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No Frills” Groceryproducts?

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No Frills” Groceryproducts? WHO BUYS “NO FRILLS” GROCERYPRODUCTS? by William F. Crittenden and Jon M. Hawes College of Business Administration University of Arkansas Fayetteville, Arkansas Authors conclude that a readily TABLE 1 identifiable market segment, based on socio-economic variables does not exist Representative Terminology for No Frills for “no frills products.” Products Problem Statement Organization Terminology A&P Economy Center In February of 1977, Jewel Food Big Bear UN-Brand Stores introduced a new category of prod- Dominion White Label ucts to the United States market. Jewel Giant Eagle No Brand Name called its new products “generic grocery IGA Much-More products.” Other firms soon followed Jewel Generic Grocery with their own versions of Jewel’s orLg- Products inal No Frills Concept. Pathmark No Frills Ralph‘S Plain Wrap In fact, as of March, 1979, more Safeway Scotch Buy (also, than 25 percent of all supermarkets in Second Generation the United States offered a type of No of Generics) Frills product.l Each of the organiza- Star No Names tions that offers No Frills products has Stop & Shop Economy used a slightly different set of terms Topco (wholesaler) Valu Time to describe its products, but the basic concept of lower prices, austere pack- aging, and functional value is always evident. Table 1 presents a list of the products. In stores that sell No Frills terms that food distributors have used to products, the new products have already describe this new brand category. captured about 11 percent of the sales in their respective product categories.3 The prices of most No Frills prod- ucts are about 30 to’40 percent lower The introduction and apparent success than respective national brands and about of No Frills products has shocked the in- 20 percent lower than respective private dustry. Chain Store Age/Supermarkets labels.2 These lower prices have re- reported that “If generics catch on, the sulted in rapid acceptance of No Frills private label-branded equation will be June 79/page 20 Journal of Food Distribution Research upset--perhaps permanently.“4 Fortune when all other independent variables are reported that “Nothing in the recent held constant. The sign (positive or history of the food business has been as negative) indicates the direction of the surprising or as controversial as the association. swift pro:~feration of so-called generic products. From the consumer perspec- Only three independent variables tive, Consumer Reports called No Frills were found to be statistically signifi- products “the h::test food-marketing cant predictors of No Frills purchases trend in years, Progressive Grocer at the .05 level. Household income was reported that No Frills products negatively correlated to the purchase of 11 . are one of the hottest topics in No Frills products. In other words, the industry. And one of the greatest lower income households were more likely riddles as well... Those who jump into to purchase No Frills products than no-names without sufficiently research- high income households. ing where basic consumer demands lie may live to rue the day.”7 Another independent variable that was a statistically significant predictor To date, however, very little re- of No Frills purchases was the number of search has been reported on the market hours per week worked by the household for No Fr~lls products. In light of member that did the majority of grocery this, a research project was initiated shopping. The relationship was positive. in March, 1979, in an attempt to iden- This means that full-time employees are tify relevant consumer characteristics more likely to be purchasers of No Frills of the users of No Frills products. If products than people who work part-time, this group can be identified, food dis- or not at all. tributors will be able to better direct their marketing efforts to the No Frills The third variable that was found segment of the consumer population. to be significant was the number of cars owned by the household. The relation- Methodology and Results ship was positive, thus the owning of additional cars was associated with a In March, 1979, 170 households were higher incidence of No Frills purchasing. randomly selected from the Fayetteville, Arkansas, City Directory. A question- Table 2 presents a summary of the naire developed by the authors was sent findings. Taken in total, the variables to each of these households. Telephone included in Table 2 explain 46.5 percent follow-ups were employed and 68 completed of the variance in No Frills purchasing. questionnaires were ultimately returned The model, in total, was shown significant (40%)● at the .01 level. A multiple regression model was con- Analysis structed to test for the statistical significance of several consumer socio- Only three of the independent var- economic dimensions that often serve as iables were found to be statistically the basis for segmentation of a market. significant predictors of No Frills pur- Partial correlation coefficients were chases. It is not