The impact of hard discounter presence on store satisfaction and store loyalty

Auke Hunneman,Peter C Verhoef,Laurens M Sloot

doi:10.1016/j.jretconser.2020.102405

Auke Hunneman, Peter C Verhoef + Show 1 more

Open Access

https://doi.org/10.1016/j.jretconser.2020.102405

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Abstract

Hard discounters, such as Aldi and Lidl, have become more important in the last decade. Recent research suggests that the presence of a hard discounter (HD) decreases customers’ share of wallet. In this study, we aim to understand why this occurs, by considering how HD presence affects store attributes and store satisfaction. In particular, we investigate whether HD presence affects store satisfaction formation as well as the effect of store satisfaction on share of wallet. We analyze Dutch data on store attribute evaluations, store satisfaction and share of wallet. Our results show that HD presence decreases convenience evaluations of a store, satisfaction and share of wallet. Moreover, we show that the relationship between convenience and store satisfaction becomes more important when a HD is present, while we then also find a stronger positive relationship between satisfaction and share of wallet. Simulations based on our model estimations show that especially price-oriented retailers should fear decreases in share of wallet when a HD is present.

Highlights

Hard discounters (HDs) no longer operate at the fringes of the retail landscape in Western Europe, but instead have become an important phenomenon with a significant impact on grocery retailing across the globe
We find that store satisfaction and SOW of traditional retailers are lower if a HD is present
In the context of multiple stores competing for a consumer’s SOW, this means that both own marketing actions and those of competitors can have a significant impact on store attribute saliences and on their perceived impor tance. This is the focus of our study, in which we look at the effect of the presence of a HD on store satisfaction formation

Summary

Introduction

Hard discounters (HDs) no longer operate at the fringes of the retail landscape in Western Europe, but instead have become an important phenomenon with a significant impact on grocery retailing across the globe. Several factors have contributed to the success of HDs (Steen kamp and Sloot 2019). When new HD shoppers learn about the quality, assortment, and shopping experiences at HD stores, they may not transfer back their purchases to their original grocery stores and instead remain loyal to the HD (Lamey 2014). This effect is partly driven by the fact that HDs significantly increased the quality of their assort ments and sell a selection of national brands (Ter Braak et al, 2013). Shopping at a HD is considered “smart” because of their greater value-for-money compared to similar products at tradi tional retailers (Chaudhuri 2015)

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