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 RWI/ISL-Container Throughput Index Indicating Ongoing Weakness in Global Container Trade
23.07.2015 | Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V.

nachricht RWI/ISL Container Throughput Index: Setback for World Trade
23.06.2015 | Rheinisch-Westfälisches Institut für Wirtschaftsforschung e.V.

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: On the crest of the wave: Electronics on a time scale shorter than a cycle of light

Physicists from Regensburg and Marburg, Germany have succeeded in taking a slow-motion movie of speeding electrons in a solid driven by a strong light wave. In the process, they have unraveled a novel quantum phenomenon, which will be reported in the forthcoming edition of Nature.

The advent of ever faster electronics featuring clock rates up to the multiple-gigahertz range has revolutionized our day-to-day life. Researchers and...

Im Focus: Superfast fluorescence sets new speed record

Plasmonic device has speed and efficiency to serve optical computers

Researchers have developed an ultrafast light-emitting device that can flip on and off 90 billion times a second and could form the basis of optical computing.

Im Focus: Unlocking the rice immune system

Joint BioEnergy Institute study identifies bacterial protein that is key to protecting rice against bacterial blight

A bacterial signal that when recognized by rice plants enables the plants to resist a devastating blight disease has been identified by a multi-national team...

Im Focus: Smarter window materials can control light and energy

Researchers in the Cockrell School of Engineering at The University of Texas at Austin are one step closer to delivering smart windows with a new level of energy efficiency, engineering materials that allow windows to reveal light without transferring heat and, conversely, to block light while allowing heat transmission, as described in two new research papers.

By allowing indoor occupants to more precisely control the energy and sunlight passing through a window, the new materials could significantly reduce costs for...

Im Focus: Simulations lead to design of near-frictionless material

Argonne scientists used Mira to identify and improve a new mechanism for eliminating friction, which fed into the development of a hybrid material that exhibited superlubricity at the macroscale for the first time. Argonne Leadership Computing Facility (ALCF) researchers helped enable the groundbreaking simulations by overcoming a performance bottleneck that doubled the speed of the team's code.

While reviewing the simulation results of a promising new lubricant material, Argonne researcher Sanket Deshmukh stumbled upon a phenomenon that had never been...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

3rd Euro Bio-inspired - International Conference and Exhibition on Bio-inspired Materials

23.07.2015 | Event News

Clash of Realities – International Conference on the Art, Technology and Theory of Digital Games

10.07.2015 | Event News

World Conference on Regenerative Medicine in Leipzig: Last chance to submit abstracts until 2 July

25.06.2015 | Event News

 
Latest News

Surprising similarity in fly and mouse motion vision

30.07.2015 | Life Sciences

Efficient Infrared Heat Saves Time and Energy in the Manufacture of Motor Vehicle Carpets

30.07.2015 | Trade Fair News

Roentgen prize goes to Dr Eleftherios Goulielmakis

30.07.2015 | Awards Funding

VideoLinks
B2B-VideoLinks
More VideoLinks >>>