Journalof Retailingand ConsumerServices,Vol. 4, No. 2, pp.

73-81, 1997

Pergamon
S0969--6989(96)00027-6

<~ 1997 Elsevier Science Lid Printed in Great Britain. All rights reserved 0969-6989/97 $17.00 + 0.00

Consumer misbehaviour
Promiscuity or loyalty in grocery shopping
Peter J. McGoldrick
Manchester School of Management, UMIST, PO Box 88, Manchester M60 1QD, UK

Elisabeth Andre
Sedgwick International Broking Services Ltd, The Sedgwick Centre, London E1 8UB, UK

Customer loyalty schemes have been a major focus of retail marketing activity over the last 2 years, as established retailers have struggled to stem the flow of 'defections' to various discount formats. Many of these schemes are little more than expensive, short-term tactics. A more integrated and longer-term approach requires a clear understanding of the concept and determinants of loyalty. This paper examines these issues, and presents results from a recently completed study of consumer behaviour within the increasingly competitive grocery market. The study compared the characteristics of 'loyal' and 'promiscuous' users of a major grocery superstore. Through a range of bivariate and logistical regression analyses, some major determinants of loyalty have been identified and modelled, notably, shoppers' travel times, age and income. The paper concludes with a series of propositions and guidelines for managers evaluating loyalty programmes. 1997 Elsevier Science Ltd. All rights reserved
Keywords: loyalty schemes, customer loyalty, grocery retailing, retailing strategy

In the centuries to come, marketing historians may well be puzzled as they content-analyse thousands of pages of trade journals. Why was all the emphasis in 1994 on loyalty schemes, in 1992 on discounters, in 1990 on customer service(s), in 1988 on design, etc, etc? Surely, if everyone was doing the same thing, no one would stand out from the crowd? It is hard to deny that there have been distinct waves of emphasis in retail marketing over the last 20 years, as illustrated by Figure 1. We can all argue exactly when each phase started and ended; more difficult to argue is the fact that these emphases, for a short period of time, become obsessions, if not fixations. This leads us to a sad conclusion: most retail strategies have been formed in someone else's head office! We need hardly remind ourselves that a clear understanding of consumer needs and motives is a prerequisite of successful strategy formulation. This being the case, why is so much of retail strategy driven by competitors or by available systems? It is in the interest of the retail strategist to go 'back to basics' in attempting to understand consumer motives: otherwise, there is a tendency to confuse needs with solutiens (McGoldrick, 1990). It is timely, therefore, to take a close look at the concept of loyalty; what does it mean from the customer viewpoint? Furthermore, what causes customers to become 'promiscuous'? Do 'loyal' shoppers have distinctive characteristics?

Much of the current concern about customer loyalty has been provoked by the switching of some patronage from superstores to discounters. Having discussed briefly the advance of discounting within European grocery retailing, this paper examines the concepts of loyalty and promiscuity with regard to shopping behaviour. Results are then presented from a comparative study of loyal and promiscuous customers, indicating the characteristics of each category and the main determinants of loyalty. Conclusions are drawn as to the implications for the current waves of customer loyalty programmes.

Growth of discounting
Without doubt, the prolonged recession has fuelled the growth of discounting within most retail sectors, including groceries. In common with many retailing terms, 'discounting' is regrettably imprecise. As the Wheel of Retailing theory reminds us (eg Brown, 1987), many retail formats became established by selling below the prevailing price, ie by discounting. It is helpful, therefore, to distinguish between the main 'discount' formats within grocery retailing: Verdict (1993) suggests three categories: (1) the limited-range deep discounters, which stock only 500 to 1000 lines at the lowest prices. They offer 73

P J McGoldrick and E Andre

LOYALTYSCHEMES SERVICE(S) DESIGN BRANDING ADVERT/SING LOCATION PRICE

. . . . . . . . . . . . . b

1970s

1980s

1990s

Figure 1 Waves of retail marketing emphasis

secondary and tertiary brands and trade in stores to a maximum of 1000 square metres. The aim of these discounters is to be 15-20% cheaper than their major competitors. For instance, Aldi and Netto are included in this group of discounters, often termed 'hard' discounters; (2) discount supermarkets, which offer 1000-5000 lines at slightly higher prices, but compensate by offering greater choice; (3) discount superstores, usually conversions of conventional superstores, which try to combine discount prices with the kind of range offered by superstores (Buckley, 1993; Gilchrist, 1993). They have, on average, 2000 square metres of area and offer a number of lines from 5000 to 10,000. An example of this format of discounter is Food Giant or Asda's 'Dales' format in the UK. In reviewing the growth and life cycles of various formats in Europe, Eurostat (1993) concludes that discounters had reached maturity only in Germany. Within the UK, Denmark, The Netherlands and Belgium, they are perceived to be in the growth phase, at the introduction phase in the other countries of the EU. Table I summarizes the position of discounters and identifies the market leaders within some countries of Europe. The long history of successful penetration by discounters in Germany is ascribed to the tight planning restric-

