Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Gas versus groceries

11.03.2011
U of A professor says food retailers need to step up game in battle for consumer's buck

A University of Alberta researcher says grocery retailers need to take heed that a jump at the pumps will be a blow to their bottom line. Alberta School of Business professor Yu Ma notes that if stores want to survive, they'll have to change their tactics in the face of rising gas prices in order to attract shoppers "hungry" for better deals.

Ma and his colleagues say that when the price of gas rises, the monthly grocery bill is the prime target for cuts. The researchers noted that there are two sets of decisions made in the gas versus grub dilemma. The first choice deals with location, which Ma notes is based on choosing the frequency of shopping visits, and distance to the venue. The second is deciding what to buy and when—in other words, whether to forgo a favourite brand for a no-name substitute or middle-tier replacement item—or to search vigilantly for deals or promotions. Consumers may also elect to purchase at wholesale or warehouse stores thus, choosing to buy bulk products in order to save money.

Ma says that wise retailers, those who recognize the changes in their customers' spending trends, will give the people what they want. Industry inclinations towards opening warehouse clubs and supercentres are not something that companies can resist if they hope to survive.

"You have to start thinking about providing one-stop shopping for consumers; they want to go to one place and buy everything in the same store," said Ma. "You have to provide them with that convenience."

And while the gas-and-groceries concept has been around for some time, Ma notes that more retail grocers are using their own gas stations on site as a shopping incentive for customers. By offering discount fuel prices or savings incentives from in-store purchases, it is a value-added attraction for customers to frequent the stores, even if they may be a little further out of the way.

Gone also, he says, should be the idea of retailers putting only single items on sale. Consumers will less likely be attracted to a store for one item in the expensive gas environment. Savvy grocers will have to come up with novel incentives, such as offering a basket of goods at a reasonable price, as a viable means of attracting consumer, says Ma.

"If grocery retailers can offer a promotion or a pricing strategy that fits the customer's objectives, if they tailor their promotional message to consumers based on how they can save money, it would be much more effective than some blind (single item) promotion," he said.

Retailers are not the only ones who will feel the effect of shifting loyalties in the wake of the groceries versus gas struggle. Manufacturers also need to find a way to become more competitive without cannibalizing their own brands, says Ma. He cites the example of top-tier brands offering lower-cost, brand-name alternatives to lower priced no-name brands, introduced briefly during the recent economic downturn. Scaling back a product's price means that the quality is also scaled back, says Ma. But he warns that frugal consumers still want their money's worth from a product, especially when filling the family car with gas is drawing directly from the grocery budget.

"Manufacturers have to think of the best strategy to use ensure long-term prosperity, and not just for short-term gain," he said.

Ma's article recently appeared in the Journal of Marketing.

Jamie Hanlon | EurekAlert!
Further information:
http://www.ualberta.ca

Further reports about: Manufacturers consumer's buck grocery retailers save money

More articles from Business and Finance:

nachricht How long do firms live? Research finds patterns of company mortality in market data
02.04.2015 | Santa Fe Institute

nachricht Innovation among SMEs continues to fade
25.02.2015 | KfW

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Fast and Accurate 3-D Imaging Technique to Track Optically-Trapped Particles

KAIST researchers published an article on the development of a novel technique to precisely track the 3-D positions of optically-trapped particles having complicated geometry in high speed in the April 2015 issue of Optica.

Daejeon, Republic of Korea, April 23, 2015--Optical tweezers have been used as an invaluable tool for exerting micro-scale force on microscopic particles and...

Im Focus: NOAA, Tulane identify second possible specimen of 'pocket shark' ever found

Pocket sharks are among the world's rarest finds

A very small and rare species of shark is swimming its way through scientific literature. But don't worry, the chances of this inches-long vertebrate biting...

Im Focus: Drexel materials scientists putting a new spin on computing memory

Ever since computers have been small enough to be fixtures on desks and laps, their central processing has functioned something like an atomic Etch A Sketch, with electromagnetic fields pushing data bits into place to encode data.

Unfortunately, the same drawbacks and perils of the mechanical sketch board have been just as pervasive in computing: making a change often requires starting...

Im Focus: Exploding stars help to understand thunderclouds on Earth

How is lightning initiated in thunderclouds? This is difficult to answer - how do you measure electric fields inside large, dangerously charged clouds? It was discovered, more or less by coincidence, that cosmic rays provide suitable probes to measure electric fields within thunderclouds. This surprising finding is published in Physical Review Letters on April 24th. The measurements were performed with the LOFAR radio telescope located in the Netherlands.

How is lightning initiated in thunderclouds? This is difficult to answer - how do you measure electric fields inside large, dangerously charged clouds? It was...

Im Focus: On the trail of a trace gas

Max Planck researcher Buhalqem Mamtimin determines how much nitrogen oxide is released into the atmosphere from agriculturally used oases.

In order to make statements about current and future air pollution, scientists use models which simulate the Earth’s atmosphere. A lot of information such as...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

HHL Energy Conference on May 11/12, 2015: Students Discuss about Decentralized Energy

23.04.2015 | Event News

“Developing our cities, preserving our planet”: Nobel Laureates gather for the first time in Asia

23.04.2015 | Event News

HHL's Entrepreneurship Conference on FinTech

13.04.2015 | Event News

 
Latest News

Electrons Move Like Light in Three-Dimensional Solid

24.04.2015 | Materials Sciences

Connecting Three Atomic Layers Puts Semiconducting Science on Its Edge

24.04.2015 | Materials Sciences

Understanding the Body’s Response to Worms and Allergies

24.04.2015 | Health and Medicine

VideoLinks
B2B-VideoLinks
More VideoLinks >>>