Insights into cross- and within-store price search: retailer estimates vs. consumer self-reports

Abstract

Past research of the accuracy of retail grocers’ beliefs about consumer search and patronage behavior has found that executives tend to overestimate the size of the consumer segment that regularly switches stores for price specials. With surveys of consumers and executives in a large midwestern market, we extend and replicate the earlier research. In this study, we find that executives demonstrate, on average, an accurate sense of the proportion of consumers who are primarily loyal to one store or are shoppers of multiple stores. However, they still tend to overestimate aggregate price comparison behavior and cross-store shopping. At the same time, we also find that managers simultaneously underestimate consumer newspaper readership, in-store search for specials, and stockpiling. This new result suggests that the more loyal primary customers may account for a greater proportion of incremental promotional sales than has been recognized in the past. These results suggest a significant increase in the information value to be derived from the desegregation of sales data by shopper loyalty status.