THE STUDY OF KEY FACTORS SHIFTING CONSUMERS FROM BUYING GROCERY PRODUCTS IN STORE TO ONLINE BY MISS DUANGHATAI TECHATANACHAI AN INDEPENDENT STUDY SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE PROGRAM IN MARKETING (INTERNATIONAL PROGRAM) FACULTY OF COMMERCE AND ACCOUNTANCY THAMMASAT UNIVERSITY ACADEMIC YEAR 2017 COPYRIGHT OF THAMMASAT UNIVERSITY Ref. code: 25605902040673CFM THE STUDY OF KEY FACTORS SHIFTING CONSUMERS FROM BUYING GROCERY PRODUCTS IN STORE TO ONLINE BY MISS DUANGHATAI TECHATANACHAI AN INDEPENDENT STUDY SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE PROGRAM IN MARKETING (INTERNATIONAL PROGRAM) FACULTY OF COMMERCE AND ACCOUNTANCY THAMMASAT UNIVERSITY ACADEMIC YEAR 2017 COPYRIGHT OF THAMMASAT UNIVERSITY Ref. code: 25605902040673CFM (1) Independent Study Title THE STUDY OF KEY FACTORS SHIFTING CONSUMERS FROM BUYING GROCERY PRODUCTS IN STORE TO ONLINE Author Miss Duanghatai Techatanachai Degree Master of Science Program in Marketing (International Program) Major Field/Faculty/University Faculty of Commerce and Accountancy Thammasat University Independent Study Advisor Professor K. Douglas Hoffman, Ph.D. Academic Year 2017 ABSTRACT People in Thailand have spent a lot of money each year on food and grocery products. Moreover, the amount of spending is growing each year but the direction that seems to change is how and where people shop for grocery products. The change in this industry can be witnessed by looking at big players in the market. One of the reasons why Big C, Tesco Lotus, or even Makro launched an online shopping platform was because the number of Thai people using a smartphone was growing and the rate of Thai people buying different kinds of products online was also increasing each year. As this market is so attractive; therefore, it has invited competition. As a result, new players in online grocery shopping such as HappyFresh has arrived in Thailand. Apart from direct competitors in the market, there are also indirect competitors; for example, Lazada and Shopee, who sell various kinds of products online including groceries. Ref. code: 25605902040673CFM (2) This research is a contemporary topic in applied marketing focusing mainly on social aspect. The purpose of this research is to explore key drivers that have an impact on changing consumer behaviors from purchasing grocery products in store to online. Furthermore, consumer behaviors will be studied so as to divide them into segments and to also find out success factors in capturing consumers’ attention when purchasing grocery products online. The research was conducted by using two research methodologies: exploratory and descriptive approach. Secondary data from various sources had been explored and seven in-depth interviews were implemented. After that the online questionnaire was designed, reviewed, and distributed to the total of 170 respondents. Statistical methods including frequency, mean values, ANOVA, and custom tables were in SPSS to analyze the data. The result shows that fast delivery, convenience, and time saving are the three keys factors indicating why people buy grocery products online. The products the respondents mostly buy online are stuffs that are heavy to carry ranking from household & cleaning products such as shower cream, followed by cleaning & laundry products such as detergents, and lastly followed by water & beverages. For this reason, the things the respondents buy are related to lifestyle and what they need from online grocery shopping. Keywords: Grocery Products, Shopping, Store, Online, Consumer Behavior Ref. code: 25605902040673CFM (3) ACKNOWLEDGEMENTS I would like to thank my advisor, Professor. Dr. K. Douglas Hoffman, for every piece of advice and support that he has given me throughout the independent study period. His guidance has supported me since the stage of developing research topic, collecting and analyzing data. His time and effort are much appreciated and without his guideline, I might not be able to make my independent study this meaningful. Furthermore, I would like to thank my family and friends for all the support in the past two years. They have been so helpful in many aspects. Last but not least, I would like to express my appreciation to all of the respondents, who were in the in-depth interview and those who did the questionnaire. Every respondent is the main contributor to my independent study and I would like to thank them for making my independent study successful. Miss Duanghatai Techatanachai Ref. code: 25605902040673CFM (4) TABLE OF CONTENTS Page ABSTRACT (1) ACKNOWLEDGEMENTS (3) LIST OF TABLES (6) LIST OF FIGURES (7) CHAPTER 1 INTRODUCTION 1 1.1 Problem Statement and Research Purpose 1 1.2 Research Objectives 2 CHAPTER 2 REVIEW OF LITERATURE 3 2.1 Modern Trade in Thailand 3 2.2 What to Expect in Thailand E-Commerce Market in 2017 3 2.3 Online Grocers vs. Supermarkets 5 2.4 More Than Half of Global Consumers Are