tions on large, out-of-town sites and to the restricted opening hours (Economist, 1993). These spatial and temporal restrictions remove much of the scope for differentiation by potential superstore entrants. In France, low profitability in food retailing mutes the competitive responses to discounter entry (Rawsthorn, 1992). In the UK, the main attraction for new entrants has been relatively high levels of grocery retail profitability, around 6.5% in 1993 (Economist, 1993). By the same token, these generally high levels of profit have given both the reason and the means to defend market shares (Buckley, 1993). The last 3 years have, therefore, witnessed a range of competitive responses by the established UK grocery retailers. Prices have come under pressure, although there is evidence that consumers are not especially price-aware (eg McGoldrick and Marks, 1987), even those using some discount outlets (Wilson et al, 1995). A major preoccupation has been the development of loyalty schemes, a comprehensive review of which is provided by Mandeville (1993). The objectives of these have been to establish longterm relationships with customers, creating a sense of belongingness (Uncles, 1994a), while at the same time creating a database of customer details and purchase patterns. While some schemes have been carefully thought out, others have been hastily bought in. Some proved too expensive to sustain at the level initiated; others created more loyalty in the loyalty scheme than in the stores using them (Brann, 1995). From a survey of I000 UK shoppers, SuperMarketing (1995) reported that 40% participate in some type of discount or loyalty scheme. The majority of those interviewed are sceptical about the schemes, doubting that they convey a genuine reward. In general, the male shoppers and those under 35 years of age tend to be more sceptical (Reed Publishing, 1995).

Customer loyalty and promiscuity

Concepts and measures

Table I Country

Penetration of food discounters in Europe

Leading food discounter

Aldi Netto Aldi Dia/Dirsa (Various) (Various) Aldi Kwik Save

Percentage share of grocery trade Leader All discounters

8.0 5.4 12.7 5.0 --4.8 6.5 16.0 12.0 22.0 8.0 2.0 2.0 6.7 10.0

Belgium Denmark Germany Spain France Italy Netherlands United Kingdom

Used loosely, as it usually is, the term 'loyalty' conjures up various notions of affection, fidelity or commitment. Even so, when we start to measure this illusive commodity, we usually resort to behavioural measures of 'loyalty'. For example, the Enis-Paui Index (Enis and Paul, 1970; Burford et al, 1971) uses three behavioural components to construct a measure of loyalty, namely: the percentage of budget allocation to the store (budget ratio); the amount of switching (ratio); and the number of alternatives explored (patronage ratio). The loyalty (L) of the ith customer to a particular store during a given time period may be represented by:
Li= 100 [b~(k+ 1-s~)/m(n+ 1-pi)n] v~,

Source: Eurostat (1993) p21

74

Consumer misbehaviour

where: b~ is the fraction of the budget allocated to the store by the /th consumer; st is the number of switches from the store to some other stores by the Rh consumer; p, is the number of stores patronized by the ith consumer; m is the number of store visits; k (=m-l) is the number of opportunities to switch; and n is the number of stores available to the ith consumer. The Enis-Paul Index has been applied in a number of subsequent studies (eg Denison and Knox, 1993) and was used to assess sample categories in the study reported within this paper. There is, however, some value in decomposing the elements of the index, as illustrated by a recent study of shoppers who had recently switched, entirely or in part, to an Aldi discount store. Table 2 shows that the different occupation and age groups use the Aldi store in rather different ways. The more affluent consumers visit less frequently and undertake a lesser proportion of their grocery shopping at Aidi. No significant differences (n.s.), however, emerge between the average weekly expenditures of the various groups. In other words, although the lower-income shoppers would appear more 'loyal' to Aldi on two measures, visit frequency and percentage of budget, each group is of equal value to the retailer (at least in turnover terms). Something of a gap, therefore, exists between the different connotations of 'loyalty'. Essentially, it comprises both a behaviourai and an affective (or commitment) component. The concept of commitment has been defined as 'an emotional or psychological attachment to a brand' (or store, or service: Beatty et al, 1988). Denison and Knox (1993) summarized this in the form of a simple matrix. A similar classification by Dick and Basu (1994), in relation to brand loyalty, labels the 'habitual' category as 'spurious loyalty', and the 'variety seekers' category as 'latent loyalty'. This draws attention to the major difference between the 'loyals', with high commitment, and the 'habituals', with low commitment. Most measurement systems would place these two types within the same category with obvious dangers for strategy formulation. On the other side of the matrix, the 'promiscuous' shoppers may be similarly divided, with very different strategies being appropriate in each case.

