A model of consumer perceptions and store loyalty intentions for a supermarket retailer

Abstract

Slow growth and intense competition in retail markets in recent years increases the need for retailers to use strategies focused on retaining and attracting the right customers. However, a strategy that is effective in acquiring new customers may not be the most effective in retaining current customers. In order to understand the effectiveness of activities designed to retain customers, we study the store loyalty intentions of current customers for a multi-store grocery retailer. Using Partial Least Squares, on data averaged across at least 100 customers per store for each of about 160 stores, we find that service quality is by far the most critical determinant of merchandise quality perception. Perceivged value for money depends on perceived relative price and sales promotion perceptions, and to a lesser extent on service quality and merchandise quality perceptions. Store loyalty intentions, measured by intent to continue shopping, intent to increase purchases and intent to recommend the store, depend on service quality and merchandise quality perception. By separating the stores according to average consumer perceptions of competitor attractiveness, we further find that perceived value does play an important role in the determination of store loyalty intention if there is a high degree of competitor attractiveness. When this attractiveness is low, our results fail to show a relevance for perceived value for money.