How Does Assortment Affect Grocery Store Choice?

Abstract

The authors investigate the impact of product assortments, along with convenience, prices, and feature advertising, on consumers’ grocery store choice decisions. Extending recent research on store choice, they add assortments as a predictor, specify a general structure for heterogeneity, and estimate store choice and category needs models simultaneously. Using household-level market basket data, the authors find that, in general, assortments are more important than retail prices in store choice decisions. They find that the number of brands offered in retail assortments has a positive effect on store choice for most households, while the number of stockkeeping units per brand, sizes per brand, and proportion of stockkeeping units that are unique to the store (a proxy for presence of private labels) have a negative effect on store choice for most households. They also find more heterogeneity in response to assortment than to either convenience or price. Therefore, optimal assortments depend on the particular preferences of a retailer's shoppers. Finally, the authors find a correlation in household-level responses to assortment and travel distance (r = .43), which suggests that the less important an assortment is to a consumer's store choices, the more the consumer values convenience, and vice versa.