BEHAVIOUR : NUMBER OF STORES USED

FEW

MANY

mort LOYALS
COMMITMENT TO STORES LOW

VARIETY SEEKERS SWITCHERS

HABITUALS

Figure 2 Commitment and behaviour in store loyalty

While useful to an extent, there is far more to the question of loyalty than can be summarized in four boxes! For example, the 'variety seekers' may alternatively be termed the 'polygamous'. Aspects of geography can easily lead to shopping behaviour that includes two or more stores. The concept of shoppers patronizing 'repertoires' of stores is noted, for example, by Uncles et al (1995). A customer, therefore, may be strongly committed to your store, or bank, or restaurant, but as time and distance are key shapers of behaviour, their commitment may not result in high visit frequency. Paradoxically, many loyalty schemes appear to penalize, maybe also alienate, customers in this category. A review of the store loyalty literature, and the qualitative phase of this study, have illustrated that loyal behaviour (as opposed to commitment) can be the result ofseveral factors.
Laziness: the 'loyal' shopper cannot be bothered to

visit more than one grocery store. Saving money is not his/her main preoccupation in everyday life. Habit." he/she is used to visiting the same store each week; s/he does not feel like changing this habit. Convenience: he/she finds it very convenient in terms of distance, parking, choice of products, opening hours, petrol selling. T i m e saving: he/she is too busy with his/her preoccupations (work, social life) to visit another grocery format; visiting one superstore is enough time spent. Full enjoyment: he/she is entirely happy with his/her store and does not have reasons to change as he/she enjoys shopping there.

Similarly, disloyalty, promiscuity or cross-shopping can be explained by a number of different motivational factors:
Cleverness: he/she feels that by cross-shopping, he/she

Table 2

Three measures of 'loyalty'

Respondent category
Occupation AB Cl C2 DE F-Ratio (p=) Age Under 35 35 - 54 55 or above F - Ratio (p=)

Visits per week

0.77 0.89 1.21 1.52 (0.004) 0.93 1.13 1.57 (0.03)

per week at Aldi

29.28 29.73 31.43 3 I. 11 (n.s.) 30.93 31.00 27.25 (n.s.)

Percentage of grocery shopping

64.2 67.5 68.8 79.4 (0.040) 71.4 70.1 61.2 (n.s.)

Source: McGoldrick and Ali (1994)

makes better deals, such as better prices, better quality for the same price, and more quantity for the same price. Dedication." he/she considers that it is a normal behaviour to cross-shop and to make better deals; he/she considers that it is a duty to cross-shop. M u l t i p l e enjoyment: he/she finds it is enjoyable to visit more than one store format so as to have more shopping experiences. M o n e y saving." he/she needs to look after his/her grocery budget either because he/she has a very limited income or because he/she spends a large part of disposable income on holidays, social life, clothes, etc 75

P J McGoldrick and E Andre Curiosity:he/shelikestoacquireknowledgeaboutgrocery

formats, products and brands; shopping around, on a regular basis, keeps this knowledge up to date. Time availability: he/she feels that, taking into account time availability, it would be a pity not to take advantage of the different retail formats, possibly going to a superstore for high involvement products and to hard discounters for low involvement products. Time killing: he/she has plenty of time every day; by cross-shopping, he/she has an everyday activity and does not suffer from boredom. This is but a partial list of the motives that drive loyal or promiscuous shopping behaviour. It is, however, sufficient to alert us to the dangers of 'shotgun' approaches in trying to increase loyal behaviour.
Correlates o f loyalty

those with children at, or below, school age. Mason (i 991), on the other hand, finds little difference according to social class or household size, but finds the under-45s and the full-time employed to be more store-loyal. A small study by East et al (1995) provided some evidence of the relative loyalty of the 25-44 year-old group. Evidence of the shopping and loyalty habits of non-grocery shoppers was provided by Mintel (i 994). The changes over the years in retail competition, car ownership, consumer values and lifestyles, limit further the inference that can now be drawn from the earlier studies. Differences in measures, methodologies and geographical/competitive contexts provide further obstacles to the comparison of these studies.

