“Each Cultural Background Has It's Own Grocery Retail Format”
Total Page:16
File Type:pdf, Size:1020Kb
Master Thesis “Each cultural background has it’s own grocery retail format” Student: Jihane Naji Student Number: 5802822 Date: 5 February 2014 (Final Version) First Supervisor: Drs. A.C.J. Meulemans Second Supervisor: Prof. Dr. J.H.J.P Tettero Preface ‘Hakuna matata’. I never thought that I could make it this far. I never dreamed that I could make the switch to economics after gaining my degree in molecular biology. Hard work, faith, belief in yourself, vision, determination, and dedication are the keywords to achieve anything what you ever want to accomplish in life. I shall be honest that it wasn’t easy at all, especially the fear of not be able to finish on time or whether my subject is well defined to receive an excellent grade, choked me up in a way that I never expected. In the end when the going gets tough the tough kept me going.. I want to thank first of all God for giving me the strength, enlightment and power, where shall I be without thou? Also I am very grateful with the beautiful people surrounding me giving me lots of energy, laughter and happiness to continue and never stop. Especially, the perfect guidance of Drs.Ing.Toon Meulemans helped me where I am now, finished and happy. Oh yeah, I mustn’t forget that music, my soul healer, also helped me a lot to keep on writing whilst singing. During my internship for the the Netherlands Consulate General in New York someone ever told me that a wise woman will make more opportunities than she finds.. Nevertheless I say we are all inventors, each sailing out on a voyage of discovery, each guided by a private chart, of which there is no duplicate. The world is all gates, all opportunities. And if you do not hope, you will not find what is beyond your hopes…Now I have that song in my mind of the rock band ‘Journey’; don’t stop believing, hold on to the future… In the end all things are possible for those who just believe.. 2 Abstract Although the dynamics in the grocery retail business has decreased, doesn’t mean that they all use the same positioning strategy. In this master thesis the preferences of a culture category to certain grocery retail formats (full service, service discount and hard discounters) by questioning which driver of Customer Equity is important for each culture category are researched. First, the Customer Equity concept of Rust, Lemon and Zeithmal (2000, p. 57) is researched followed by examination of the 5 cultural dimensions of Hofstede (2001, p. 24). In this study we used the survey strategy by sending out questionnaires via email and social media. Factor Analysis was conducted to identify dimensions of Customer Equity and its constructs. Principal Component Analysis with subsequent rotation (Varimax) was conducted on all constructs of the questionnaire. Constructs with a loading below 0,6 and eigenvalues below 1 were excluded from further analysis. The results showed that there are no significant differences between the choice of a grocery retail format and a culture category. Therefore is chosen to continue this research only with the format of Albert Heijn (full service). The only two culture categories who were eligible for data analysis in this research are Dutch and Moroccans. Each of these remaining two culture categories valued the grocery retail format Albert Heijn differently. The overall score of Customer Equity for Albert Heijn on a 5 point Likert-scale for the Dutch customers is lower (3,87) than the Moroccan customers (4,20). This means that Moroccan customers of Albert Heijn value this grocery retailer more or better than its Dutch customers. The hard part of this thesis was to link these outcomes with the dimensions of Hofstede to gain an alternative explanation. Unfortunately, we didn’t raise any questions concerning the relationship between Hofstede’s dimensions and Customer Equity; therefore it was hard to give an alternative explanation concerning the dimensions of Hofstede. This thesis presents a study on an aggregate level as well as a more practical analysis on a level of a retailer. We get additional insights between grocery retail formats and given cultural dimensions. Overall, this study contributes to the literature in general as well as practical issues to optimize a retailer’s grocery format. 3 Table of contents Chapter 1 Introduction 1.1 Introduction…………………………………………………………………………… 6 1.2 Problem statement…………………………………………………………………... 8 1.3 Research Question…......................................................................................... 8 1.4 Structure of the thesis........................................................................................ 9 Chapter 2 Theoretical framework 2.1 What is Culture? ................................................................................................ 