To assess the determinants of multiple store patronage (cross-shopping) behaviour, this chapter reviews the retail store patronage, retail store choice and store loyalty literature.
According to Bodkin and Sewell (2012), previous studies have assessed the phenomenon of cross-shopping behaviour from variety of aspects including store switching, store choice, multi-store purchasing and consumer promiscuity.
Retail store patronage behaviour has explored the relative importance of store patronage motives and developed a shopper typology (Jayasankaraprasad and Kathyayani 2014).
Shopping motives are a significant determinant of store choice and store patronage. Store
65
patronage involves several related considerations, such as how many stores visited to buy a product (Luceri and Latusi 2012).
Retail patronage can be viewed as retail loyalty, which is when consumers repeat their purchases in a store over a period of time (Jones and Sasser 1995, cited in Jayasankaraparasad and Kathyayani 2014). One of the major indicators used in measuring customer loyalty is the set of alternative retail stores explored by a customer (Burford et al.
1971, cited in Luceri and Latusi 2012). According to East (1997, p. 235), consumer loyalty is defined as “a sequence of purchases at the same store, the proportion of purchase or expenditure that a given store takes in the retail category, the repeat patronage frequency, or the duration of patronage (store allegiance)”. The measure used in most studies, such as Maruyama and Wu (2014a), is the proportion of expenditure devoted to the store most frequently used.
It is considered more valuable for retail stores to focus their strategies on retaining existing consumers rather than attracting new ones, as retaining consumers is relatively inexpensive (Blackwell et al. 2007). The value of customer loyalty is widely recognized, as loyal customers are usually less price sensitive and less responsive to advances from competing offers (Jensen 2011). In the grocery sector, loyalty is becoming more difficult to secure because competition is intensifying.
In the context of modern food retailer diffusion, where modern retailers first emerge in urban areas, Varshney and Goyal (2005) (cited in Zameer and Mukherjee 2011) describe ‘out-shopping’ as the activities that consumers from smaller urban settlements undertake when they visit larger urban centres to get a better deal from modern shopping malls. Zameer and Mukherjee (2011) then extended the concept of ‘out-shopping’ to include the switching of consumers from traditional food and grocery stores to modern retailers. In other words, Zameer and Mukherjee (2011) focused on the factors that influence consumers in selecting a place to purchase food between two different retail formats (traditional kirana stores and modern retailers). Riecken and Yavas (1988, cited in Ganesh, Reynolds and Luckett 2007, p. 371) suggested that “cross-shopping was characterized by shoppers who change their retail patronage patterns and turn to other retail formats to fulfil shopping needs which have traditionally been met by a preferred and well patronised retail format”.
Recent research, however, has shown that the availability of modern formats, in addition to existing traditional food stores, has encouraged many consumers to use both formats regularly, instead of totally switching from the traditional to the modern format. According
66
to Bustos-Reyes and Gonzales-Benito (2008) (cited in Luceri and Latusi 2012), the proliferation of retail formats and a growing heterogeneity in consumer needs enhances consumer’s multiple store patronage (cross-shopping behaviour). Similarly, Skallerud, Korneliussen and Olsen (2009) and Carpenter and Moore (2006) suggested that the mix of retail stores that consumers use to satisfy different shopping needs may lead to the development of a complex multiple store patronage referred to as cross-shopping.
With the proliferation of modern retail formats which put pressure on the pre-existing traditional formats, the study of cross-shopping behaviour seems to offer more insights than store patronage. According to Bodkin and Sewell (2012), store patronage is a criterion to understand the factors influencing store selection, while cross-shopping is a criterion to evaluate consumers’ decision to purchase from multiple stores.
The majority of consumers today exhibit cross-shopping behaviour when they purchase food, as no single store is considered the best to cater to all consumers’ needs (Prasad and Aryasri 2011). If cross-shopping is conducted in a single shopping trip, when “consumers go to a central location to purchase more than one good or service, this refers to multi-purpose shopping” (Krider and Weinberg 2000, p.2). Other definition suggests that cross-shopping is occurring when “a single consumer patronises multiple types of retail outlets which carry the same broad lines of merchandise” (Cort and Domiguez 1977, p. 187, cited in Bodkin and Sewell 2012). Hansen (2003, cited in Jayasankaraprasad 2014) suggests that cross-shopping can be differentiated into two categories; intertype (between different types of retailers) and intratype (between the same type of retailers). In this study, cross-shopping is defined as “consumers shopping regularly at each of two or more food retail stores”
(Jayasankaraprasad and Kathyayani 2014, p. 80).
Gijsbrechts, Campo and Nisol (2008) suggested that multiple-store patronage is not only encouraged by cherry picking preference (where consumers purchase among different stores to take advantage from seasonal price discounts), but may also be based on careful evaluation of specific store attributes. One of their argument is that the stability and regularity of multiple-store shopping does not align with cherry picking, and the high percentage of consumers (75%) who use multiple stores on a regular basis is well below the 10-35% of consumers who made decisions to purchase based on temporary sales promotions.
Similarly, Krider and Weinberg (2000) suggested that many consumers plan their regular shopping trips based on their knowledge of an overall relative price for a shopping basket of goods, rather than advertised price specials.
67
According to Gijsbrechts, Campo and Nisol (2008), consumers may regularly visit many stores to get the benefit of ‘fixed cost complementarity’ or ‘category-preference complementarity’. To get the advantage of ‘fixed cost complementarity’, consumers visit high and low fixed cost stores in turn to balance transportation and holding costs against acquisition costs. To get the advantage of ‘category-preference complementarity’, consumers may visit different stores which offer best value for money for different product categories on a combined shopping trip. Both types of consumer multiple-store patronage enhance a change from competing for the ‘share-of-customers’ to the ‘share-of-wallet’
among food retail stores (Gijsbrechts, Campo and Nisol 2008, p. 5).
