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MATCHING STORE TYPES TO MARKET NEEDS TO BETTER SERVE THE CONSUMER by Stephen C. Goff Market Research and Planning Manager Nash Finch Company Minneapolis, Minnesota Failure to recognize the role of could be understored for another. the consumer has led to a number of mar- Then again it depends on the type of ket disasters. Stresses that a store store we are talking about. Convenience image preselects its customers. stores in their site location ignore the location of supermarkets. Ware- You know I’m going to challenge house Food Markets in their site loca- you with a lot of information today, tion ignore the location of convenience but none of it will work for you unless stores and supermarkets. you try it and use it. Site location is a fun and important part of research. The type of store determines type Let’s explore a couple of concepts first: of analysis: WHAT ARE THE TYPES OF RETAIL FOOD Convenience Store STORES WE HAVE IN OUR ARSENAL FOR FOOD Specialty Store DISTRIBUTION TO SERVE THE CONSUMER? Hypermarket Wholesale Grocery Large Prototypes (Are All Valid Concepts) Hypermarche (European) Family Centers Every firm develops its proven proto- Combination Stores types and style or if you want to get Supermarkets fancy-marketing mix. Super Stores Warehouse Food Stores Firms, in their minds or on paper or both, have developed models (con- Small Prototypes sumer acceptance and behavior models and the type of store combination of Convenience Store services> product> and departments to Food Specialty Shops serve the consumer.) Limited Assortment Stores In chatting with my friend Bill Overstores: Applebaum, whom I consider the Father of Site Location, Bill mentioned he We hear the word overstored a lot thought to cover the subject “Matching in the retail site location field. Over- Store Types to Market Needs to Better stored is relative to many definitions. Serve the Consumer” we should take a What is overstored city to one firm 3 hour time period. This morning we’re February 76/page 58 Journal of Food Distribution Researc going to take 1/6 of that time. So buying. One key to success today is let’s get going. store loyalty. Marketing research provides the means of learning what Today ‘thereseems to be a polar- kind of filter a store performs and ization of success in prototype stores what kind of market segment it serves. into two areas: mass merchandisers and small store prototypes like con- If a retailer knows this, he can venience stores, specialty food stores, properly select location type and and limited assortment stores. The other physical aspects. He can also mass merchandise stores include hyper- select merchandising aspects and marche, family centers, combination operating strategies. stores, jumbo supermarkets and food warehouses. A General Foods study of the food industry recently revealed something Each one of these successful for us we already knew...location and working prototype stores including the store type planning may be more impor- conventional supermarket appeal to dif- tant to the profitability of a business ferent segments of the population by than good execution and control. satisfying different sets of consumers’ Market needs and consumer needs are wants and needs. related. What kind of store type can match market and consumer needs is a Retail firms today have this great valid problem for food distributors. choice of types to choose from in their arsenal of tools, in selection of store We have come a long way in site type. Considerations in order to make location research through the guidance a selection of store type must be of leaders that some of you know and feasible for the corporation and must one of whom you met yesterday--Bill consider competition and of course the Applebaum. consumer. Alert managements today are working to understand and serve con- Bill Applebaum’s contributions sumers. and books on site location have coined and guided our industry. Things are happening quickly today. The Institutional Life Cycle of Retail Charles Hardy, USDA Agricultural Firms has sped up. From department Economist, in February 1975 relates to stores which took 100 years to reach us that his survey work shows that their maturity, we now have catalogue consumers are satisfied with the food showrooms which are estimated to reach products purchased for their house- maturity in 10 years. (See Exhibit A.) holds, but only 70% of today’s shoppers are satisfied with the food stores they The retail environment is con- now shop most. stantly changing and retailers must use new and proven research techniques to - Price is an obvious source of survive these changes. To select a dissatisfaction. marketing strategy and store type a retailer today should know his store and - Also, availability and reliability what kind of customer it serves. Retail of product and shopping information are stores act as filters, attracting and cited. serving some customers, while others are not attracted or may browse without What are we going to do about that? >urnal of Food Distribution Research February 76/page 59 Exhibit A. The Concept of the Institutional Life Cycle: Acceleration of New Retailing Innovations. THE INSTITUTIONAL LIFE CYCLE Early Growth Accelerated Maturity Decline Development .. .