Willing to Buy Groceries Online 6 2.5 The Future for Online Grocery Shopping 6 CHAPTER 3 RESEARCH METHODOLOGY 8 3.1 Research Methodology 8 3.2 Sampling Plan 9 3.3 Data Collection 9 CHAPTER 4 RESULTS AND DISCUSSION 10 4.1 Results from In-Depth Interviews 10 4.2 Results from Descriptive Research 10 Ref. code: 25605902040673CFM (5) 4.2.1 Key Drivers Shifting Consumers from Buying Grocery Grocery Products in Store to Online 12 4.2.2 Consumer Segments and Their Behaviors When Buying Grocery Products 15 4.2.3 Success Factors in Capturing Consumers’ Attention to Buy Groceries Online 21 CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS 24 5.1 Conclusion 24 5.2 Recommendations 25 REFERENCES 26 APPENDICES APPENDIX A: SCREENING QUESTIONS 29 APPENDIX B: QUESTIONNAIRE 30 BIOGRAPHY 45 Ref. code: 25605902040673CFM (6) LIST OF TABLES Tables Page 4.0 Frequencies and Percentage of the Total Respondents 11 4.1 Factors Why Respondents Buy Grocery Products Online 12 4.2 Factors Why Respondents Do Not Buy Grocery Products Online 13 4.3 Factors Why Respondents Would Consider Buying Grocery Products Online in The Future 14 a 4.4 Rotated Component Matrix 16 4.5 KMO and Bartlett's Test 16 4.7 Cluster Behavior – Spending on Grocery Products in Store 18 4.8 Cluster Behavior – Grocery Products Being Bought in Store 19 4.9 Cluster Behavior – Grocery Products Being Bought Online 20 5.0 Mean Values of 4 Factors 20 5.1 Multiple Comparisons 21 5.3 Channel of Advertisement 22 Ref. code: 25605902040673CFM (7) LIST OF FIGURES Figures Page 4.6 Cluster Analysis 17 5.2 Awareness and Usage of Online Grocery Shopping 22 Ref. code: 25605902040673CFM 1 CHAPTER 1 INTRODUCTION 1.1 Problem Statement and Research Purpose Online shopping is no longer a word, but it has become an act that more people in Thailand have adopted. Thailand is expected to have over 12 million online purchasers by the end of 2017 (Kinasih, 2017). Online shopping is one of the most promising aspects in Thailand. Small to large scale brick-and-mortar stores are moving towards online channels. At present, the value of the whole retail sales in Thailand alone accounts for 980,000 million baht (Government Savings Bank, 2017). In the past, traditional retailers in Thailand were family-owned business. Middle man was a key player in this supply chain. As time went by, the country faced economic crisis; therefore, rules and regulations in running a business were changed. As a result, foreign investors had more influence and owned more shares in big retail stores, namely Big C, Tesco Lotus, and Makro. In 2016, the expansion of big department stores was around 9%. However, the increase in sales was less than 3% (Krungsri Bank, 2017). On the hypermarket side, Big C and Tesco Lotus were in a head-to-head competition fighting for market share. Convenience stores was another attractive segment mainly owned by 7-11. Nevertheless, big players in hypermarkets even launched their shops; for example, Lotus Express and Mini Big C, in different locations to serve new groups of customers. In the next 3 years, the modern trade industry in Thailand is anticipated to continue to grow between 3-4% (Krungsri Bank, 2017) and more competition will Ref. code: 25605902040673CFM 2 soon arrive. Another trend that can be foreseen is, of course, online shopping. Regardless of scale, more players will come into play in online channel which is expected to grow by 20% each year (Krungsri Bank, 2017). In summary, online grocery shopping in Thailand is expected to grow step by step. Retailers are now making themselves ready for the new channel and the competition as well. The challenge right now is how to get more potential buyers to know about the online platform. Furthermore, inviting them to get a first trial might be even harder if they do not notice any distinctive advantages. For this reason, a contemporary topic of “The Study of Key Factors Shifting Consumers from Buying Grocery Products in Store to Online” in applied marketing in the area of social aspect has been chosen for my independent study topic. 1.2 Research Objectives Objectives of the study include: 1) To study key drivers shifting consumers from buying grocery products in store to online 2) To differentiate consumer segments and their behaviors of those who buy grocery products in store and those who buy online 3) To discover underlying success factors in capturing consumers’ attention and sustaining their behaviors to buy grocery products online Ref. code: 25605902040673CFM 3 CHAPTER 2 REVIEW OF LITERATURE 2.1 Modern Trade in Thailand In the next 3 years, the modern trade industry in Thailand is anticipated to continue to grow between 3-4% (Krungsri Bank, 2017) and more competition will soon arrive. Another trend that can be foreseen is, of course, online shopping. Regardless of scale, more players will come into play in online channel which is expected to grow by 20% each year (Krungsri Bank, 2017).