uncommon, however, in determined for each variable in the research designed to identify a market model. These values measure the degree segment to find only a limited number of of association between No Frills pur- socio-economic variables statistically chases (the dependent variable) and the significant. Progressive Grocer reported one particular independent variable, that No Frills products are “the great Journal of Food Distribution Research June 79/page 21 TABLE 2 Partial Correlation Coefficients for No Frills Purchases Model Partial Correlation Independent Variables Coefficients Number of persons in household -.095 Number of children in household .321 Age of youngest household member .226 Marital status -.002 Age of head of household -.007 Total household income -.642* Occupation of head of household -.351 Employment status (worker or nonworker) .013 Hours of employed per week .806* Number of cars ‘.759* Education of head of household .208 Proportion of purchases in Chain A .010 Proportion of purchases in Chain B .058 Proportion of purchases in Chain C .064 Proportion of purchases in Chain D .002 Proportion of purchases in Chain E -.008 Proportion of purchases in Chain F -.092 Proportion of purchases in Chain G -.062 Proportion of purchases in other stores -.059 Overall R2 .465** *Statistically significant at the 5% level. **Statistically significant at the 1% level. equalizers--they tend to transcend demo- impact of these special groups, care graphic differences.”8 A previous must be taken in extrapolating the Progressive Grocer survey of No Frills results of this study to a larger popu- shoppers did, however, verify this lation. study’s finding that lower households are more rone to purchase No Frills For example, our study found hours products.~ worked per week to be positively assoc- iated with the purchase of No Frills In the analysis of the results of products. This result is surprising this study, one needs to take into ac- because most marketers assume that full- count some of the nonrepresentative time workers are brand loyal because of characteristics of the population from a time constraint on their shopping be- which the same was drawn. The havior. Part-time workers, and house- Fayetteville, Arkansas, community in- wives not employed outside the home, are cludes a relatively high proportion of usually thought to be more prone to students and retirees. Thus, the “shop around” for better values because population sampled was not representa- they have time to compare available prod- tive of most markets. Because of the ucts and brands. However, one must June 79/page 22 Journal of Food Distribution Research consider that retirees and students were exist for No Frills grocery products. included as respondents. Retirees and The large number of shoppers who are cur- students obviously work fewer hours per rently purchasing No Frills products do week than many other groups. In addi- not seem to have a common set of socio- tion, retirees and students have not economic dimensions. A food marketer been among the heaviest users of No could easily be mistaken if he were to Frills products due to long established assume that any particular market was purchase preferences or students pur- more prone to purchase No Frills prod- chasing “what Mom always buys.” Thus, ucts than another market. Food mar- these groups may have had an impact on keters need to thoroughly analyze the our findings. Had the study been con- market before making a decision to intro- ducted in an area that contains a duce No Frills products. smaller proportion of retirees and students, the results regarding hours Factors other than socio-economic worked per week might not have been variables must be considered. Our study significant. indicated that a consumer’s store loyalty might impact upon his propensity to In general, the study demonstrated experiment with (purchase)No Frills that a readily identifiable market seg- products. Perhaps research on the psycho- ment, based on socio-economic variables, graphics (lifestyles)and attitudes of does not exist for No Frills products. the market, especially in terms of thrift- Previous studies conducted by Frank and orientation, might make possible a better Boyd reported a similar conclusion for identification of that segment of the private label grocery products. In market which is most likely to purchase their study, only: number of persons No Frills grocery products. in family, age of female head, income, education, and store patronage were REFERENCES found to be statistically significant . predictors of private-label purchases. ‘Charles G. Burck, “Plain Labels Chal- It is important to note that the ab- lenge the Supermarket Establishment,” solute magnitude of these variables was Fortune, March 26, 1979, p. 70. quite small. They concluded that: 21bid. The socio-economic and total consumption characteristics of 31bid. private-brand-prone households appear to be quite similar to 4“Jewel’s Generic Label line: Giving the those households whose members Consumer Another Choice,” Chain Store tend to favor manufacturer’s Age/Supermarket9, October 1977, p.
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