“ Market Share ,“ .. .,, ,.’ ----- .-’ ‘. Profitability Time Time Period Required Years Required Retailing to Reach to Reach Institution Maturity Maturity Department Store 1860-1960 100 Variety Store 1900-1950 50 Supermarket 1935-1965 30 Discount Department Store 1955-1975 20 Fast Food Service Outlet 1960-1975 15 Home Improvement Center 1970-1980 10 Home Furnishings Warehouse 1970-1980 10 Catalog Showroom 1970-1980 10 Source: Management Horizons Incorporated, Columbus, Ohio February 76/page 60 Journal of Food Distribution Resear Failure to appreciate the central communicates to them that this is their role of the consumer has led to a num- kind of store. ber of marketing disasters. Some of our stores need image freshening. Some 11. Why do people shop? need new positioning in the food in- dustry. Some are not serving the con- Personal Motives sumer properly. If we start with the premise that a store image preselects Role Playing its customers, then if we can determine Diversion what consumers want in a market and what Self-Gratification need gaps exist in the market, we can Learning about New Trends better determine which of our store Physical Activity prototypes would best fit the market. Sensory Stimulation This gets us into a heavy subject of consumer behavior. Social Motives I. WY do consumers shop retail food Social Experience Outside the Home stores? Communications with Others Having a Similar Interest Forces of Influence: Peer Groups Attraction Status and Authority Internal Pleasure of Bargaining Learning Television Com- Impulse Shopping Personality mercials Perception Service Rational Patronage Motives Attitudes Quality Preferences Price Convenience of Location Motivation Image of Store Variety of Assortment Technological Image of Company Quality of Goods Innovations Range of Services Offered Attractive Furnishings and Display External Price in Relation (value) Courtesy and Helpfulness of Sales Culture Personnel Social Forces Economics Emotional Patrona9e Motives Marketing Sociability Many things enter into the process. Individuality Pride People’s motives for shopping are a function of many variables. Customers The customer will go where he can shop in stores which carry the merchan- get the products and services he wants dise selections most appealing to them, most conveniently and at the lowest displayed in a manner that fits their cost available for the quality of goods concept of a comfortable place to shop, he wants. in stores in which the attitude and language of the sales personnel seem People may choose a store because fitting to them and whose advertising they are apt to run into friends there, ournal of Food Distribution Research February 76/page 61 because they think buying there may There are many ways to measure enhance their prestige or because they store image. At the Nash Finch Company, are following the lead of some admired the most widely used method we have person they wish to emulate. chosen is Semantic Differential. (See Exhibit C.) Choice of a store may be influenced by how the customer sees his position Other recognized methods include: in the social structure or his social class. Some shoppers “would not be Staple Scale caught dead“ in a discount store and Guttman Scale others feel uncomfortable in plush sur- Customer Prototypes roundings. Ego considerations are again Q-Sort emphasized in a consumer’s choice of Projective Techniques stores. No one firm can cater to all seg- Exhibit B illustrates Engel’s ments of the market simultaneously and Store-Choice Processes. In general the be fully successful. In a competitive determinants are: location, depth and market system, the firms that under- breadth of assortment, price, advertis- stand the characteristics of their ing and word-of-mouth communications, markets and try to satisfy the particular sales promotion, store personnel, ser- needs and wants prevailing in these mar- vices, physical attributes, store kets can increase their probability of clientele. success. In markets today we are not dealing with different types of people, It is important today to do the but with differences in people’s values. traditional site location research such Demographic and nondemographic data is as: important to making decisions on store type. Socio-economic analysis of data Economic Climate is important: Population--Demographics--Density Zoning Income Traffic Flow Occupation Highway Plans Education Natural Barriers and Man-made Barriers Segmentation Index, analysis of Competition--Size, Depth, Strategies buying behavior must be made. All of Commercial Center Locations and these aid in understanding and position- Planned Expansion ing retail type selection. Visibility The retailer selects his price It is also important to collect strategy through the combination of ser- profiles of image competition and deter- vices offered to shoppers.

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