Objectives and methodology

Objectives and model

Studies of relationships with store loyalty adopt a number of perspectives. The linkages between customer satisfaction and loyalty have been examined (eg LaBarbera and Mazursky, 1983; Rust and Zahorik, 1993), as have the relationships between store image and loyalty (eg Doyle and Fenwick, 1974; Osman, 1993). Some evidence has also been presented as to the demographic, socioeconomic and psychographic characteristics of loyal or promiscuous shoppers. In an early study of 'deal-prone' shoppers, Webster (1965) finds more deal-proneness amongst older housewives. Blattberg et al (1978) found low levels of deal-proneness amongst those from upper-income households, homeowners, and non-working women. A distinction must be clearly drawn between the deal-prone shopper and discount store patronage. Not all discount shoppers are promiscuous, nor vice-versa. Bearden et al (1978) illustrate that discount store shoppers tend to be younger and better educated, not the usual profile of the deal-prone. Conflicting evidence has emerged as to the characteristics of the UK grocery discount shopper. According to Checkout (1993), new families and older couples tend to be most likely to patronize discounters. Kwik Save, on the other hand, claims that its customers are no longer confined to poorer shoppers (de Jonquieres, 1993). In part, this may relate to their location and assortment policies, with some newer, larger stores in middle-market areas. Schmidt et al (1994) found evidence of down-market appeal amongst the hard discounters, whereas the studies of Strategic Retailing Associates (1990) and McGoldrick and Ali (1994) illustrated the wide appeal of Aldi outlets. Unfortunately, many studies have been limited in their scope of stores and areas, making it difficult to form reliable generalizations. Other studies have addressed more directly the characteristics of loyal/promiscuous shoppers. Farley (1968) found no associations with demographic characteristics. Enis and Paul (1970), on the other hand, found that high loyalty was associated with low income and less education. More recently, Dunn and Wrigley (1984) confirmed that store loyalty is higher in low-income households and 76

The purpose of this study is to develop further our understanding of attitudes and behaviour associated with store loyalty/promiscuity. A model is developed which integrates the findings of earlier work, while providing a structure for the empirical work and an outline agenda for subsequent research. More specifically, the objectives of this study are as follows: (l) To examine attitudes towards the new generation of hard discounters, vis-a-vis the superstore patronized. (2) To examine attitudes towards the practice of crossshopping at discount stores. (3) To identify the product categories purchased at the discount store(s) by promiscuous shoppers. (4) To identify reasons for and against cross-shopping. (5) To compare characteristics of loyal and promiscuous shoppers. (6) To analyse, using bivariate and logit analysis techniques, the possible determinants of loyal or promiscuous shopping behaviour.
Figure 3 summarizes the structure of this investigation,

building upon earlier work. Images, beliefs and perceptions of risk are seen to be the most immediate drivers of store choice, and the decision to patronize one or more. These attitudes are conditioned by the experience derived from previous shopping behaviour and by a number of shopper-specific characteristics, notably demographic, economic and geographical.
Methodology Given the current interest in 'defections' towards discount outlets from mainstream grocery superstores, the decision was made to focus upon loyal and promiscuous users of one such store. The primary sampling decision was, therefore, to identify a store which is as close a possible to the major grocers' concept of the 'conforming store'. Furthermore, the store must also be located in an area with a typical socio-economic cross-section of potential customers. Competition from more than one hard (deep) discounter, within the primary catchment areas, was also vital to the purpose of the study.

