"Good Value for Money" #1 Influencer of Grocery Store Choice - More Important than Product Range, Location & Convenience
Price, Promotions and Reputation the most influential in helping consumers arrive at a value perception
January 11, 2008, Hong Kong -- According to a global survey conducted by The Nielsen Company, Good Value for Money is the most important factor for world consumers in determining where to spend their grocery dollars.
Conducted in mid 2007, the study surveyed over 26,000 internet users in 47 markets1 from Europe, Asia Pacific, the Americas and the Middle East, on the factors that influenced their choice of grocery store.
Nielsen found an overwhelming 85 percent of consumers ranked Good Value for Money as the most important consideration when choosing a grocery store – outperforming other considerations like product range, location/convenience and environmental friendliness etc. On a five-point scale, Good Value for Money scores 4.57 2 in the Philippines as the most important consideration and 4.56 in Singapore, among the world’s highest. In Hong Kong, Good Value for Money is also the most important criterion as consumers decide which store to visit, at a score of 4.37.
“Our survey results offer a unique global snapshot of shopping habits and the motivations behind grocery shoppers behaviour today,” said Angel Young, Retail Measurement Services, The Nielsen Company Hong Kong. “What shoppers want and demand from grocery retailers vary significantly across regions and countries, and with increasing consolidation and globalization of the retail industry, it’s crucial for retailers to understand how shopper preferences differ across markets.”
The Nielsen survey also revealed that besides Good Value for Money, the second most important attribute for the world’s consumers was a retail outlet that offered a Better Selection of High Quality Brands and Products followed by Location and Convenient/Easy Parking. Two thirds of Hong Kongers are keen to get high quality brands and products, the second most important criterion when choosing a grocery store, at score of 3.78.
“This is a perfect example of today’s schizophrenic shopper. Demanding shoppers expect the best of both worlds from retailers today. On the one hand, we’re all natural bargain hunters and demand good value for our grocery dollar, and on the other, we expect retailers to stock a wide selection of high quality brands and products to allow us to indulge in our favourite premium treats,” said Ms. Young. “The same consumers want the ‘cheapest of the cheapest’ in some categories and the ‘best of the best’ in others”.
Better Selection of High Quality Brands and Products Scoring highest in the world for choosing a supermarket that offers a ‘Better Selection of High Quality Brands and Products’ were the world’s booming economies of Russia (4.62), India (4.23) and China (4.2) as well as emerging Baltic countries of Latvia (4.15) and Lithuania (4.15) – a clear message to retailers operating in or entering those markets.
“In deed, in fast-growing, emerging markets, there are large numbers of consumers with growing disposable incomes and newly acquired, discerning tastes. These consumers want premium international grocery products in their shopping baskets and seek out supermarkets with a better offering of high quality, branded products.” Ms Young added.
“Foreign retailers looking to enter the emerging markets should know that local consumers do not necessarily react to promotions and price discounts as much as other countries. Instead,brand reputation, quality and buying habits are more important to shoppers.”
Choosing a supermarket because it’s close to where they live ranked top in South Korea (3.93), Indonesia (3.89), and Convenient/EasyParking is considered most important in Malaysia (4.01). In Hong Kong, the proximity of a grocery store is quite important to shoppers (3.62), ranked third; while Convenient / Easy Parking ranked fourth at 2.94.
How consumers around the world define ‘Good Value’?
The survey revealed Price, Promotions and Reputation as most influential in helping consumers arrive at a perception of value.
Three in four consumers around the world recognized a lot of promotions and regular price discounts offered by grocery stores as a good value for money, and 70 percent said it was important the store had a reputation for being cheaper than competitors – despite whether it is really the case in reality. In third place was prices published in the store’s own leaflets and promotional material (62%), followed by one’s own research and prices comparison across retailers (60%), and then price reductions offered through loyalty/store cards (57%) and stores that promised to have every day low prices (57%).
Again, regional and country differences prevailed. European shoppers rated stores that run a lot of promotions and regular price discounts and that have a reputation for being cheaper as the two best indicators of Good Value. Asia Pacific shoppers defined prices published in the store’s own promotional material, the stores’ promise to have every day low prices and own research and prices comparison across retailers as their most important Good Value indicators. Asians are also most likely to listen to word-of-mouth and friends who tell them where to get the best value while shoppers in EEMEA and Europe tend to believe that price reductions through store/loyalty cards are Good Value.
Promotions and regular price discounts appealed most to bargain-hunters especially those in Portugal, Taiwan, Malaysia, Singapore and Brazil. In Hong Kong, in line with the global findings, running a lot of promotions and regular price discounts are perceived as a Good Value for money (82%). 74 percent would choose to believe in the reputation of being cheaper than competitors and do price comparisons on their own, and 73 percent would seek out for retailers who offer more price reductions to their store card holders.
“The power of perception is very important – especially among South East Asian shoppers. 90 percent of Filipinos and over 80 percent of consumers in Singapore, Indonesia, Greece, Malaysia and Taiwan are influenced by price perception.” Ms. Young added.
There are consumers who take matters into their own hands to ensure they get good value by researching and comparing prices across retailers. This was an important task for the Turks (84%), Filipinos (79%), Brazilians and Poles (78%) and the Portuguese and Thais (77%). Over 70 percent of shoppers in Taiwan, Hong Kong, the Philippines and Portugal recognize value for money through price reductions offered through store/loyalty cards.
“Our research tells us that loyalty cards don’t necessarily lead to stronger loyalty or more customers to specific grocery stores! Our numerous studies into loyalty cards have told us that shoppers who join loyalty schemes just to ensure that wherever they shop, they will enjoy the appropriate rewards,” observed Ms. Young.