for this hypothesis is erratic: as noted, store loyalty is significantly related to the composite index of brand loyalty. In this study we could not exclude the effect of loyalty to retailer brands which raises the asso- ciation between store and brand loyalty. There is a significant relation- ship between store loyalty and having a usual time of day for supermarket shopping; 67 per cent of the high loyals have a usual time of day as opposed to 52 per cent of low loyals (p < 0.05). But there is no corresponding association between store loyalty and having a regular day of the week for supermarket shopping.

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Loyalty to supermarkets 107

How much can store loyalty be explained?

We conducted a stepwise regression analysis using all ordinal variables except the first two in Table 1 since these seem to be reflections, rather than potential causes, of store loyalty. This gave an adjusted R2 which accounted for 7 per cent of variance with main trip spending and com- posite brand loyalty as significant factors. When large out-of-town supermarket customers are examined separately, the adjusted R2 accounts for 15 per cent of variance with store accessibility and main trip spending significant.

Discussion

These results give confidence that mail surveys are an effective method for investigating store loyalty. Average supermarket loyalty matched published data and a number of associations that had previously been found using panel data were shown again in our study.

However, our findings do not agree with the conclusions of Enis and Paul (1970), Carman (1970) and Dunn and Wrigley (1984) that store loyalty is predominantly a phenomenon of the underprivileged; we find no relationship between loyalty and either income or period of full-time education and we also find that people with different loyalty levels give similar ratings for the pleasantness of supermarket shopping, which is inconsistent with Carman's account of loyalty as a way of dealing with an uninteresting obligation. We also find no difference between high and low loyalty groups in the accessibility of the preferred store; Carman's account implies an association between high loyalty and high accessibility.

We find some support for Carman's view that the high loyals have more commitments but, following Dunn and Wrigley (1984), we think that many high loyals make a positive choice and select large out-of- town stores which can meet a high proportion of their needs. Our work does not invalidate findings that apply to earlier times in the US and Wales but it indicates that the forced choice theory of store loyalty does not generally apply to England and Wales in the present day. It is pos- sible that there is a small group of underprivileged shoppers in Britain for whom high loyalty arises as a necessity; if so, our survey lacked the size necessary to identify them. We also acknowledge that the most dis- advantaged members of our society are less likely to be respondents to a mail survey.

The association between trip spending and loyalty might arise simply because more loyal shoppers tend to use out-of-town stores where larger spends are the norm. If so, we would expect the loyalty-spending asso- ciation to disappear when oll'ly the patrons of the large out-of-town

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108 Robert East, Patricia Harris, Gill Willson and Wendy Lomax

stores are examined but we find that this correlation is in fact higher for shoppers in large out-of-town stores. This indicates that part of the rea- son why big out-of-town stores have higher main trip spends is that they recruit more people who are both highly loyal and high spending. This finding emphasizes the importance of recruiting loyal patrons.

The idea that high loyalty is associated with the routinization of behaviour is not clearly supported. The more loyal customers are more likely to be brand loyal and to shop at a particular time of day but they show no greater propensity to have a particular day of the week for supermarket shopping than the less loyal patrons. One explanation for the connection between loyalty and regular times of the day for shop- ping may come from work patterns and other daily routines; when such patterns are varied they may bring people into contact with more stores at different times of the day, thus promoting both lower loyalty and no regular time of shopping.

We find that the high loyalty supermarket shopper is more often in the 25-44 age group. Greater family commitments in this group provide some explanation for the higher loyalty since one-stop shopping is an efficient response to greater pressures, but we cannot substantiate this with the available data. Our work draws attention to the scale of spend- ing of the 25-44 year-olds; in our data this baby-boom group comprises 39 per cent of the sample, but is responsible for 49 per cent of all main trip spending, making it an important target group.

It seems likely that with a larger survey we will be able to explain store loyalty better and, in particular, will shed light on the effect of store accessibility and on the appeal of the large out-of-town store. With more data, analyses can be made by store type and income level but the present evidence suggests that we will not explain the larger part of store loyalty with the present approach. One reason for this is the nature of survey data which carries a large element of error. A second reason lies in the phenomenon of store loyalty itself which is likely to be an outcome of store choice decisions which are themselves made for a variety of reasons that are difficult to classify or relate closely to demo- graphic factors. Further work should explore the relationship between the criteria of store choice and store loyalty as well as the contribution made by attitude to stores.

Robert East, Patricia Harris, Gill Willson and Wendy Lomax Kingston Business School

Kingston Hill Kingston K T 2 7 L B

UK Fax: (44) 081 547 7026

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