Consumer misbeha viour

CHARACTERISTICS OF SHOPPERS

weekly shopping is typical of superstore users, a month was sufficient time to reveal switching behaviour, in the vast majority of cases. To maintain the focus of the study, those not loyal to Tesco but using neither Netto nor Kwik Save were excluded from either sub-quota. The loyal and promiscuous subsamples were further sub-divided, in order to improve the comparability of the two samples on variables that are observable:
age: equal proportions under 35, 35-54 and 55 plus; sex: one-third male, two-thirds female; and time: each of the 7 days, more on Friday, Saturday and

T
ATTITUDES TOWARDS STORES

T
I STORE(S'~ CHOICE Loyal or Promiscuous

Sunday. It was possible to control accurately the recruitment quotas by classifying as loyal or promiscuous before handing over the questionnaire. Response quotas inevitably varied: for example, 55% of promiscuous shoppers responded, compared with 69% Ioyals. A higher proportion of females than males responded; amongst the day samples, Sunday shoppers produced the lowest response (53%), possibly indicative of greater time pressures. In total, 248 valid responses were obtained, 138 loyal shoppers (LS) and 110 promiscuous shoppers (PS). Two separate, but closely linked, questionnaires were developed for the LS and PS samples, in that some of the behavioural and attitudinal measures were not relevant to both samples. Space does not permit the reproduction of the questionnaires in full. The measures relevant to the findings now presented are explained in the discussion of the results.
M a i n results
Attitudes towards shops and shopping

L
T
I BEHAVIOUR TOWARDS STORES

i
- number of stores - budget allocated to different s t o r e s - number o f sv.itcbes

Figure 3 Drivingforces of loyalty

Tesco is one of the two market leaders in UK grocery retailing; this company collaborated to the extent of providing catchment-area and local-competitor data, to assist in the selection of the sample store. A superstore was selected that has a Netto outlet within 1 mile and a Kwik Save within 2 miles. This competitive situation had been stable for over 12 months at the time of the survey. Although the (Danish) Netto store is closer, Kwik Save is better known to UK shoppers, being the leading discounter in that country (see Table 1). The Tesco company collaborated by allowing pilot interviewing and respondent selection within the superstore lobby area; it also offered comments on the study objectives and on drafts of the questionnaires. In total, 54 pilot and test interviews were conducted entirely at the store, but the developed questionnaire was considered too long to administer directly to people leaving with baskets of shopping and anxious to get on their way. For the main survey, respondents were, therefore, recruited at the store, accordingly to the quotas established, then asked to complete and mail back the questionnaire. A prize draw of 100, a letter appealing for co-operation and the personal introduction at the store combined to achieve a return rate of 65%, 62% after rejecting incomplete or inconsistent questionnaires. An initial quota of 400 was recruited, divided equally between shoppers loyal to Tesco and those crossshopping at Netto and/or Kwik Save. The distinction between loyal shoppers (LS) and promiscuous shoppers (PS) was based upon behaviour over the last month. Longer periods of time create greater risks of recall error; as

When asked for their reasons for patronizing a discounter as well as a superstore, 59'7,, of the promiscuous shoppers (PS) said that they wanted to save money, 27% wanted more for their money, and 14/,, sought better quality for the same money. Opinions on savings to be obtained on the same or similar products varied greatly, with a mean of 20%. Most (95%) of the loyal shoppers (LS) had been to Kwik Save at least once, whereas only 12% of the LS had visited Netto. Table 3 summarizes why the LS chose not to patronize the discount store regularly. Of the LS who visited Kwik Save at least once, the three most common reasons for not routinely patronizing the store were the lack of choice, the absence of petrol and the quality of the products. Of the LS that visited Netto at least once, the three most reasons frequently given were the absence of petrol, the fact that Netto is less attractive than Tesco and the distance of Netto from the shoppers' home/work. Analysing the reasons that might cause LS to become PS, the highest percentage is given for better prices (Table 4). However, these results seem to contradict the fact that prices are far from being the most important factor for shoppers. The interpretation of this result could be that 77

P J McGoldrick and E Andre

Table 3 Reasons explaining why LS decided not to be PS Kwik Save LS % (Yes) 95.0 Netto LS % (Yes) 12.2 Table 5 Type of shopper by attribute importance rating PS Mean 6.30 6.54 5.43 6.60 6.35 5.70 5.09 6.04 6.30 6.24 6.17 5.99 4.67 5.23 3.45 LS Mean 6.14 6.32 5.55 6.72 6.46 5.85 4.98 6.17 6.51 6.49 6.63 6.46 5.14 5.54 3.41 0.044 No difference No difference No difference No difference No difference No difference No difference 0.086 0.045 0.003 0.001 0.026 No difference No difference Sig~