Similarly, Maruyama and Wu (2014a) also identified that it is important to consider benefits and costs in studying multiple store patronage because visiting multiple stores not only involves benefits (such as better value for money and product range) but also involves some costs (such as the effort needed to identify different sets of store attributes).
Cross-shopping (multiple store patronage) has been identified as one of the most important trends in food shopping today. Consumers who shop in only one grocery store (exclusive loyalty) have become the exception rather than the rule (Uncles and Kwok 2009;
Gijsbrechts, Campo and Nisol 2008; Farhangmehr, Marques and Silva 2001). In India, Prasad and Aryasri (2011) found that the majority of consumers are opting to patronise more than one store because certain retailers fulfil certain needs, and these needs depend on shopping motives, shopping trip types and shopping situations.
Multi-store patronage means that consumers exhibit split loyalty, but most of the time they still have a major store which captures most of their purchases, and this major store is relatively stable (East et al. 2000, cited in Uncles and Kwok 2009). This loyalty is related to the routine nature of purchasing food and groceries, which means that consumers will minimize their cognitive effort in making decisions. They generally refer to their past experiences to assist with the purchase decision. Therefore, the food purchase patterns of most consumers are relatively steady (Raijas and Tuunainen 2001, cited in Picot-Coupey et al. 2009).
In maintaining a relationship with their major store, consumers anticipate some financial advantage and use less cognitive effort because they are familiar with store-specific feature of assortments, lay-out and prices (Rhee and Bell 2002). Therefore, consumers tend to shop at one main store and one or more additional stores. In Finland, for instance, consumers use hypermarkets as their primary channel and supermarkets as their secondary channels for
68
grocery shopping (Koistinen and Järvinen 2009). As supplementary choices, they frequently use neighbourhood stores and convenience stores close to home.
In the first stage in the development of modern food retailers (hypermarkets/supermarkets) in developing countries, consumers generally exhibit selective adoption behaviour (Hino 2010;
Goldman, Ramaswami and Krider 2002). Evidence from many countries has shown that the main shopping patterns exhibited by consumers is to divide their food and grocery purchases between modern retailers (hypermarkets, supermarkets) for packaged and processed foods, and traditional retailers for fresh foods (Hino 2014).
Regarding the cross-shopping phenomenon, Hino (2014) identified two research streams: (1) multiple-format shopping, which focuses on consumers’ socio-demographics and format outputs; and (2) selective-use, which characterizes consumers’ shopping patterns in non-western economies and focuses on cultural values associated with eating habits such as the type of food and use of fresh ingredients.
The second research stream on selective use demonstrates that modern retailers will capture the market from traditional retailers for one food category at a time (processed food first and fresh food later). In the first stage of supermarket diffusion, consumers start patronising modern retailers for dry and processed food, but not for fresh food. Supporting the view of consumers’ selective adoption and the three step model of supermarket diffusion, Joseph and Soundararajan (2009) claimed that consumers shop at both traditional and modern food stores, with the spending varying among products.
3.7 Summary
The importance of food shopping in the field of consumer behaviour has been identified in previous research such as Elijah, Okoruwa and Ajani (2011), which is related to the significance role of food as human basic needs, and, with reference to the developing countries, to the fact that large proportion of household expenditure is allocated for food.
For this study, food shopping provides a base to explore consumers’ cross-shopping behaviour between traditional and modern food retail stores. The slow growth in modern retail diffusion for food compared to non-food products enhances the need to identify, from the consumers’ perspective, preferred retail store attributes and the presence of any segments that may exist among Indonesian consumers.
69
Previous research has identified a common phenomenon of multi-store patronage (cross-shopping) in food shopping, which is partly caused by the proliferation of different retail formats. In the context of developing countries such as Indonesia, the expansion of modern retailers’ has increased retail market competition, and this calls for more insights into consumers’ cross-shopping behaviour between modern and pre-existing food retailers.
The literature has particularly found that consumers cross-shop to fulfil different needs based on situational factors (bulk versus urgent, routine versus festive) and different product categories. This study will add to the literature on cross-shopping by comparing product categories in relation to the three step model of modern food retailer diffusion (processed food, semi-processed food and fresh food).
Other than situational factors and product categories, consumers’ socio-demographic characteristics have also been identified as determinants of food store choice. While some of the literature, suggests that socio-demographic factors are non-influential, this study prefers to include socio-demographic factors since much of the prior research in developing countries has identified significant differences in purchasing behaviour.
Segmenting consumers based on socio-demographic and geographic variables is important in the context of this study. According to Hino (2010) the diffusion of supermarkets in developing countries falls into three main components: geographic, socioeconomic and diffusion by product category. Tam and Tai (1998) suggested that future research in market segmentation needs to emphasize product-specific attitudes and behaviour to gain a deeper understanding about consumers regarding their specific product categories.
A range of store and product attributes have also been identified in previous research as influential factors in selecting a retail food store. These include: functional, social and entertainment outcomes. The attributes established or recognized in a Western context do not necessarily explain consumers’ perspectives in developing countries. Romling and Qaim (2011) suggested that unlike China and India, for which more research on consumer behaviour is available, Indonesia is a Muslim majority country, which may influence consumer lifestyle and preferences for food shopping. For example, halal attributes are expected to be more significant in influencing Indonesian consumers’ decision to purchase food. The limited research on Indonesian consumers as well as the potential influence of culture/religion on consumer cross-shopping behaviour suggest an exploratory study.
70
The next chapter will outline the selection and justification for the research methods selected for this study.
71