Impact of market entry and competitive structure on store switching/store loyalty

Abstract

Managerial interest in building store loyalty has increased. Research addressing consumer store switching behaviour is limited, however, and the need for new knowledge is considerable. This exploratory field study uses data collected in four markets under varying competitive conditions to investigate consumer response to market entry of new retail chains. Results suggest that the size of the switcher segment is a function of the degree of differentiation, number of new competitors and variety of strategies brought to the market on critical store choice dimensions. When examined in the aggregate, switchers do not differ dramatically from non-switchers in terms of store choice criteria. However, segmentation of switchers by specific store shopped most often shows that these individuals responded to new strategies executed by attacking chains. Empirical results are used to formulate research propositions related to the impact of competitive differentiation on store switching behaviour.