Reasons explaining why LS decided not to be PS Have been at least one t o . . . but ! decided not to visit this store more regularly Among the shoppers who have been at least once to: There is not enough variety of products The products bought there were not of good quality Do not like the atmosphere, the displays, the layout It is not close to where I work/live Did not feel that I saved enough money to lose time every week going there There are not enough proper brands The store(s) visited are satisfactory enough not to bother visiting a less attractive one The store(s) visited sell petrol, not sold at Kwik Save/Netto

Type of shopper by attribute importance rating" t-Test Prices Value for money Special offers Quality of products Choice of products Choice of major brands Choice of store brands Staff friendliness Staff efficiency Convenient access Convenient parking Convenient opening hours Displays and internal decor Store layout The other shoppers

Kwik Save % Netto % 82.5 48.4 6.8 42.4 36.3 24.2 36.3 52.2 0 53.2 23.7 59.0 35.2 23.7 64.7 74.1

~Scale from l = not important, to 7 = very important bSig = level of significance

Table 4 store

Reasons given by LS that might cause them to switch to another

Reasons given by LS that might cause them to switch to another store: Better prices More choice Products of better quality Closer to where life/work Easy walking distance Need for change Better atmosphere No reason to change

Percentage (Yes) 52.5 35.3 33.1 27.3 12.9 7.2 8.6 33.8

LS will visit another store if they are offered better prices but for the same quality, convenience, etc as they have in Tesco. It is interesting to note that 34% of the LS said that they have no reasons to visit another store; their satisfaction from shopping at Tesco is high enough, or their habit of visiting Tesco is too well established to visit another store. It all depends on the way loyalty is understood and defined in terms of motives. Respondents were asked to rate the importance of 15 attributes, which, the literature and the pilot interviews indicated, are relevant to store choice. Table 5 summarizes the mean ratings based upon seven-point important scales, using t-tests to compare the two samples. The importance that shoppers give to store features is different for PS and LS on the following features: value for money (value for money being more important for PS than for LS) and staff friendliness, staffefficiency, convenient access, convenient parking, convenient opening hours, displays and internal decor, these factors being more important for LS than for PS.
Behavioural tendencies From the pilot interviews, a series of agree-disagree statements was developed to capture some of the general attitudes

towards different types of shopping behaviour. Specifically, statements were designed to elicit attitudes towards time poverty, bargain-hunting and perceived risk. Table 6 summarizes a factor analysis of these nine statements, plus the scores of the two samples compared using t-tests. This analysis suggests that the risk factors are not strong discriminators between LS and PS, neither the performance risks nor the psycho-social risks. Not surprisingly, the bargain-hunting orientation is linked strongly to PS, time poverty to LS. The process of principle component analysis, using orthogonal rotation, was used to group these statements. Factor loadings in excess of 0.5 are shown in Table 6. A full comparison of product purchasing behaviour is beyond the scope of this study, being a research task better suited to a large scale shopper panel. Table 7, however, provides an indication of the proportions of all shoppers purchasing specific product categories at Tesco, and the proportions of PS at the two discounters. In relative terms, the discounters are strongest in the sale of canned goods, biscuits, dairy and other packaged goods, and weakest in the fresh food categories. A detailed analysis of the direct product profitability of the purchases switched to discounters would be required to assess the real cost to Tesco and other superstore retailers of increased shopper promiscuity.
Characterizing loyal and promiscuous shoppers

A large number of respondent classification variables are explored through bivariate analyses, to identify significant differences between PS and LS. Table 8 summarizes those analyses within which significant differences are identified at the level p<0.099. In summary, the loyal shoppers are more likely to be: in the middle age bands; married (marginal); higher social class;

78

Consumer misbehaviour

Table 6

Factor analysis on shopping habit statements

Factor analysis on shopping habit statements: Factor 1 = bargain hunter I like to visit new grocery stores to see what they offer I think it is worth visiting more than one grocery store ! think it is worth spending a little more time to save some money Factor 2 = habitual shopper 1 like to visit the same grocery stores every week I think in general it is better to visit places I know, so that I am not disappointed Factor 3 = risk reduction I think it is risky to buy from discount stores, such as Netto or Kwik Save 1 would not like to be seen using a food discount store Factor 4 = OK if time available I do not have enough time during the week to visit more than one grocery store If I see someone I know shopping at a food discount store, i would think that this person takes care of his/her budget
"7 = strong agreement, 1 = disagreement bSignificance of t-tests

