November 26, 2001
Metters shops for ways to explain grocery choices
By Eric Rangus email@example.com
When a shopper pulls into the parking lot of a local Kroger, does he
think about why he has chosen this particular store, at this particular
location, at this particular time?
Richard Metters has.
In his paper, Every House a Warehouse: An Inventory-Theoretic Model
of Retail Shopping Behavior, Metters, along with coauthors Edward
Fox and John Semple of the Cox School of Business at Southern Methodist
University, delve into the often complex world of household shopping and
emerge with some interesting results.
We wanted to come at this problem from both the marketing side
and the operational side of things, said Metters, associate professor
of decision and information analysis in the Goizueta Business School.
They approached it from the angles of both consumer behavior and traditional
inventory theory, he said.
Metters and his coauthors constructed a flexible stochastic inventory
framework that links store choice, purchase cost, purchase timing and
consumption within a single dynamic system.
To accomplish this, the researchers studied 246 households in the Chicago
area over a two-year period. The participants recorded not only what they
bought, but how much each item cost, as well as where it was purchased.
Metters found that two types of shoppers exist: those who are loyal to
a single store and others who are store switchers: People
who shop at a variety of stores for a variety of reasons.
The most intriguing of these two groups are the store switchers, who
were the majority. Metters found that shoppers needing a large quantity
of goods would generally go towarehouse stores and stock up, trading convenience
(like easy parking and short travel time) for lower prices. If shoppers
needed just one or two items, they generally would go to more convenient
(and expensive) traditional grocery stores and mini-marts.
If youre out of just about everything, youre going
to load up the car and drive 20 miles to Sams Club and buy $200
worth of groceries, Metters said. But if you want to make
lasagna and youre out of lasagna noodles, youre going to go
to the 7-11 around the corner. Your household inventory causes you to
make different decisions about store choice.
This type of shopping behavior confounds store marketers who strive to
cultivate customer loyaltymost often through coupon programs and
selected sales. If Metters research that shows a consumers
need to replenish their inventory is the most underlying factor in store
choice, then most store marketing is off the mark.
If thats the case, then none of these types of promotions
will change anything, Metters said. What stores can do to
keep customers loyal is make time-based promotions on an individualized
basis, which they now have the ability to do.
That ability comes with the relatively recent advent of member-card programs,
which retailers scan each time a customer makes a purchase at the store.
Metters said stores collect this information, which reveals buying habits
and the frequency of the customers visits, but do not fully utilize
The paper concluded that the best way stores can court more loyalty from
store switchers is to match targeted retail promotions with time-dependent
shopping behavior. Through the card systems, stores already have a log
of what their customers buythey just need to use the information
Examples include offering coupons at the point of sale or coupons for
frequently purchased items, such as bread or milk, that expire before
a customer could switch to another store.
They have this great database, Metters said, but really no clue how to use it.