10 2.2 Cultural dimensions………………………………………………………………….. 11 2.3 Hofstede’s Cultural dimensions…………………………………………………….. 12 2.3.1 Individualism –Collectivism……………………………………………….. 13 2.3.2 Uncertainty avoidance…………………………………………………….. 14 2.3.3 Power distance…………………………………………………………….. 14 2.3.4 Masculinity-femininity……………………………………………………… 14 2.3.5 Long-term orientation……………………………………………………… 14 2.3.6 Indulgence versus Restraint……………………………………………… 15 2.4 Grocery retail formats classification………………………………………………... 15 2.5 The 8 P’s of services marketing……………………………………………………. 16 2.6 Customer Equity……………………………………………………………………… 18 2.6.1 Value Equity………………………………………………………………… 20 2.6.2 Brand Equity………………………………………………………………... 23 2.6.3 Retention Equity…………………………………………………………… 25 2.7 Conceptual model……………………………………………………………………. 28 Chapter 3 Research design 3.1 Grocery retail industry in the Netherlands…………………………………………. 30 3.1.1 Albert Heijn (full service format)………………………………………….. 32 3.1.2 Jumbo group (service discount format)………………………………….. 32 3.1.3 Lidl (hard discount format)………………………………………………... 33 3.1.4 Aldi (hard discount format)………………………………………………... 34 3.2 Research model (concept)………………………………………………………….. 35 3.3 Survey strategy…………………………………………………………………......... 36 3.4 Instrument & Sampling……………………………………………………………..... 36 3.4.1 Sampling…………………………………………………………...........…. 37 3.4.2 Variables ...……………………………………………………………........ 38 3.5 Questionnaire structure and design……………………………………………...… 38 3.6 Data analysis………………………………………………………………………..... 40 Chapter 4 Results 4.1 Sample characteristics………………………………………………………………. 41 4.2 Grocery retail choice per category…………………………………………………. 45 4.3 Reliability, Validity and conditions of Factor Analysis……………………………. 48 4.4 Factor analysis………………………………………………………...……………… 51 4.5 Differences between factors………………………………………………………… 57 4.6 Calculating Customer Equity Performance………………………………………... 58 4 Chapter 5 Conclusion 5.1 Conclusion…………………………………………………………………………..... 60 5.2 Discussion………………………………………….……………………………….... 61 5.3 Limitations and Future Research……………………………………….....……….. 63 References.............................................................................................................. 65 Appendix A: Survey Rust, et al., (2000)................................................................ 70 Appendix B: Survey Dwivedi et al., (2012)…........................................................ 71 Appendix C: Questionnaire……............................................................................ 72 Appendix D: Reliability Analysis……………………………………………….…….. 79 Appendix E: SPSS output of Factor Analysis……………………………………... 80 Appendix F: SPSS output of Descriptives…………………...………………………. 96 Appendix G: SPSS output of the Means………………………………………..........108 5 1.1 Introduction Shifts in consumer needs and shopping behavior, and a growing tendency for internationalization have changed the rules of the competitive game (Ahlert, Blut and Evanschitzky, 2006; Dawson, 2000; Lewis, Turcsik and Janoff, 2001). Since more and more grocery retailers are having the same products and the price differences are small, it is interesting to see how the top grocery retailers excel from each other. Especially with local specialty stores disappearing, the number of stores and the shop square meters keep increasing. Also long opening hours, demographical change, change of format retailing (like multi-outlet retailing or multi-format retailing) and technological developments in grocery retail (like RFID, self scanning) puts enormous pressures on profitability and budgets of a grocery retailer (Rabobank; cijfers & trends supermarkten, 2013) (Bolton, Venkatesh and Detra, 2006; Kaufman, 2000). In other words it becomes more challenging for grocery retailers to keep up with the customer needs in order to attract more customers and retain current ones and above all staying in all circumstances profitable. In order to keep a piece of the pie in the market, retailers have to respond to these shifts and trends. They face the challenge of not only improving the appeal of their offer to customers but also of increasing the efficiency of their operations to preserve profitability. In the annual GfK (Growth from Knowledge) retail report 2012 it is stated that the food retail in the Netherlands is a vital branch. The total consumer spending in the Netherlands is € 278 billion in 2011 whereas € 55.5 billion is spend in the food sector (foodservice, grocery retailers and specialty stores) of which € 26.9 billion is spend only on grocery retailers. It is expected that the revenue growth of grocery retailing in 2013 will be approximately 2%. In the Dutch market, the grocery retailing faces intense competition and struggle for market shares. Continues search