Rotated factor Ioadings > 0.50

0.64 0.77 0.78 0.83 0.77 0.79 0.77 0.62 0.75

PL ~
5.07 5.15 4.98 5.09 4.75 2.40 1.81 3.30 4.32

LS"
4.35 4.17 4.41 5.23 5.12 2.64 1.77 4.50 4.46

Sig c
0.003 0.000 0.016 No difference No difference No difference No difference 0.000 No difference

Table 7

Percentage buying product types in Tesco, Netto and Kwik Save

Table 8

Characteristics of promiscuous and loyal shoppers

Percentage buying product types in:

Fresh fruit and veg Fresh meat Cereals Dairy products Bread Washing powders and liquids Frozen food Chocolate and biscuits Wine and beer Hair and skin care products Canned food Tea bags and coffee

Tesco PS and LS
91.1 73.2 60.7 75.0 81.3 66.1 75.9 51.8 49.1 46.4 67.9 70.5

Netto PS
11.6 5.4 14.3 21.4 13.4 13.4 10.7 19.6 1.8 5.4 20.5 10.7

Kwik Save PS
4.5 1.8 35.7 42.0 32. l 34.8 18.8 34.8 16.1 12.5 48.2 33.0

Type of shopper by shopper characteristics

Age: Under 25 25 - 34 35-44 45 - 54 55 - 6 4 65 or over Family situation: Married with partner Single Social class: A, B C1 C2 D, E Shopping transportation: Foot Bus Car Number of cars: No car One car More than one car Household income: Under 4000 4000 - 6999 7000 - 8999 9000 - 12,000 12,001 - 16,000 16,001 - 20,000 20,001 - 30,000 30,000 or over

Promiscuous (%)
10.0 17.3 22.7 13.6 16.4 20.0

Loyal (%)
1.4 17.4 29.7 21.0 18.1 12.3

Chi-square

(p=)

(0.015)

79.1 20.9 28.2 37.7 61.1 69.6 25.5 10.9 80.0 21.1 49.5 29.4 16.0 15.0 13.0 12.0 13.0 I 1.0 14.0 6.0

87 13 71.8 62.3 38.9 3.04 l 0. I 1.4 94.2 5.8 51.8 42.4 4.5 5.3 7.6 11.4 11.4 14.4 26.4 18.9

(0,097)

(0.020)

higher income groups; car owners, who; shop bycar; higher spenders on groceries; larger families (marginal); living closer to the store.

(0.004) (0.001) (0.001)

Inevitably, some of these characteristics are intercorrelated, such as social class and income. The procedure of logistical regression is, therefore, used to examine the multivariate structure of the developing model. All the variables shown in Table 8 are entered into the model: the logistical regression procedure, in effect, eliminates redundancy, and identifies those characteristics most salient in explaining or predicting the category. Multiple regression analysis and discriminant analysis are two related techniques that are used to make predictions. However, the logistic regression model requires far fewer assumptions that discriminant analysis. Only three variables, age, travelling time to Tesco and total household income, are used to predict if a shopper belongs to the PS or LS group. The number of cases

(0.001)

(0.000)

Mean
Money spent on groceries per week () 52.43 Size of family household (n) 2.73 Travel time to Tesco (min) l 1.37

Mean
63.26 3.04 9.32

T-test (/7=)
(0.005) (O.O59) (0.022)

79

P J McGoldrick and E Andre

predicted correctly by this logistic regression test is 152 out of 223, which can be considered to be a resonably good prediction. This is not to imply that the other variables are irrelevant to the task of predicting loyalty/ promiscuity status. The task of the logistical regression analysis is to identify the best combination, from amongst the available independent variables, to contribute significantly to the prediction. Only two out of nine shopping habit statements are significant in predicting whether a shopper will be a PS or a LS: "I do not have time during the week to visit more than one grocery store" and "I think it is not worth visiting more than one grocery store". Taking into account that 139 cases out of 226 can be predicted, this result is relevant but less conclusive than the prediction based upon shopper characteristics. Among the 15 store features rated for importance, only three, value for money, convenient parking and convenient opening hours are useful to predict the shopper types, PS or LS. Once again this result is interesting as 147 cases out of 235 can be predicted on only three store features, instead of 15.

