An imaginary supermarket chain, Food Aplenty, puts pickles on sale. Pickles fly off the shelves. Food Aplenty executives pat themselves on the back. Another brilliant marketing coup.
The executives think the extra sales volume is due to customers from Food Aplenty's arch rival, Super Edibles, jumping ship because of this week's advertised specials.
But that's not necessarily the case, according to Joe Urbany, associate professor in the Notre Dame College of Business Administration.
A "curious characteristic" of the supermarket business, say Urbany and research partner Peter Dickson of the University of Wisconsin-Madison, is that grocery executives believe more consumers compare prices and switch among stores than really happens. The marketing professors' research shows that the real cause of sales increases is often loyal customers choosing to stock up on an item at a bargain price.
To learn more about grocery shopping patterns, Urbany and Dickson surveyed 343 grocery shoppers in the Midwest. They found that 16 percent of all shoppers could be classified as "vigilants" (people who shop two or more stores regularly), 22 percent stay loyal to one store, and 62 percent occasionally stray in search of better deals.
Grocery executives tend to overestimate the size of the vigilant population, the researchers say, because what looks like store-switching may instead be relatively store-loyal consumers responding to specials they've learned about through word-of-mouth and advertising. The danger, as the researchers see it, is that stores may cut their profit margin to run sales on items when the specials don't really lure customers away from competitors.
From a consumer's standpoint, stores' weekly sales promotions may cancel each other out. Over time, Urbany and Dickson say, customers who bounce from store to store attracted by sale items report spending about the same amount as customers who stay loyal to one store.