Conclusions and managerial implications

The main focus of this study is to identify the attitudes and characteristics of loyal shoppers, compared with those of promiscuous, cross-shoppers. The results do not support the view of some earlier studies (Enis and Paul, 1970; Dunn and Wrigley, 1984) that loyalty is a characteristic of poorer shoppers. On the contrary, the incomes and weekly expenditures of the loyal shoppers are very significantly higher in this study. It must be recognized, however, that the methodology and process of sample selection differ somewhat from that employed in earlier studies. The results serve as a reminder of the importance of the geographic and demographic variables, as well as the more predictable economic variables. It can hardly come as a surprise that less-mobile shoppers may switch some of their purchasing to a more conveniently sited discounter. This 'promiscuity' is not just a reflection of discounters' appeal, but it is as much a consequence of the superstore

Table 9

Logistic regression between types (PS or LS) and shopper characteristics Number of cases

Variables
Age, sex, family situation, occupation of the respondent, grocery spending each week, size of the family household, shopping transportation, number of cars, travelling time to Tesco, household income

Variables predicting type

Age Travelling time to Tesco Total household income

predicted by the logistic regression Significance test

0.0105 152 out of 223

0.0267

operators' strategic decisions in previous decades. Having abandoned their high street locations in favour of fewer, larger superstores, they leave themselves vulnerable to retailers capable of operating smaller sites on leaner margins. The study illustrates the importance of studying the structure of 'defections', rather than simply reacting to the aggregate loss of trade. To use round numbers, the loss of 50% of the purchasing of 30', of customers results in an unnerving 15% loss of turnover. If, however, the discounter has created an almost irresistible combination of convenience, fast service and low prices, it would be extremely expensive to win back the 100% loyalty of this group of shoppers. Attempts to so do may also undermine the profitability of the other 85% of trade. Here, we must also revisit the concept of direct customer profitability. To the extent that discounters specialize on the high volume, typically low margin items, the loss of profitability suffered by the superstore is likely to be far less than the loss of turnover. Thus, after some initial loss of nerve, the main superstores have reverted to focusing upon aspects of value other than price. In the United States, also, retailers have been urged to define the 'value equation' more broadly, considering not just the financial cost to consumers, but also the time, effort and risk that they should seek to minimize for the shopper (Chain Store Age Executive, 1994). The last few years have, however, taught valuable lessons in segmentation,just when the superstores were starting to believe that they could be all things to (almost) all people! As these results, and those of other studies, demonstrate, however, it is not a simple matter to define the segments most susceptible to the discounters' offering. The findings of this study suggest that a combination of socio-economic and geographical considerations offers the best prediction. This study offers new insights into the attitudes associated with loyalty or promiscuity, as well as contributing to the modest fund of evidence as to the characteristics of loyal/promiscuous shoppers. It is, however, limited to one competitive context, albeit one chosen to be typical of many others within the UK. It is also conducted without access to detailed panel data of consumers' purchase switching patterns. Future work that combines attitudinal, purchase and direct product profitability data could, indeed, provide valuable insightsinto the real strategic significance of shopper promiscuity. In that this research was largely provoked by a specific wave of strategic emphasis, namely loyalty schemes, it is appropriate to conclude with a number of reflections upon such schemes. These propositions are, in part, conclusions, in part, hypotheses. They emerged from the review of earlier studies (eg Uncles, 1994b), the qualitative and quantitative phases of this study, and discussions with retail management. Loyalty should be a long-term strategic goal, not a series of short-term tactical schemes.

0.000

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Consumer misbeha viour

D o not panic at the first sign of defections: study the pattern and motives, then respond strategically. The best loyalty scheme is to offer more value, as defined by your target customers, than your competitors. D o not assume that price is the only issue: value is a more complex equation. D o not assume high levels of price awareness: consumers retain highly generalized images of price. Bribery of customers should be used only as a last resort: it is expensive, short-term and can be undermining to long-term loyalty. Some loyalty schemes alienate the high value customers who, for reasons of time or location, are necessarily polygamous in their shopping habits. Customer sharing can be a profitable strategy: identify the product/service needs that you can serve most profitably. Some loyalty schemes incur time and effort, subtracting from the value equation for busy shoppers. Do not start what you cannot afford to finish: withdrawal of a scheme can be damaging to the very customers you are attempting to target. There is nothing new about rewarding loyal customers: the co-operatives were doing it 150 years ago! References
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